Friday, April 13, 2012

Yet Another Example of Why Economics is Not a Science

From Exponential Economist Meets Finite Physicist:
The evening’s after-dinner keynote speech began, so we had to shelve the conversation. Reflecting on it, I kept thinking, “This should not have happened. A prominent economist should not have to walk back statements about the fundamental nature of growth when talking to a scientist with no formal economics training.” But as the evening progressed, the original space in which the economist roamed got painted smaller and smaller.
First, he had to acknowledge that energy may see physical limits. I don’t think that was part of his initial virtual mansion.
Next, the efficiency argument had to shift away from straight-up improvements to transformational technologies. Virtual reality played a prominent role in this line of argument.
Finally, even having accepted the limits to energy growth, he initially believed this would prove to be of little consequence to the greater economy. But he had to ultimately admit to a floor on energy price and therefore an end to traditional growth in GDP—against a backdrop fixed energy.
I got the sense that this economist’s view on growth met some serious challenges during the course of the meal. Maybe he was not putting forth the most coherent arguments that he could have made. But he was very sharp and by all measures seemed to be at the top of his game. I choose to interpret the episode as illuminating a blind spot in traditional economic thinking. There is too little acknowledgement of physical limits, and even the non-compliant nature of humans, who may make choices we might think to be irrational—just to remain independent and unencumbered.
A failure to consider, or even acknowledge fundamental physical laws demonstrates that what passes for "mainstream" economics is not a science, but an ideology, at best, and a joke, at worst.    (Neither is Marxist economics a science--predetermination was proven to be a fallacy long ago.)

Perhaps, economics could become a real science, as the author acknowledges later in the text, but it isn't there yet.

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