The difference between science and the humanities is that
science is based on mathematical dogmas which are precise and cannot be
violated whereas the humanities are not. For this reason the human race has
progressed at a relatively rapid pace in the sciences, but seems to have
stalled when it comes to the humanities. Why did this happen?
The truth is that science has yielded positive results
through the clear vision of equations whereas the humanities got lost looking
through a “haze of equations” as Paul Krugman put it. What happened here is
that in trying to inject science and mathematics into the humanities, some well
meaning academics and researchers created a problem that proved too big for the
humanities to handle. And they muddled the project in the process.
But now that America
has gone through a prolonged period of near stagnation with minimum growth, the
economists who used to pray at the altar of one economic dogma or another are
reconsidering their positions. They are beginning to see that each economy is a
unique case that must be dealt with uniquely as if it were an individual with
needs that cannot be fulfilled by a one-size-fits-all formula.
And in the same way that an individual needs to grow and avoid
falling ill, or be cured if he does, growth is the one ingredient that everyone
agrees must be generated for the economy to remain healthy. And the belated
realization is that growth and the cure – if needed – will happen when the
correct combination of procedures is applied to each economy.
In fact, this is what John H. Cochrane writes about in the
“Failure of Macroeconomics,” an article that also comes under the title: “When
models don't yield the spending policies they want, some Keynesians abandon
models – but not the spending.” It was published on July 3, 2014 in the Wall
Street Journal.
Aside from the politicking which occupies a good part of the
article, Cochrane makes a useful point near the end. Speaking of what is needed
to fix what afflicts the American economy at this time, he writes the
following: “[It] requires us to fix: our tax code, our cronyist regulatory
state, out welter of anticompetitive and anti-innovative protections,
education, immigration, social program disincentives, and so on. They require
'structural reform'”. Of course, not everyone will agree this is the proper or
even the full prescription, but they will all agree that a unique remedy must
be applied to this unique case.
This being the way that Cochrane has articulated his
position from the “Right” of the political spectrum; Joseph E. Stiglitz has
articulated the position of the “Left” in a different way. Writing: “Inequality
Is Not Inevitable,” an article that was published on June 28, 2014 in the New
York Times, he basically makes the point that ending inequality will cure the
illness now plaguing the American economy.
And to do that, he goes on to say the following: “We need
not just a new war on poverty but a war to protect the middle class.” This, in
itself, is not a novel idea but it is a comprehensive one. In this sense, it is
similar to the kind of remedies which are applied elsewhere in society with
great success.
Stiglitz tells in detail how this can be done: “Making
markets act like markets would be a good place to start. We must end the
rent-seeking society in which the wealthy obtain profits by manipulating the
system … The problem of inequality is not so much a matter of technical
economics. It is a problem of practical politics. Ensuring that those at the top
pay their fair share of taxes – ending the special privileges of the
speculators, corporations and the rich – is both pragmatic and fair.” In fact,
Joseph Stiglitz says a lot more than that, and reading his entire article would
be helpful.
In any case, when considering the two articles, the debate
takes on a different flavor from the days when one group held on to the idea
that all the problems of the economy can be solved by adhering dogmatically to
the theory of Milton Friedman, and the other group held on to the idea that the
problems can be solved by adhering to the theory of John Maynard Keynes. Now
both sides reject the dogma, and look for practical solutions.