The Mises Institute monthly, free with membership
Volume 14, Number 9
In a state-funded education system, bad ideas live longer than
they would in a free market. That's the best explanation for the
staying power of the two opposing errors of our time: nihilism
and pseudo-omniscience in the social sciences.
Nihilism comes in the form of postmodernism, a pretentious
body of academic blather that has invaded almost all academic
fields over the last 15 years. Students despise it and good
faculty fear it, while tuition-paying parents know virtually
nothing about it.
Yet year after year, postmodernism grows like a cancer, even
within economics. Its ranks swell with careerists anxious for
tenure, promotions, and financial stability at taxpayer expense.
If you trounce traditional logic and values hard enough, and cast
your argument in stupefying complexities tinged with leftist
politics, you'll eventually win the respect of your colleagues.
In class after class, the postmodern message is the same: what
we call truth is wholly subjective, what we call science is
merely the momentary professional consensus, and what we call
reality is a fiction made up to sooth our psychological need for
order in the universe.
Postmodern politics are egalitarian socialist, and its
exponents are not embarrassed by this fact. But hasn't socialism
failed in reality? Sure. But the question implies we can learn
something from reality or that it exists at all, propositions
which postmodernists are inclined to deny.
Murray N. Rothbard snowed on their picnic several years ago in
a rousing article called "The Hermeneutical Invasion of
Philosophy and Economics." These people deserve "scorn and
dismissal," he said. "Unfortunately, they do not often receive
such treatment in a world in which all too many intellectuals
seem to have lost their built-in ability to detect pretentious
The problem is that postmodernists are moving targets and thus
immune from refutation. For example, no postmodernist admits to
being a relativist. To them, all critics have misunderstood them,
all negative reviewers have misread the text, and all opponents
are blinded by ill-will. Nothing is certain, they say, except
that they are right and everyone else is wrong.
How to deal with them? If refutations don't work, there's
always the gibe. For instance, Schopenhauer once called Hegel "a
flat-headed, insipid, nauseating, illiterate charlatan, who
reached the pinnacle of audacity in scribbling together and
dishing up the craziest mystifying nonsense." But his comment did
nothing to keep the Hegelians at bay.
What, then, to do? In a stroke of genius, a physicist named
Alan Sokal at New York University wrote a parody of a postmodern
treatise. He strung together the nuttiest quotations from the
postmodern pantheon, sauntering from quantum physics to feminism
to the evils of capitalism, and concluding that "physical
'reality' is at bottom a social and linguistic construct."
Sokal then dressed his masterpiece up in voluminous footnotes,
goofy words not found in any dictionary, and vagaries about
"flux" and "interconnectedness." The result was "Transgressing
the Boundaries: Toward a Transformative Hermeneutics of Quantum
Sokal sent his manuscript to a prestigious journal called
Social Text, the flagship of postmodernism. Seven
editors evaluated it, and insisted it be featured in their next
issue. When it was, Sokal revealed the hoax in Lingua
Franca, and became an overnight sensation.
The Social Text editors cried fraud, failing to
realize that Sokal had not committed it, but exposed it. Editor
Andrew Ross told Katha Pollitt of The Nation that Sokal
might have written his article seriously, and only now claimed it
as a parody. But fed-up students and academics the world over
cheered Sokal in the academic equivalent of a ticker-tape parade.
Sadly, however, we're not done with postmodernism. So long as
intellectuals find this nonsense profitable, and have captive
audiences for their destructive message, and logic is denounced
as reactionary, it will, like socialism itself, persist.
So it is with the second great error of our time, a special
problem within economics: mathematical witchdoctors who claim to
be able to predict the future. In Congress, this error shows up
the form of budget projections and productivity estimates.
Practitioners show off their supercomputers the way Olympic
weightlifters flex their muscles, and then fudge the numbers
until the politicians are pleased.
But all forecasting from government is notoriously incorrect.
As Rothbard noted, governments "seem to have great difficulties
in forecasting their own spending, much less their own incomes,
let alone the incomes or spending of any else." The result of
government economic forecasting is a history of hilarious
blunders and errors, which somehow don't deter D.C. palm-readers.
In academia, the problem is more complex. Beginning in the
1950s, positivists threw out the idea that economics follows a
logic of cause and effect. In the old days, for example, everyone
knew that rent controls would lead to a housing shortage. Under
positivism, however, this proposition has to be "tested" by
correlating historical data, thus making all claims subject to
"Science is prediction," said the motto of the econometric
society, but no one said the prediction had to be right. They
hardly ever are. Economics deals with real people who act and
choose in ways that can never be known in advance. If economists
could really predict the future, they wouldn't be teaching
classes; they'd be making billions in stock futures.
Denying economic law can have horrible political consequences.
When two left-wing economists recently said that raising the
minimum wage can cause overall wages to rise, they should have
been ignored. The minimum wage is a price floor; it will always
price some people out of the employment market. But with
positivism, every claim based on "data," real or imagined, must
be taken seriously.
This preposterous study was then trotted out to show that at
least some economists think the minimum wage is great. But we
can't really say either way. We have to run the experiment on the
nation at large. And so Congress did: it raised the minimum wage.
The way to beat back statism masquerading as mathematical
science is not with supercomputers showing that free markets will
produce better results. That's the game the left would like us to
play. Everything is then reduced to our word against theirs, our
assumptions versus theirs, and the politicians arbitrate the
Ludwig von Mises exposed the errors inherent in the
pseudo-science of economic forecasting. Computers cannot predict
the future, any more than horoscopes and Tarot cards. What we
know about what tomorrow will look like is based on what we know
about cause and effect generally.
If the government adopts measures that intrude into the
economy, we will be poorer. Showing this truth through logic and
example makes a more powerful case than an econometric program
that fails more often than its succeeds. This strategy also has
the natural advantage of being hard-nosed, honest, and true.
The two great errors of our age are mirror images: that we can
know nothing about reality (postmodernism) and that we everything
about reality (positivist forecasting). The one great truth is
that society is constrained by unchangeable and universal laws of
cause and effect. Knowing those laws and applying them is the
essence of economics.
American intellectual life has been poisoned but by academics
who deny this. But for once we can take comfort in a version of
Keynes's one accurate prediction: in the long run, they'll all
Llewellyn H. Rockwell, Jr. is president and founder of the Ludwig von Mises Institute