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The Economic Territory is Far Too Complex For Our Meager Maps

Posted on August 14 2009 4:25 pm
David Swindle is the Managing Editor of NewsReal Blog and the Associate Editor of FrontPage Magazine. Follow him on Twitter here
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I found this letter to the editor from last week’s issue of The Economist thoughtful. (And note that “liberal” here is used in the European sense, where it basically means “libertarian” in the American sense — as it should):

SIR – The belief that working economies could be precisely represented by very abstract and simple models should have worried any liberal economist. Only a kind of religious faith in the ability of the human mind to represent the fabric of society mathematically could have led to such confidence in these models. Any economist who has read Hayek, and other conservative thinkers before him, knows that economies, as society at large, are much too complex. Macroeconomists should take models for what they are: simplified views of the world that help us think about a complex issue, but are not true representations of the complexity itself.

Jean-Luc Demeulemeester Professor of economics

Université Libre de Bruxelles Claude Diebolt Research director in economics Université de Strasbourg

This is an important thought to keep in mind as you hear the amateur economists of both Left and Right pontificate on the cable news shows as though they actually know what they’re talking about. Far too many of them have made the critical mistake of forgetting that the map is not the territory.

(It’s this insight that often yields to skepticism of ideas like government plans to remake the economy through so-called “health care reform.”)

And be sure and read some Friedrich Hayek if you haven’t already. (His classic The Road to Serfdom is generally the place to start.) He’s a thinker who’s had a great influence on many prominent libertarians.

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