Classical Economists: the social scientists who are unsocial and anti-science

In this excellent discussion of so-called pro-market economists
("Occupy Economics Departments: Conventional economists have a lot to answer for but will they listen?"), David Morris gives us a little factoid I never fully grasped before that actually offers profound insight:

A few weeks ago the Nobel Prize for Economics was announced. The press dutifully noted that it wasn’t one of the official Nobel Prizes inaugurated in 1901. Yet the media continue to call it the Nobel Prize rather than by its actual name: The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel.

Knowing that the prize is issued by a bank might help people understand why, since its inception in 1969, 70 percent of these economics prizes have been awarded to Americans compared to only 39 percent of the real Nobel Prizes in chemistry, physics, literature and medicine. And why ten have been won by University of Chicago faculty.

The study of economics may indeed help us understand the world and design appropriate policies. But we need to drop the pretense that economics is a science based on laws and objective models and accept that it is a normative discipline. We need to own up to the bias inherent in conventional economic models and the social damage policies based on those models has wrought.

Morris' article starts from the recent walk-out by Harvard University students protesting the inherent conservative bias in the introductory economics course taught by Greg Mankiw, a frequent adviser to Republican candidates and President Bush.

Right now, we have a University of Chicago economist (Casey Mulligan) who seems to be arguing that -- I kid you not -- the reason we have high unemployment is generous unemployment compensation and too many workers who want to use it to take a vacation. Under this theory, several million got this hankering for leisure within the space of a few months as the Bush economy imploded and unemployment soared.

Of course, the U of C has been the center of modern classical economists with its theories about how "the market" is perfect because everyone in the economy has perfect information, acts totally in self-interest on rational expectations and so forth -- and all of these assumptions, when plugged into mathematical algorithms that most of us shrink from in fear, even though the assumptions not only cannot be supported by real life evidence but seem to push the outer envelope of absurdity, are supposed to convey the status of a "science" to their compilation of theories. Of course, it's just a coincidence that their implicitly libertarian theories are used to support right wing politics and low taxation of the wealthy, and justify letting banks do whatever they want because "the market" will correct any abuses. Their notion of "the market," by the way, seems even to go so far as to preclude enforcement of ancient laws against fraud.

So we have the University of Chicago Economics Department advancing these frivolous theories, and yet they get all these Nobel Prizes there. Well, now we know the awards should at best be identified as "Nobel" Prizes in Pro-Banking Economics. Understanding the true nature of the prizes closes the disconnect there. The greatness of the University of Chicago, as verified by all those "Nobels," is a sham. Casey Mulligan looks in his picture like a very nice guy. But the stuff he writes is used by very not nice people to do some very not nice things to a lot of people. How long will it take for the truth to start bringing down those glowing rankings the institution receives?