Economy Is Not a Science

Speculations by Stefan Stenudd

On Saturday, December 10, this year's (2011) Nobel Prize laureates will receive their prizes from the Swedish king. Among those are two winners of the Economy Prize, which is not a real Nobel Prize – fittingly, since it's not a real science.

In the testament of Alfred Nobel, a number of prizes were specified. None in economics, although Nobel himself sure knew how to make money. That prize was introduced by the Bank of Sweden in 1969. I doubt that any other institution could get away with inventing its own Nobel Prize, and have it accepted among the others. Money sure is power.

The Bank of Sweden calls it a prize in economic sciences, but that can definitely be discussed. Through the years it has mainly been propaganda for stern capitalist perspectives and convictions. For example, Milton Friedman got the prize in 1976.

What has the economic “science” at all accomplished? Has it found laws for how the economy works, so that they can predict future economic events? No. Have they been able to perform repeated experiments with foreseeable results? No. Do they agree on fundamentals of how the economy works in society or parts thereof? No.

What they do is to present pure theories, one after the other, and fight for them to be applied to society and its economy, although they can't prove what will be the outcome. It's like treating a disease with a medicine never before tested.

Actually, I am sure that the so called science of economy is partly responsible for the financial world behaving like a sinus curve run amok. When this or that theory is applied to society, that's when it starts to go downhill. And the countermeasures are equally unsure.

I think they should skip that prize, at least until economy is able to prove that it has achieved scientific solidity. By the way, my opinion on psychology is similar, but it has no Nobel Prize.

Thomas J. Sargent and Christopher A. Sims got their prize "for their empirical research on cause and effect in the macroeconomy." Good luck with that. Would Aristotle buy it?

Stefan Stenudd
December 9, 2011