That Joke Isn’t Funny Anymore

pj-orourke-1-1You don’t find jokes about economic graphs every day. Looking for a catch phrase for a paper on visual representation and economics textbooks, I came across political satirist PJ O’Rourke’s Eat the Rich, subtitled “A Treatise on Economics”. On page 110, O’Rourke introduces an absurd diagram in which he relates “the number of pages of Econ text devoted to graphical analysis” to “the number of Econ students asleep in the lecture hall”.  On page 105, he summarizes the attitude of most undergraduate students toward the principles of economics class: “I. There are a lot of graphs II. I’d better memorize them III. Or get last year’s test”. Okay, that’s funny. And so I have my catch phrase.

What is not as fun, on the other hand, is the rather populist background that comes with that joke when we get deeper into O’Rourke’s book. What he really means, in fact, is that economic diagrams as well as other technical elements are thrown in the introductory course only to introduce socialist ideas, for example the idea that “all wealth is the result of criminal conspiracy among: A. Jews B. Japanese. C. Pirates in neckties on Wall Street” (Ibid.). One of the examples provided by the author is the Keynesian equation Y=[C+I+G+(X-M)]/(1-c). He notes that “it’s hard to imagine applying the above formula to any ordinary economic question, e.g. should I put my bonus in a certificate of deposit or buy new stereo speakers?” (p. 106). O’Rourke may well have his definition of “economics” from Aristotle rather than from Robbins, so it’s easy to disembowel the guy for writing that but most importantly, all of the chapter is to show us that mathematical economics is simply socialist thinking dressed in fashionable mathematical nonsense. I thought this kind of thinking had been thrown out with McCarthyism. So this is not so funny, after all …

What is a bit funnier, on the other hand, is that the opposite discourse has become as fashionable: thanks to Sonja Amadae, we know that mathematical economics and assumptions about rational behavior necessarily imply the defense of capitalism as a political discourse. Amadae is probably more researched than O’Rourke in her demonstration but the similarity between the two theses is that mathematical economists are just idiots who are not even aware of the political implications of their discourse. For O’Rourke, they’re just a bunch of socialists in disguise; for Amadae, they just underwrite the protection of big corporations. I am not naive: I would not assert that there is no politics in methods. I just wonder whether it is too much asking for more subtlety…


7 thoughts on “That Joke Isn’t Funny Anymore

  1. Yann,
    these things are indeed very interesting. I’d like just to ask you a question in order to better understand the arguments implicit in these “jokes” (of course, without reading the references you cite…): is there a sense that graphs, as opposed to “hardcore algebra”, is an easy way of framing and thus spreading socialist ideas, while “hardcore algebra” in economics is just a defense of capitalism? In other words, would O’Rourke claim that a formal mathematical model in economics (not with graphs –and this is important, as the Keynesian multiplier model that he mentions has a clear graphical apparatus attached to the equation he mentions) is a representation of socialist ideas? (a related question is does Amadae make any distinction between formal models and graphs?) Probably I’m asking too much knowledge of economics of O’Rourke, but anyway, it is just a question.

  2. In O’Rourke’s case, the answer is no. But, wait: O’Rourke does not pretend that diagrams are representations of socialist ideas, but that by focusing on machinery rather than on the “real” issues (whatever “real” means here), economics encourages an understanding of the economy that leads to socialist conclusions. “We feel as though we’re confronting an enormous piece of machinery that we can’t comprehend and don’t know how to operate”. We might say that this is a vulgar version of Hayek’s idea that mathematization of economics imply that the economy can be manipulated. The zeitgeist which is criticized here is the Lange-Cowles-Rand stuff that, in the author’s opinion, would render economics less “human”. It’s important to take into account that O’Rourke is a humorist and a satirist, but that he’s also a libertarian and a member of the Cato Institute. I remember that Bruce Caldwell told Phil Mirowski during a seminar at Duke that he believes Phil is a libertarian, too … I think that what Bruce had in mind is that kind of connection. But of course, I would not go as far as to compare Phil’s historically researched account and O’Rourke’s vulgate for that matter, and neither would Bruce (I believe)!
    I don’t have Amadae’s book at hand, right now, but I would be surprised if she operated any distinction between visual and mathematical languages. Almost no one does. I remember that in McCloskey, the two are put in the same basket. Of course this is problematic and this is my goal since the beginning of my graduate work to convince people that it is important to study visual representation as distinct from the formal models they are associated to. People, however, do not seem to be convinced easily …

  3. Now I got it: economics as a “machine” is a dangerous understanding because machines can be manipulated by engineers –although there is a logical fault here, as you can show that a machine after being constructed should be let working by itself, instead of being toyed with…

  4. I would defend Amadae’s book here; as an explanation of the general projects of Arrow (on social choice, anyway), Riker, Buchanan, and others, I’ve found it very useful. Her argument, with which I disagree both factually and methodologically, is that social choice theory was an intellectual wing of the Cold War, which, operating as it did on the basis of the presumption of immutable preferences, implicitly upheld freedom of personal choice as the way society works. This, she claims, avoids crucial problems of values inculcation (a la Smith’s theory of morals, Kant’s categorical imperative, or Foucault’s panopticon); the body of theory thus forms an implicit endorsement of amoral, self-interested behavior.

    Her argument makes a lot our of the authority and objectivity she believes was believed to be inherent to formalism and quantification—hence her whole RAND thing in chapter one. This is my major methodological qualm, because I believe it’s a crutch used by many historians of science to assert an enhanced importance for whatever intellectual product they happen to be analyzing.

    Her link between social choice theory and the cultural presumptions of the Cold War is a little like Mirowski’s argument with respect to neoclassical economics, except I think Mirowski is a bit more subtle about it, claiming that what he believes to be suspect intellectual programs survived because of their mathematical links to the optimization tools of OR and info theory, which were heavily supported by the military for practical reasons. While he does resort to fascination with the computer argument from time to time, he doesn’t get quite so caught up in the coarser side of the culture-ladenness of theory issue that is popular in STS.

    My take has always been that theory carries a lot less automatic authority than is often presumed, and therefore that one of the historian’s major goals when confronting theory should be to uncover the intellectual appeal of academic theory in view of its cultural and political marginality most of the time. This, I think, Amadae’s book does well, regardless of whether you accept her main argument or not.

  5. Will,
    your comment perfectly makes sense to me. My post is in no way a criticism of Amadae’s book in general, but of the idea that you can easily link one’s set of tools and their political implication. I think that the question of “amorality”, that you mentioned, is crucial, here. Last week, we organized a HOPE Conference at Duke on the relations between economics and other social sciences (Tiago is going to write on that event, so I don’t want to interfere yet). One of the papers was written by Ron Robin. His narrative was also that economists have implicitly endorsed amoral behavior. But in Robin’s words, amoral equals immoral and that’s where I think I rather disagree. I would say that endorsing an amoral point of view is indeed a moral position per se, but linking this position with the defense of particular interests is problematic. I think that the usefulness of Amadae’s book (and of Mirowski’s for that matter) is that it presents a strong reading that people might subsequently want to qualify a bit. And of course, the presence of such strong theses are vital for the development of the discipline.

  6. The link between late modern economics and its cultural consequence is not merely idealogical. The literature on Social Studies of Finance stresses that finance, and I think other kinds of economics can be included too, is a material practice making use of computers, calculating algorithms, tables, graphs. The prescribed use of these objects creates “calculating agencies” as the Ecole de Mines crowd has wanted to call it, but which Phil and Donna Haraway I believe would call cyborgs. I think this helps explain how economics can be consequential without being culturally authoritative. You don’t need to know where a computer routine came from, you don’t need to TRUST economics once the package is sealed, the black box closed.

    1. Damn, that looks like it was a good conference… I’m only up in DC, wish I’d known about it!

      The amorality/hidden morality of models is a key problem, and also an old one. It was a favorite weapon in the Marxist arsenal, for instance. Therefore, it’s important to figure out how these discussions played out in detail, rather than in just broad outline.

      Those who simply revive the argument in one way or another will tend to feel that the argument was closed prematurely, which is why one of several possible aspects of context (usually having to do with the Cold War) must be invoked to explain its closure, and the rise of a dominant paradigm.

      This argument, I think, does indeed feed fairly nicely into what Don MacKenzie (speaking of Social Studies of Finance) calls the “performativity” of markets, wherein the intellectual and moral content of the models actually become the reality by following the models’ prescriptions of rational action (or, following MacKenzie’s argument, the models’ identification of opportunities for arbitrage).

      While it’s clear that this is part of the story, though, it’s looking more and more as though the deeper arguments were not simply swept under the rug as powerful new modeling programs were built. Notably, the tension between optimization and behavioral modeling—or between OR and economics, or between performativity and descriptive science, or, as Beatrice pointed out a few weeks ago, between the normative and positive—is looking to be a far from straightforward historical question. It is most certainly one that does not break down along neat lines such as between institutional and neoclassical camps, or between Keynesians and the Cowles crowd. And that’s just on the theory side—never mind policy-oriented economics!

      These problems look to me like the beginning of an exciting and important set of historical questions—ones that your conference concerning the relationship between economics and bordering social sciences was perfectly situated to address. I’m looking forward to the rundown!

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