The End of Certainty in Economics

The story of the sciences in the twentieth Century is one of a steady loss of certainty. Much of what was real and machine-like and objective and determinate at the start of the century, by mid-century was a phantom, unpredictable, subjective and indeterminate. What had defined science at the start of the century—its power to predict, its clear subject/object distinction—no longer defined it at the end. In the century just past, science after science lost its innocence. Science after science grew up. What then of economics? Is economics a science? I believe it is. It is a body of well-reasoned knowledge. Yet until the last few years it has maintained its certainty, it has escaped any loss of innocence. And so we must ask: Is its object of study, the economy, inherently free of uncertainties and indeterminacies? Or is economics in the process of losing its innocence and thereby joining the other sciences of this century? I believe the latter. In fact, there are indications everywhere these days in economics that the discipline is losing its rigid sense of determinism, that the long dominance of positivist thinking is weakening, and that economics is opening itself to a less mechanistic, more organic approach. In this chapter I will show my own version of this loss of certainty. I will argue that there are major pockets of uncertainty in the economy. I will show that the clear subject/object distinction in the economics often blurs. I will show that the economy is not a gigantic machine, but a construct of its agents. These are not “anomalies” to be feared, they are natural properties of the economy, and if we accept them, we will have a stronger, not a weaker science.