Saturday, January 26, 2008

On What Non-Economists Have Never Wanted to Accept and Economists Were Always Afraid to Tell

Freud and Marx

I like Freud a lot. I have read some books of him. He is so witty, deep, intuitive and revealing. Each paragraph by him I read, it is a little piece of truth that becomes revealed. And it is not just some truth: it is the truth about human behavior.

But then... my psychologist friends tell me: Freud was not scientific enough, and this is not to say he was not scientific at all; he is totally outdated, “modern” psychology doesn’t need him; indeed, he was most of the times wrong. Finally, my psychologist friends say, he was totally limited by the prejudices of the epoque.

And how do I react to all these anti-Freudian assertions? I accept them, and I believe on them. Why? Well, because I am not a psychologist, I have never studied psychology, I have never attended a course of it. The arguments I can use to defend my prince would most probably be based more on my ignorance than on anything else.

Still, how wonderful it is to read Freud! Still, how incredibly real and truthful to me everything he wrote is! And still, how practical (yes, practical) those lessons are! Not to say how well written, how interesting and, of course, how spicy!

In the other direction, I have many friends and, (used to) see on the television, and I read everyday people that defend Marx, defend marxist ideas and defend ideas also defended by Marx, sometimes without knowing how Marx was important to diffuse them and to make them live till our time. And these people believe they understand economics because they have read Marx or, more often than not, have learnt or absorbed his ideas without ever reading him. And usually they act and demand from and criticize others, specially politicians, based on that belief.

It is then that I tell them that Marx was not scientific, he was actually much against the spirit of science (science as we see it nowadays), that what he wrote was going back to problems that had already been solved before him, that he was not only outdated in terms of ideas but also in terms of history and actual facts. (Actually, he was not that original either). Finally, that most of what he wrote was based on just wrong ideas and most of his conclusions (on the positive part of his writings) are hopelessly wrong. And that his normative assertions based on positive wrong conclusions couldn’t be but biased and counterproductive.

And how people react to this? They say that mainstream economics is a politically driven orthodoxy aiming at defending the capitalists, they say mainstream economics is a flawed science, they say it is not even a science as it uses too much mathematics for explaining the “chaos” of social interaction, they say it assumes people are rational and everybody knows nobody is rational, I am not rational, and so on.

And this behavior leaves me astonished! People might feel really interested by medical themes, people get a lot interested by politics, people might be fond of planets and stars, people might enjoy the history of the great battles, people might even have seen all American shows about lawyers, judges and have already pre-ordered all the present and future dvds of this district attorney Shark thing,... But in all these and other cases, people in general won’t say they are doctors and political scientists and astronomers or historians or lawyers or... unless they really are!

But when it comes to economics, everybody is a specialist and such a great specialist, the kind that is actually above that so-called thing of... what’s its name anyway? Ah! standard economic science.

Why is that? I mean, WHY? And why is that, thinking how difficult economics can be for the lay person when compared to the other social sciences. Well, I have some explanations.

The more or less evident explanation is that there is nothing so directly, immediately and, more importantly, always presently important to the real lives of real people than economics. Of course, there are health concerns, and concerns of the heart, but they don’t seem to be so all time, every instant present. Take health concerns: of course I am concerned about my health, but fortunately, for most of people, at least until a certain age, it is not an omnipresent concern. Heart matters: it is the same: for most people and for the most time, people are not concerned about that (and if they are it is because they’re teenagers, poets or maniacs...).

But now, economics: people wait for the day they get paid; people go spend their money and complain how prices are going up; people wait for the sales; people complain about taxes, health and education systems; (some) people get concerned about unemployment rates; people hate the perspective of low economic growth; people demand higher wages; people have an oppinion on immigration and foreign products; people get excited about stock market booms and crashes; people worry with their mortgage interest rates going up. And so on and on. Also, most themes discussed in newspapers are mainly economic or have economic content.

Economic matters are clearly omnipresent and they are as much or almost as sensitive as health and heart matters.

So, how come we don’t understand about the most common, most present and extreme sensitive matter of our lives? We’re all economists, of course! I accept I am not an historian. After all, the World War II was really far ago, not to mention World War I and, imagine!, the Peloponnesian War! What about being a doctor? Well, I don’t care much for being a doctor because people that care too much about their own health die young (and people who care too much about others’ health die younger). But don’t tell me I am not a specialist in MY money, don’t tell me I am not an expert on government matters because they only do what they do because of the taxes I (with a big “I”) pay. And don’t tell me about inflation and productivity and abstract things with which those academics not living in real world amuse themselves so much when it comes to the money I want and the money I deserve! Indeed, we are all economists.

Next to this explanation, there is the legitimacy argument. In democracies, people have the right to take part on the country’s decision making process. Some of the most important issues to be decided are mainly economic. And it would of course be antidemocratic to push away people from the democratic process because they are not specialists. But of course they aren’t (or of course they are, see the previous paragraph) but still sovereignty belongs to people.

Another interesting explanation is that ideology is a bit like religion, people choose it at their will (and the will of their parents and their circumstance) and economics is an extremely important part of ideology. Basically, ideologies incorporate opinions about economics that are not necessarily based on scientific economics, they can simply be based in, say, Marx or some other non-economist. And once someone adopts an ideology and learns how to defend its doctrine, that someone becomes expert in some economic opinions that might be, let’s put it simply, totally wrong. But since ideology is like religion, i.e., it is not a search for the truth, but only for the truth we like, a person that adopts an ideology doesn’t care much to check the scientific validity of its economic doctrine.

If someone chooses an ideology on ethic grounds or, say, on its appeal to justice, well, that’s already really nice in my opinion. But I believe most people might choose an ideology based on their selfish interests and aversion to risk (the more “social” a ideology is, the more based on selfish aversion to risk it is; and what is the origin of interests and risk aversion? is this origin so easy to locate?).

And in this case of selfish ideology choice, it is of course undesirable to know the truth: the truth will expose the selfishness, it will expose the utopy and the inoperability of an ideology. Thus, it is all better to keep true economists aside. Only OUR economic science can reveal the truth (otherwise, the truth of our interests will be revealed instead).

The fourth reason why people so much despise economic science and professional economists is that social sciences are fun whether one is a specialist or not. People talk and get interested about the subjects studied by them. And it is really irritating when our opinion is attacked not by a different opinion but by a self-proclaimed scientific law or truth. We feel we are playing in a lower league! And that’s what economists are so keen on doing.

For instance, in the case of historical matters or, specially, in political matters, even specialists will propose just their opinions, not a law of nature, much less the truth. The lack of mathematics and more importantly the lack of experimentation (and the inexistence of simulation techniques) in all social sciences but economics allow far more for the importance of the opinion. Now when it comes to economics, there are laws, there are stylized facts, there are theories that have been prooved right by many empirical studies for specific countries, then for groups of countries, then for groups of groups of countries and the world.

Thus, one gives his/her economic opinion and suddenly a all truthful theory is splashed against his/her forehead by a professional economist. One tells his/her mind, and gets a scientific definitive refutal. The discussion is closed. And it gets really irritating to talk about things when that happens. Economists cut short the pleasure of freely stating and defending our own opinions. And that is ultimately extremely boring (for the non-specialists).

And it is not only that. It is also that sometimes economics go against intuition and, what is even more irritating, economic truth goes against intuition in many of those sensitive matters where fairness plays the most important role. The classical example is house rent controls but so many others exist. Of course, the infamous infinitely hated example of the effect of minimum wages on unemployment rates. People have the greatest contempt for economists not only because they never have just opinions but always the truth itself but also because sometimes the truth hurts our deep intuition about how a fair world should be.

When one thinks about all of this, then psychology seems almost an inoffensive science. It is okay to say this or that great psychologist was right or wrong, after all, his or her ideas don’t touch my wallet. It is okay to accept we don’t have scientific legitimacy in psychology matters, after all it is not psychologists who decide to increase taxes.

However, just like the ones who really did read Marx, and have found him extremely appealing and, indeed, a fairly interesting writer and, because of that or also because of that, have become themselves marxists, I will keep enjoying reading my beloved Freud and feel very Freudean and imagine I might have something interesting to say about the matters of human behaviour.

And that might end up being not only interesting, but truthful.


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