Economics may be dismal, but is it a science?

http://www.theguardian.com/business/2015/oct/14/economics-may-be-dismal-but-is-it-a-science

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This assertion that economics is not a science (Joris Luyendijk, Opinion, 12 October) was verified by the article preceding it (Money machine didn’t work – so keep it switched on). This apparently is the only advice that the IMF can give in these unprecedented times, where debt is the only growth industry and negative interest rates are being considered as a means of not solving but perpetuating this uneconomic, unsustainable situation.

I am a biologist, a very expansive science, and as such I have an understanding of energy transfer, production and growth, self-sustaining systems, feedback mechanisms, carrying capacities, natural selection and evolution. Unfortunately, economists do not have such a broad understanding of the natural world in which they operate. They also seem to be woefully unaware that the functioning of any activity involving humans, such as money-dealing, cannot be described by a mathematical formula but will be determined by the behaviour and mindset of the people doing the deals.

Removing regulations that governed money-dealing obviously encouraged those involved to behave unlawfully. The great god market forces has become a sentient being that feels excited or depressed and whose behaviour has been manipulated by corporate practices and the criminally minded. The “need” to have increased economic growth of any kind (increased consumer activity and indebtedness, for instance) is obviously unsustainable. As any biologist knows, unregulated growth is cancerous and a danger to someone’s health.Julia BirdMelton Constable, Norfolk

• Joris Luyendijk’s suggestion that the Nobel prize in economics should become the Nobel prize in social sciences is not without merit. However, his argument is based on a false dichotomy between exact sciences and social sciences. Are meteorology, volcanology, neuroscience and cognitive psychology exact sciences? If we decide that they are not, then it follows from Luyendijk that we must regard them as social sciences.

The problem with the dominant paradigm within economics is not that it uses modelling or that it rarely uses qualitative methodologies. (Increasingly, non-exact sciences, including cognitive psychology and meteorology, use modelling.) Instead, it is that economists’ models are based on assumptions that are not psychologically realistic and that those assumptions are accepted without being rigorously tested using both quantitative and qualitative methodologies. Researchers in behavioural economics and behavioural finance are working to rectify this situation. However, some of their conclusions remain tentative and economists have not yet been able to incorporate them into the sorts of models needed for producing the forecasts that the modern world requires.Nigel HarveyProfessor of judgment and decision research, Department of experimental psychology, University College London

• At last, in Angus Deaton (Report, 13 October), the Nobel prize committee has awarded the economics prize to someone who describes the world “as it is” rather than how they would like it to be. But far from remaining a “dismal science when it comes to prediction”, at least 13 high-profile economists, including Wynne Godley, Nouriel Roubini, Steve Keen, Dean Baker and Ann Pettifor forecast the 2008 crash, yet they are largely ignored by policymakers today. Ideological and political expediency, not economics that works, drive UK economic policy. So inflicting poverty on many children by doing away with child tax credits before a higher minimum wage kicks in is more than “lapsing into a vice” and should tell the Guardian’s leader writer (13 October) that it’s not disinterest on Osborne’s part that stops him seeing the evidence.David MurrayWallington, Surrey

• Ha-Joon Chang (Why it’s OK to ‘live beyond our means’, 14 October) scorns what he sees as the economic illiteracy of balanced budgets, let alone surpluses. If you borrow to invest, he says, your future worth will more than repay the borrowing. When does this nirvana arrive? Since the 1950s (at least), public policy has involved huge quantities of investment borrowing, and the national debt has rarely done anything but increase. Now it is over £11tn and 9% of annual government expenditure goes on interest payments, a gigantic figure. Borrowing to invest is still borrowing, and increases further your total debt and annual interest payments. It is all very well to give the example of a student borrowing to gain a degree at the start of a career, but if that borrowing is then followed by more borrowing to improve other aspects of the situation, and then more borrowing, never ceasing, then you begin to detect the limits of such a policy.Roger SchafirLondon

• In a stagnant economy, borrowing tends to get distributed to generate economic activity: a substitute for earned income that does not create sustainable additional wealth. Infrastructure that is subsequently sold to fund a trade deficit does not create wealth. Quantitative easing is an example of economic activity that fails to generate such additional wealth. QE for people is a political, not an economic, policy.Martin LondonHenllan, Denbighshire