The Sociology of Mankiw

The notion that economics can explain everything about everything (re: Freakonomics) is something that I’ve always regarded as silly and kinda gross. The basic economic model — the super-rational individual relentlessly seeking out his own material self-interest — is almost embarrassingly inadequate. If you want to deal with something like the Global Financial Crisis then, yes, you do have to start by grappling with the discipline of economics. But that’s not enough. Economics as a discipline fails to paint the picture that sociology, history, science and literature, in concert, can about the world generally. And explaining the Financial Crisis specifically is no different. We need more than economics.
What I’d be interested in reading is something on the sociology of the economics discipline. How did people come to believe the cluster of ideas that that got us into the Financial Crisis? That’s an historical and sociological inquiry. What are the social factors that got a whole group of people to believe fraudulent economics? I like John Cassidy’s New Yorker piece “After the Blowup” (gated, Harvard LexisNexis) because he seems to want to start the process of answering this:

In the course of a few days, I talked to economists from various branches of the subject. The over-all reaction I encountered put me in mind of what happened to cosmology after the astronomer Edwin Hubble, in 1929, discovered that the universe was expanding, and was much larger than scientists had believed. The profession fell into turmoil. Some physicists stuck to the existing theories, which posited a stable universe. Others, Albert Einstein included, tried to adapt the old models to Hubble’s data. Still others attempted to come up with a new account of how the galaxies formed; it was this effort that ultimately produced the theory of the big bang.

There’s a whole corpus of zombieconomics out there — ideas like the Efficient Market Hypothesis and the Great Moderation — that needs to be slayed. But old ideas are hard to kill. And the secret is: killing ideas is a social process, with power struggles and true-believers, as much as it’s an academic process.
Krugman wrote in the New York Times Magazine a few months ago that the problem with the economics discipline is that it “mistook beauty for truth” — i.e., it used neat mathematical models to explain extremely complex and irrational stuff. That’s true, but there’s more to it than that. People value things because people and institution around them value those things. So start looking into peer review boards and tenure committees in the academy. How did one generation, through institutions, protect its own? And start looking at the umbilical connection between mathematical modeling and the financial service sector. Our own Larry Summers made about $100,000 a day doing consulting work for D.E. Shaw.  Beautiful math isn’t just attractive — it’s also damn profitable. And in a profession that considers money to be the all-important talisman for predicting of human behavior, do connected and well-paid scholars get more academic attention?