©Deirdre Nansen McCloskey | COPYRIGHTED MATERIAL

Eureka Moments

by Deirdre McCloskey
(London) Times Higher Education Supplement,
forthcoming late Dec 2009 or early Jan 2010, one of a series by various hands
1969 words
Filed under editorials

Deirdre McCloskey teaches economics, history, English, and communication at the University of Illinois at Chicago. Her last book, with Stephen Ziliak, was The Cult of Statistical Significance (University of Michigan Press, 2008). Her latest, Bourgeois Dignity: Why Economics Can't Explain the Modern World, will be published this October by the University of Chicago Press.

Archimedes' discovery

My life, and I suppose yours, consists of a series of big and small moments of "I have found it!" My keys. My purse. My alleged scientific discoveries. My goal in life. My Anglican God. The notable feature of my own moments, though, is that a normally alert person would have experienced them years and years before I did. I seem to be stuck with an irritating naïveté: gosh, you mean that when the price of petrol goes up, motorists buy less?!! I've known economists and historians who had experienced all my eureka moments before they graduated from university. I stand in awe — though come to think of it, it must make for a boring life. Oh, yeah, once again: when profits are high, in a business or a corruption or an ecological niche, entry happens, as water finds its level. Yawn. Such a life in science would be like never losing your keys.

The first scientific eureka came when I was a sophomore at university, a very wise fool. As I started to learn the macho science of economics I suddenly realized that mere prudence, "rationality," rules. Wow: that's so much simpler than attending to human meanings. Hurrah. Therefore the sociologists, psychologists, anthropologists are idiots. I wrote a long paper attacking David McClelland's new book The Achieving Society (1961), and carried into graduate school and beyond the economist's conviction that the only virtue a social scientist needs to consider is prudence, and that we social engineers therefore can fine tune the economy. Bliss was it in that dawn to be alive,/ But to be young and a social engineer was very heaven! True, for academic 1966-67 in graduate school at Harvard I taught with another student, the anthropologist Renato Rosaldo, and had to face up for a moment to the ostensive proof that he and the books we read together (Tocqueville, Marx, Durkheim, Weber) were far from idiotic. And Vietnam showed me, as it did many of my generation, that a government can't fine tune even a war with much in the way of rational, economistic prudence.

That last reinforced a drift toward libertarian convictions, which the study of economics had anyway started. Economics turned me, as it has many natural lefties, into a rightie. I remember for example realizing suddenly while studying for my comprehensive examinations in graduate school that the merit of the system of capitalist prices is not that it is leftie-fair but that it gets stuff into the hands of those who value it most, as a rightie might wish. Holy cow! I had been educated as a Keynesian, but in suddenly grasping what many non-naïve people grasped the first time they read it in an elementary economics text I drifted towards the rightie "Chicago-School" of economics. In fact, I got a job teaching at that very Chicago, and stayed until 1980. It was quite a place for eureka moments in those days — fully a fifth of the economists who have received Nobel prizes got them from the work they did in the 1970s in Chicago's neighborhood of Hyde Park (where, as they say, you can't hide and you can't park). I recall grasping all of a sudden, for example, that the "monetary approach to the balance of payments" implies that Milton Friedman was entirely wrong about money, because the money supply under, say, the gold standard or crawling pegs is world-wide, not country-by-country. The height of my Chicago-School scientific eureka moments came from eating lunch every day with the economists at the Business School, two of whom (Merton Miller and Myron Scholes) got their glittering Nobels for devising market valuation, options trading, and all our woe. Their mathematics of portfolio balance, I realized one day, could be used to understand why medieval peasants in England scattered their holdings of land across the face of the village. I've found it!

But then tenured, age 35, I started doubting. I realized with a jolt that economists are fibbing when they say that they follow a positivist, hypothetico-deductive , method-of-science-I-learned-in-secondary-school. Partly the realization came from noting that when I put forward any proposition in Chicago-School economic-historical science (wholly correct, I assure you) I got from other economic scientists not counter-evidence but anti-Chicago-School ideology. I had already realized that my Keynesian teachers at Harvard in earlier years had exhibited in their ways of arguing such a disgraceful lack of devotion to the plain truth. Shame on them. But around 1977, hiding in Hyde Park, I realized that the Chicago-School folk had it, too, in spades redoubled and vulnerable. An English professor at Chicago, Wayne Booth, asked me — on the strength I think of a reputation I had for being marginally more open than other economists — to give a lecture to some undergrads on the "rhetoric of economics." Sure, I said. But what's that? Wayne suggested I read some books, such as Stephen Toulmin, The Uses of Argument (1958), and Perelman and Olbrechts-Tyteca, The New Rhetoric (1958; English 1969), and I suddenly got it. Oh, my God! Even a science like economics has a rhetoric, that is, a means of unforced persuasion! And the claimed "scientific method" ain't it!

This blindingly obvious point led me to start doubting that economics was the queen of the social sciences, or at any rate that the queen had any clothes on. I first realized — I remember the day, by then at the University of Iowa, talking to my colleague Richard Zecher — that a crucially important technique used by economists called "statistical significance" is rhetorical rubbish. Close fit is not the same thing as scientific or political importance. It just isn't. Sic transit most of applied economics, because its practitioners even now don't get the point, against giants of statistical theory and practice such as Gosset ("Student"), Neyman, Pearson, Jeffreys, de Finetti, Wald, Savage, de Groot, Kruskal, Zellner. Then I realized — again, it took years, but when I came to write about it around 1990 the penny suddenly dropped — that what economists call "proof" was also rubbish. Blackboard qualitative proofs of the "existence" of, say, an equilibrium between demand and supply, beloved of economists trained in the maths of the Department of Mathematics instead of the maths of the Departments of Physics or Engineering, are meaningless, because they don't tell how big is big. Years later it struck me that the two doubts, the one about statistical significance and the one about existence theorems, were the same. Real science, as against cargo-cult science, does not care about the statistical or mathematical "existence" of an effect. It cares about its oomph in the world.

The double eurekas led me to view normal science in economics with great suspicion, a suspicion never really allayed. I've consulted with the best econometricians and the best mathematical economic theorists in the world, and none of them have the slightest notion of how to reply to the doubts. They just get sore at me (and also, it would seem, at Gosset, Neyman, et alii). I have a lot of people sore at me.

If the usual journal article in economics is made into nonsense by ignoring magnitudes, why didn't I give up and go into investment banking? I suppose I'm an optimist, hoping with every new year that my colleagues will have the eurekas about how big is big, and start doing actual scientific tests, the way physicists and historians do. And after all economists, who are very bright and hard working, do sometimes by accident discover interesting facts and ideas, despite their bizarre scientific rhetoric.

And anyway there were new worlds of naïveté yet to conquer, this time on the side of our culture we English speakers call "arts" or "the humanities" (by contrast, in English before the mid-nineteenth century and in all other languages on earth they are called by the "science" word, as in Dutch kunstwetenschap or French sciences humaines, impossible expressions in recent English).

My first discovery was a slow rediscovery of those inklings in graduate school that people outside economics are not, after all, idiots. As an economic historian I benefited in the 1960s and 1970s and 1980s from colleagues who were historians without the skill set of economists, such as Jack Fisher at the L.S.E. or William McNeill at Chicago or Henry Horwitz at Iowa, and they were obviously not idiots. Then in the 1980s to these I added numerous encounters with non-idiotic philosophers (Richard Rorty) and non-idiotic British sociologists of science (Harry Collins), and then, astonishingly, non-idiotic literary critics (Stanley Fish). Excited by this remarkable discovery, and meeting people in such contemptibly non-Scientific fields as law or communication who appeared to actually have brains in their heads and learning to impart, I spent a long vacation at the (then Dartmouth) Summer School of Criticism and Theory, where I took a course on poetry and magic given by Thomas Greene from Yale. I found that one could do scientific work on meanings. Yikes!

I therefore became open to the substantive discoveries of the humanities in the twentieth century, the sort of propositions that any competent student reading English Lit has safely stored in her head by the end of her second-year ("Is there a text in this class?"), but that came to an economist as a long series of jolts. Yes, I know: if you are from the sciences you are inclined to believe that on the arts side there aren't any "substantive discoveries." With Cromwell, though, I beseech you in the bowels of Christ to think it possible you may be mistaken.

For one thing, I realized that the point of literary study is not merely to dole out stars of greatness. For another — you can see how it might be encouraged by an interest in the rhetoric of economics — I realized that literary and philosophical and narrative sciences (those sciences humaines) exhibit forms of knowledge not attainable by first-order predicate logic, or a system of axioms rich enough to contain arithmetic. For still another I realized that logics and axioms depend on such knowledge. And out of all this came the gobsmacking realization that language is more than the transmittal of bits of information. Language is a way of being human-the way of being human — a mobile army of metaphors (you might say). (While this was going on, incidentally, I had on 15 August 1995 a eureka moment in realizing that I could become a woman [see "It's Good to be a Don if You're Going to be a Deirdre," THES, August 23, 1996], and then more slowly that the most important event in human history happened in Galilee and Jerusalem around 30 C.E. But these are not scientific eurekas.)

Meanwhile I had slowly, slowly discovered — a slow motion scientific eureka like car crashes in the typical Hollywood product — that the Harvard-Chicago economics I had learned and taught couldn't explain the second most important event in human history, the Industrial Revolution. Investment, saving, railways, foreign trade, slavery, a rise of rationality — all inadequate. I then realized, separately, that how we talk in an economy radically affects how the economics works. Putting two and two together on a day in 2007 I realized that it had therefore to be ideology that changed in the Industrial Revolution. Then I twigged — I remember the day, and the satisfaction of a unified intellectual life it brought — that ideology just was rhetoric.

All that wandering away from economic Science in the realms of Arts suddenly didn't look so odd. An economics adequate to explain the modern world of plate glass, general elections, indoor plumbing, and higher education, I realized, is going to have to take language seriously as a maker of meanings. That is to say — my last scientific eureka, so far — economics should become a humanistic science of the economy. My word! Exactly.

So my series of eureka moments, for some of which I did feel like rushing through the streets of Syracuse stark naked, have two halves. For about twenty years they built up prudence-only. For the next twenty years they broke it down. Do the maths. Plus one minus one equals zero, eh?