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The messy methods of macroeconomics
December 2017 / January 2018


(Illustration by Michael Daley)


Acrobats come together in troupes, churchgoers in congregations and witches in covens, but what about economists? What is the right collective noun for practitioners of the dismal science?

The question is not as trivial as it seems. The way in which groups of people characterise themselves can help others understand their methods and motives. For over 30 years I have been a loyal and appreciative member of the Society of Business Economists. But the powers that be have proposed that its name be changed to the Society of Professional Economists. I am therefore faced with an unexpected and urgent intellectual challenge. Do I belong to a profession?

Dictionaries see the term “profession” as applying to a paid occupation, where qualification involves prolonged training and a formal testing of skills. The testing of skills implies that a profession shares a body of expertise and that this body of expertise is objective. It is unacceptable if the member of a profession, when asked for advice, lapses into “in my opinion” or “in our view”. Artists and writers can be as subjective as they please, but economists must never use phrases like “on the one hand . . . on the other hand . . . on balance, I think . . .” Language of that kind is unsound and irresponsible, and — above all — unprofessional.

Dear reader, you may chuckle. Are not groups of economists defined by the jokes that non-economists tell about them? And are not many of these jokes concerned with economists’ inability to agree among themselves about anything?

My argument here will be that the humour is largely, although far from entirely, misguided. I will suggest that much of economics is (fairly) uncontroversial. With goodwill and common sense, certain ideas and principles could be brought together in a professional code. The trouble arises because these parts of economics are of less interest to non-economists than other parts that are riven by contention and faction-fighting. Because non-economists particularly want answers in the disputed areas of the subject, they have an exaggerated impression of disunity. All the same, economists have failed to resolve such fundamental issues and are engaged in so much squabbling that they do not constitute a profession.

The (fairly) uncontroversial parts of economics relate to the determination of the prices and quantities of individual products, and of the factors of production (of labour, capital, land and raw materials) that are needed to make them. In a word, they relate to “microeconomics”. In the late 19th century, leading thinkers — such as William Jevons and Alfred Marshall in England, and Carl Menger in Vienna — proposed that the conditions of demand and supply could be analysed separately. Their technical expositions invariably appealed to a geometry of curves on a plane, with quantity on one axis and price on the other. An equilibrium could be defined when the curves intersected, at which point demand and supply would be equal, and quantity and price determined. 
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