In Bloomberg Viewpoint today there’s a pleasant article about economics by Noah Smith. In it he describes four schisms within the subject — and then makes his own! Here’s my response to him:
“Dear Mr Smith,
“I enjoyed reading your “Economics struggles to cope with reality” in the current Bloomberg. However, I found your own contribution to be just as opaque as the other four.
“What economics really ought to be — which it isn’t so far — is to be a science. If this were so then all theories, or models, or policies ought to bow down to the known laws of physics — the laws of thermodynamics among others — including the most irrefutable one of them all, Entropy, which is not doubted by a single scientist in the world.
“Entropy means — among many other things — that any system which needs additional energy to drive it will also seek — automatically — to shed as much energy a possible to the environment around. A consequence of this is that it will use as little energy as possible to drive the system itself. Richard Feynman spends a lot of time referring to this in several of his Lcctures as the Law of Least Effort. Mysterious though this is, which neither he nor any other physicist understands, this is what happens.
“This accords with the neoclassical economists’ view of the self-correcting economy. This means that, once you have designed a system to supply a product within a set of cultural, political, financial and mechanical constraints, you should then leave it alone as much as possible while it finds its own methods of achieving the objective of entropy, or least effort –whichever way you want to describe it.
“The other half of economics is, of course, human beings themselves. These have always been blamed for making economics a difficult subject. So it may be, but it doesn’t prevent many of the brightest young minds of today going deeply into evolutionary biology, including neurophysiology, genetics, anthropology and the like. Just like thermodynamics, I guess, this is also absent from the training of most economists.”