Title: Economics as Religion: from Samuelson to Chicago and Beyond

Author: Robert H. Nelson

Publisher: The Pennsylvania State University Press

Date of Publication: 2001

pp. 378

ISBN: 0-271-02095-4

 

Review by Karl Widerquist

Karl@Widerquist.com

917-445-4744

 

            This book makes an extremely important criticism of economics, but it suffers from a too narrow and too poorly defined focus. According to the Preface, “Economists think of themselves as scientists, but as I will be arguing in this book, they are more like theologians.” The book is able to show some ways in which economics is like a religion, but not that it is more like religion than science.

            The book’s focus is too narrow because, although it makes a claim against all of the economics profession he discusses in depth only the Keynesian-neoclassical synthesis as exemplified by Samuelson’s textbook, Economics, and on the Chicago School of Economics. The first edition of Economics was released in 1948 and the Chicago School was past its height by the late 1970s. Why focus on this 30-year period out of the entire history of the discipline? The book briefly discusses the religious character of Keynesian theory, Marxism, and Smith’s Wealth of Nations, but it does not discuss whether Samuelson was following a religious tradition or breaking a scientific tradition of earlier influential economics texts by Marshall, Mill, Ricardo, and others. It does not mention whether alternative schools of economic thought, such as Austrian economics, Evolutionary economics, Marxian economics, Post Keynesian economics, or others, represent genuine scientific alternatives or whether they are simply competing religions. An overview of the religious nature of discipline as a whole at present and over time is not adequately examined, although it would be far more important than an in-depth discussion of the missteps of Friedman and Samuelson.

            The more important shortcoming of the book is its failure to define the difference between science and religion. It simply discusses characteristics that economics and religion have in common, which may be enough to claim that economics is like religion, but not to claim that economics is more like religion than anything else. If one wants to prove that humans are more like horses than primates (or protozoa) it is not enough to say that like horses humans have hair, two eyes, one nose, one mouth, and four extremities. One must also list the characteristics of primates and protozoa and examine what humans have in common with them, and then to make a full accounting of whether humans have more in common with one than the other. The book does not include a definition of what true science is, how it differs from religion, or whether social sciences can possibly be true science.

            A typical example, it describes Veblen’s view of economists as being a “new priesthood” that would be “motivated to serve the common good (as now revealed by science), much as priests of old had followed God’s commands (as revealed to them through biblical and other sources).” But we can play the analogy game with any discipline: Much as the black-robed priests of old would offer spiritual salvation from sin (by administering the ritual of the communion with wafers and wine), the white-robed doctors of today offer physical salvation from disease (by administering the ritual of inoculation with needles and vaccine). Immunology shares some characteristics with religion, but is this similarity enough to make immunology a religion and not a science? No, inoculation is not simply a ritual; it is a technique that has been shown by trial and error to effectively prevent disease, but it is not the role of this review to provide a list of the important characteristics of science. The closest the book comes to a definition of science is an interest in an accurate understanding of the work, but I imagine that any religious person would say that their religion provides an accurate understanding of the world.

            According to Nelson, economists share the following characteristics with religion: (1) They believe in fait by believing human history is drive by economic forces. (2) They believe in secular version of salvation because they believe material abundance, which progress can create will make people better human beings. (3) They assert the priestly authority of economists. (4) They believe in a value system about what is good for society, the gospel of efficiency. (5) They have faith in their value system and in the effectiveness of the methods practiced by the priestly class.

            Nelson does not discuss four important characteristics of religions that economics lacks: Belief in a higher power, belief in eternal life, the proscription of rituals for the lay, and an explanation of he origin and destiny of life and the universe. Biology, physics, and astronomy consider question of the origin and destiny of life or the universe. Is this similarity enough to make them religions? I don’t believe the subject matter of a discipline cannot determine whether it is a science or religion, only its approach. Even the question of whether the universe was created 4,000 years ago by a very powerful being can be a scientific hypothesis if the answer is sought in examining the evidence for that hypothesis, but again it is not the role of this review to define science.

            The first three characteristics that economics and religion share do not add up to serious indictment. Nelson seems to believe that no one can state the hypothesis that historical forces have a powerful influence on history without asserting a religious belief in fait. I don’t know whether free will or impersonal forces are more important in determining human history, but I think it is a question that lends itself to scientific examination. Similarly, Nelson defines a belief in secular salvation so broadly that almost any action aimed at improving the human condition is messianic to him. This view would seem to indict not only economics, but also all science and all human action as a quest for secular salvation. The priestly authority of economists is likewise a weak similarity between religion and economics. Not all religions have a priestly class; Protestant Christianity is hostile to the idea, but it is still a religion. When I go to an Italian restaurant, I defer to the authority of the cook as someone who knows more about making Eggplant Parmesan than I do, but Italian restaurants are still not religions. By definition, any profession has professionals with more technical knowledge of their field than nonprofessionals. But this does not make all professions religions or all professionals priests. If professionals use their authority to promote their value judgments, they are on dangerous ground, but simply having technical authority is not enough.

            The fourth and fifth commonalities are the books best points. It argues that the profession largely asks people to place their faith in the value system it promotes—the gospel of efficiency. Economists take it for granted that a policy that satisfies more people’s preferences without hurting anyone else is a Pareto improvement, and is therefore unequivocally worth doing. But many belief systems do not agree that satisfying material desires is inherently good. Economics cannot reach this result without making the value judgment that satisfying material preferences is necessarily good. This is no small value judgment when many of the world’s religions agree that avarice is evil.

            According to Nelson, economists make additional value judgments in how they select what is and is not included in cost benefit analysis. The cost of moving a factory from one city to another includes the material costs of workers who lose their jobs or relocate, but economists typically ignore the anger, stress, and fear that go along with these disruptions. These kinds of costs are hard to quantify, but to simply leave them out is to make the implicit value judgment that they do not matter. Similarly, the book criticizes Gary Becker for including benefits into a social equation such as the enjoyment addicts get from doing drugs and the enjoyment thieves get from the goods they steal. These are benefits to society as a whole as traditionally defined by economics, but they might not be benefits that are incorporated into the value system of policy-makers. To assert that they must be taken into account is to make a value judgment. Therefore, anyone who uses “the benefit to society as a whole” as the variable to be maximized cannot claim to be practicing value-free economics.

            To truly practice value-free economics would take a great revision of economics methods, but the book does not give an outline of what a truly scientific economics would be. It credits economists, such as Stiglitz, Coase, and North, for practicing better economics, but doesn’t discuss how to get values out of economics. It concludes that new institutional economists are better able to understand the causes of economic growth by examining the role of institutions and values in making a market economy work, but these are criticisms of the discipline’s scientific understanding of how the economy works, not of its value judgments. Nelson believes that development can best be increased if economists become the priests of a set of values that curb corruption and advance respect for property rights, as if he is not calling on economics to stop being a religion but to become a different religion. Perhaps value-free economics is not possible and the best solution is to for social scientists to state their value judgments and to examine the consequences of alternative value judgments, but any economist would do well to be aware of the values in economics pointed out in this book.