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Economics as Economics

Last week I spent a day at the Perimeter Institute in Waterloo, Ontario. It’s a sort of institute for advanced study devoted to theoretical physics, and they had a meeting on The Economic Crisis and its Implications for The Science of Economics (sic).

One thing occurred to me in connection with trying to create a workable economic theory. Everyone is motivated by analogies: economics as physics, economics as collective phenomena with phase transitions (cellular automota, agent-based theories, which sounds sensible) economics as a gauge theory with a local invariance group (which sounds beautiful but maybe overambitious), economics as evolution, economics as biology, economics as computational neurology.

But if you look at new theories that burst on the world successfully — Darwin on the origin of species, Adam Smith on labor and value and organization, Freud on the subconscious, Marx on capital — they weren’t driven by analogies. They looked at the world with fresh eyes and made up an explanation for what they saw. Not everything is a metaphor.

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