Yet, like most economists, I don’t view the study of economics as laden with ideology. Most of us agree with Keynes, who said: “The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique for thinking, which helps the possessor to draw correct conclusions.”
The slightly different formulation was that neo-classical economics is a toolbox, one with which you can attempt to unpick and analyse certain problems and questions. Certain assumptions are useful at certain times, at other times they need to be discarded and others take their place.
Rational expectations for example, the assumption that our views of the future are randomly, not structurally wrong.
In one sense this is a tautology: if we\’re trying to work out how people behave then we must indeed measure how they do, thus whether they should, logically, behave another way is a non-sequiteur.
In another sense this is an assumption that should be junked at important points: for example, when we\’re trying to work out whether humans are systematically wrong in their beliefs.
One example might be hyperbolic discounting: we don\’t place enough weight on matters far into the future according to some metric of what we *ought* to do. If you want to try and predict what people will do then you need to assume hyperbolic discounting. Even if you think it\’s wrong that people do this.
Another example might be the entirely stupid idea that politicians are in the game for the good of the people rather than for the good of politicians. The stroking of the ego that exercising power provides. We might know that politicians are venal liars but we still need to study psephology as if at least some part of the electorate is dumb enough to believe them.
A toolbox, one with the hammer, the screwdriver and the pliers, the skill in using the toolbox being knowing which tool to use and when.