Earlier, I discussed an article by Jonathan Newman discussing what he sees as scientism, specifically:
Scientism has many forms, one of which is the use of empirical methods to do economic science, or the dismissal of claims not based on experiment results that question other claims that are based on experiment results.
I had addressed the first condition of his scientism claim in my last blog post. Now, I’d like to address the other.
It is true that rejecting claims not based upon experiment results in favor of claims that are based on experiment results can lead to scientism. Note I said “can lead to scientism.” I outright reject Newman’s claim that the rejection is in and of itself scientism. If one gets empirical results that conflict with one’s model, one should ask “why?” Failure to ask this question is what leads to scientism, not the rejection thereof. Furthermore, failure to ask this question can lead one to avoid important insights.
Prior to the Marginal Revolution, the idea of a Labor Theory of Value dominated the economic world. Promoted by men like Adam Smith and David Ricardo, it was a key concept of economic theory. However, empirical and philosophical issues were coming about calling into question the LTV. Rather than simply dismissing these concerns as “scientism”, economists decided to look at the theory. Carl Menger (whose writings on the matter would become the foundation of the Austrian School of thought) was one of the main questioners. He developed the idea of diminishing marginal utility and people use rank-ordering of utility to make choices. William Jevons and Leon Walras also made major contributions to the theory which would eventually become foundational to modern economics.*
About a century later, Gordon Tullock took up Mundell’s challenge for economists to explore why empirically there so little deadweight loss from trade compared to what theory would predict. It’s a good thing Tullock did not simply dismiss the empirical evidence as “scientism,” but rather explored why the model was failing. His work lead to the creation of Public Choice economics (you can read in more detail the story here).
One of my professors, Garret Jones, likes to say it is important to see how models fail, if they fail in interesting ways. The models of the Labor Theory of Value and international trade failed in interesting ways. One gave us a new understanding of economics (the Marginal Revolution). They other gave us better insight in economic theory (Public Choice). I feel confident to say that, if we had simply ignored the concerns raised by empirical results as “scientism,” then the economics profession would be worse off for it.
*I must apologize for not giving Jevons and Walras the time they deserve here for their contributions to the Marginal Revolution; space constraints force me to economize.