Economics: The Culture of a Controversial Science

Published by EH.NET (March 2000)

Melvin W. Reder, Economics: The Culture of a Controversial Science

.

Chicago: University of Chicago Press, 1999. xii + 384 pp., $35.00 (cloth),

ISBN: 0-226-70609-5.

Reviewed for EH.Net by Ross B. Emmett, Department of Economics, Augustana

University College, Canada.

In the 1980s, it became common among management types to speak of

“corporate culture” and its importance in understanding the work of an

organization. Business analysts began to examine the institutional framework

and practices of an organization in order to understand the way its

underlying values were carried out. While “the bottom line” obviously remained

important, the corporate culture gurus showed that every organization pursues

profitability through different practices and institutional structures.

“Successful” cultures were

those which were able to create institutional structures which brought the

practices of the organization’s members in line with the organization’s overall

goals,

including profitability.

Melvin Reder has applied the same insight to the discipline of economics in

this engaging book. For the scientist, “predictive accuracy” could serve as a

proxy for the bottom line. Traditionally, the potential for prediction and

control was the hallmark of a “true” science, and economics was either praised

or vilified for its ability/failure to live up to that potential. Reder shows

that the economics discipline, as an organization, has a set of

institutionalized structures that shape the practices of its members. While

these structures are possibly intended to assist the predictive accuracy of

outcomes, they also create a “culture” in which adherence to a paradigm or the

pursuit of status may be more important than prediction and control. Near the

end of the book, Reder addresses the question of economics’

“success.” If its culture includes structures that impede prediction and

control, what good is it to society? The tone of much of the book is carried in

his answer, which is a paraphrase of Bob Solow: “I know the wheel is crooked,

but economics is still the best game

in town” (p. 362).

The notion of “corporate culture” had another important role in the management

literature: it suggested that the student of organizational behavior needed to

act like the student of culture. The management specialist, in other words,

needed to become an ethnographer. To understand the success of an organization,

one needed to get “inside” it, to see how it functioned by its own rules and

standards, rather than judge it solely by external criteria (even

profitability). Here, too, Reder

follows the organizational behaviorist. Part I explores the notion of culture

in science, and several of the chapters in other parts of the book provide an

inside guide to the practices of economists. Those who operate within the

structures and practices

of academia will find Reder’s exploration familiar: editorial prescriptions,

the quest for status among the elite of a profession, the role of prizes and

honors, and the requirements of tenure and promotion. In fact, Reder’s analysis

of the culture of economics sounds suspiciously like the culture of American

universities: a fact he recognizes near the beginning of the book, but focuses

little attention on

(we will return to this in a moment).

The use of the term “controversial” in the sub-title of the

book reveals another of Reder’s themes. Some would argue, he claims, that the

institutional structures and practices of economics render it unscientific.

In Reder’s view, they should instead simply remind us of the limitations of

economic science (Reder’s

argument here is very similar to that developed by one of his predecessors at

the University of Chicago, Frank Knight). The notion that economics’ scientific

reach is limited makes its claim to be a science controversial, giving Reder

his title. But Reder’s argument about the scientific status of economics seems

to falter here. One could say that the focus on organizational culture was

intended to remind us that organizations are artifices, and that looking at the

culture of economics reminds us that it,

too, is a human creation. But “science” is not supposed to be a human

creation. Instead, it is created by adherence to a particular method, or by

observation of reality (in other words, science’s creator —

or at least its judge — lies outside human artifice).

The tension between his emphasis on economics as a form of human activity and

the claim that economics is still a science permeates Reder’s book.

Recognizing this tension helps to explain a number of unusual features to the

book. For example, the

majority of the book (chapters 3 to 10) is an account of the scientific

paradigms of economics (yes, Kuhn plays a prominent role in the book) for

non-economists. And there is the obligatory chapter on the relation of the

dominant scientific paradigm (Rat ional Allocation Paradigm – RAP for short –

or what is commonly called neoclassical economics) to the ideology of laissez

faire. Investigation of the “culture” of economics is surprisingly slim

compared to the amount of space devoted to exposition of the

scientific side of economics. As already indicated, most of the discussion of

the culture of the economics disciplines depends upon the reader’s prior

appreciation for American academic life. There is no ethnographic examination

of economists at work,

no

attempt to explain the human drama of RAP’s rise to dominance, and only a

glance at the roles of graduate education, foundation funding and non-North

American economists in the discipline.

In other words, Reder’s book is a long way from a “science studies”

approach to economics, and despite his use of “culture,” is still rooted in the

philosophy of science approaches common to the 1970s and 1980s.

Nevertheless, in a discipline that still pursues the mantle of Science,

Reder has provided an account that may help readers admit that economic

science is fundamentally a human activity.

Ross B. Emmett is editor of The Selected Essays of Frank H. Knight (two

volumes), recently published by the University of Chicago Press.