Blood circulation and economics?
The Economist’s latest issue has a review of Money, Blood and Revolution: How Darwin and the doctor of King Charles I could turn economics into a science, by George Cooper. The review intrigued me enough to take the morning of my last weekday of Spring Break and devote it to purchasing the Kindle version of the book and reading the crucial chapters. These are the chapters where Cooper discusses his view of economics and what ails it and then proposes a new conceptual framework for economics
I am disappointed. I spent my time investigating this book because I agree that economics needs change. I also liked that the author does not simply complain that economics needs changing, but has a proposal to make. However, the proposal was disappointingly vague. I started suspecting it would be so before I reached the proposal: the review does mention that economists would be unlikely to pay attention to it because it is not presented precisely enough, but, also, the description of economics that Cooper offers before coming to his proposal shows clearly that he does not know enough of the field he is criticizing.
To give an example of the gaps in Cooper’s knowledge, he says in section 7.3 that
The problem for mainstream economic theory is that the experimental evidence suggests that the way we choose to arrange our societies has enormous influence on how our economies actually work. However, there is simply no coherent way to integrate this observation into the neoclassical paradigm…
Really? Cooper does not seem to be aware of mechanism design theory, or its offspring that is making tremendous strides lately, market design. There is a lot riding on his usage of “coherent”, without which his ignorance of these fields would be utterly condemning of his diagnosis here.
A little later in the same section, Cooper complains that
Given the empirical evidence, it is unscientific not to at least consider whether democracy and government play a role in the promotion of economic growth.
Really? I have to exclaim again. Cooper has apparently not heard of the work of Acemoglu and Robinson, not to mention a legion of other mainstream economists who have examined exactly this question. Oh yes, and let’s throw in all of modern institutional economics, to boot. Cooper has a lot to learn, it appears.
Here is one more piece of evidence on the partial nature of Cooper’s knowledge of economics, as revealed in this book. In the entirety of section 7.5 he conflates all of mainstream economics with DSGE (dynamic stochastic general equilibrium) models. These models are indeed used in mainstream macroeconomics, but they are not the entirety of mainstream macroeconomics and of course macroeconomics is not ALL of economics.
And what about Cooper’s discussion in section 8.1 of competition, in the Darwinian sense, as opposed to individual maximization as in microeconomic theory. Methinks someone ought to show Robert Frank’s works to Cooper, not to mention the entire evolutionary game theory literature.
So, do I care for the proposal for reform that Cooper advances? I would, if he had told me how to formulate a model or two of the economy. He does not do so in this book. Instead, he gives a vague story about a flow that resembles (at least in Cooper’s mind) the circulation of blood in a body (hence the title of the book and the heading of this post). This flow is created by the social mobility that democracy enables, Cooper says. Yet, it is not clear what flows here, although I suspect it is money. Cooper does talk about income inequality in this connection. I suspect more serious thinkers, concerned with income inequality and the nature of contemporary economists (as am I), may be able yet to build on the vague suggestions of Cooper. Maybe Thomas Piketty, now that he has finished the labor of his upcoming (in English) magnum opus (which I am eager to read when it arrives in my Kindle in a few days). Maybe an economist well-versed in political economy, Acemoglu-style, can bring Cooper’s project to fruition. Maybe someone else. It seems certain to me, though, that, by giving us nothing precise to build on, Cooper has not advanced his self-professed goal to make economics more scientific.
Cooper is diagnosing the sickness of economics without having examined all parts of the patient, and it’s as though he’s showing us a bottle of colored liquid that supposedly has the needed medicine, but he does not explain the medicine’s formulation or how it is going to improve what he thinks is the entirety of the economic theory patient. If the medicine is ever made and administered and gets to improve some part of economics, I will be glad. But it would take someone with the theoretical chops needed to do the job that Cooper has only started. And the medicine may prove to be sugared water.