ECONOMICS

 ASSIGNMENT  

The  Rhetoric  of  Economics  

An  Analysis  of  Deirdre  McCloskey’s  Writings  and  Critics  
 
[Type  the  author  name]  
11/22/2010  
 

Submitted by:

Manivel K. (Roll No. 56)

Maya Sarah John (Roll No. 57)

Megha Jain (Roll No. 58)

Merrin Mathew (Roll No. 59)

Michael Valdez (Roll No. 60)

Ilayraja (Roll No. 60A)

           
 I. What is Rhetoric?

Rhetoric is the study and practice of persuasive expression, an alternative since the Greeks to
the philosophical programme of epistemology. Some of these rhetoric devices arise from bad
motives and it is this sort of bad rhetoric that people have in mind when they call a piece of
writing “rhetorical”. The badness does not reside in the techniques themselves but rather in
the person using them, since all techniques can be abused. Aristotle noted that “if it be
objected that one who uses such power of speech unjustly might do great harm, that is a
charge which may be made in common against all good things except virtue itself.”
According to Deirdre McClosky, the paying of attention to one’s audience is “rhetoric”. She
says that rhetoric has been defined in two ways, one narrow and the other broad. The narrow
definition, given by Plato, is that rhetoric is a cosmetic – like hiding a disease under paint
rather than curing it. The broader definition, given by Aristotle says that rhetoric is “an ability
[in each case] to see the available means of persuasion. McClosky says that the word has
taken on a broader and more amiable sense, to mean the study of all the ways of
accomplishing things with language.
She further goes on to give a beautiful analogy of rhetoric using economics itself – she says
that Rhetoric is an economics of language, the study of the way scarce means (devices of
language) are allocated to the insatiable desires of people to be heard. Thus Rhetoric is the
proportioning of means to desire in speech.

II. Rhetorics In Everything

The realm of Rhetoric includes logic and fact as much as metaphor and story. A fact is a fact
relative only to a conceptual scheme. Studies of science over the past few decades have
shown repeatedly that facts are constructed by words. Appeals to experimental finding are as
much a part of the broad-church definition of Rhetoric as are appeals to the good nature of
the speaker.
The English Metaphysical poets of the seventeenth century were addicted to logical forms,
forms that were viewed as figures of speech by writers still educated in rhetoric. The
reasonings of syllogism and number are themselves rhetorical, that is, persuasive acts of
human speech. A mathematical proof will depend on how convincing is an appeal to the
authority of the Bourbaki style. The ‘facts’ and the ‘logic’ matter of course, but they are part
of the rhetoric, depending themselves on the giving of good reasons.
According to McCloskey, all speech that intends to persuade is rhetorical, from higher math
to lower advertising. Not just politicians and public indulge in word craft, but experts do as
well, not just giving us the facts and logic, as they want to persuade audiences too.
A model in economics comes to be called as a metaphor and hence a rhetoric if “the
statement can be tested only approximately.” But in that case, the inverse square law of
gravitational attraction and Einstein’s generalisation.
 III. Economics: Science or Art?

Economics combines elements of both science and art.

Economists try to develop analytical mathematical models which seek to explain economic
behavior in a way that can be theoretically proved. For example: working out the elasticity of
demand through using calculus. In macroeconomic models there are many models which
seek to explain macro variables such as inflation, growth and unemployment. Yet, when
applied to the real world these models have significant limitations which can make them of
limited value. For example, much of economic theory rests on an assumption of rational
behaviour by consumers. Especially in classical economics, economic theory is derived from
a belief that consumers and firms will rationally pursue utility maximising decisions. Yet, in
practice human nature is much more complex. Behavioral economics tries to understand
these human factors much more – but, this involves many normative / subjective opinions. In
the past few decades the efficient market hypothesis took the assumption, asset prices would
be correctly priced – given available information. Yet, recent events suggest these neat
theories have severe limitations in the real world.
Consumers and firms do not always behave rationally, but are subject to irrational behaviour
such as
• Irrational exuberance – the belief asset prices can keep rising
• Herd behaviour – the belief the majority must be right e.g. if share prices, house
prices are rising it must be based on economic fundamentals. Yet, the majority is
often wrong, which is why we get booms and busts quite frequently.
If economics is a science, the obvious question is why did so few economists not predict the
current crisis? The answer is that many economists had great confidence in their theories of
efficient market hypothesis and didn’t feel the house price rises of 2000-2006 was a boom,
but based on underlying fundamentals. In October of 2008, one of the chief architects of the
period of great moderation, Alan Greenspan admitted he was in a state of “shocked
disbelief,” because “the whole intellectual edifice” had “collapsed.”
If economics was a science, the whole intellectual theory was no longer was satisfactory. This
crisis is not the first time; economic theory has been left failing to give any meaningful
explanation. The Great Depression left the economic profession fumbling in the dark for why
markets weren’t clearing. Monetarists will claim the stagflation of the 1970s, showed the
limitations of Keynesian fiscal expansion.
To summarise, in isolation, you can look at an economic issue and analyse them as a science.
But, linking theory to the real world is always going to be a very subjective experience. It
depends on which sets of data you use, it depends on which assumptions to make. Perhaps the
problem in recent decades is that economists have spent too much time trying to fit
everything into their neat theories.
 IV. Economics: Metaphor?

The dictionary meaning of metaphor is “A figure of speech in which an expression is used to

refer something that it does not literally denote in order to suggest a similarity”. Economics
as the auther says has been filled with ‘Rhetoric’ and ‘Metaphor’. A more obvious example is
“game theory” the very name being a metaphor. It is obvious that the arms race is a two-
person, negative-sum cooperative ”game.” Its persuasiveness is instantly obvious, as are
some of its limitations. Each step in economic reasoning of the official rhetoric is metaphor.
Metaphors in economics are not ornamental
Metaphor, though, is commonly viewed as mere ornamental; from Aristotle until the
1930s even literary critics viewed it this way, as an amusing comparison able to affect the
emotions but inessential for thought. The question is whether economic thought is
metaphorical in some non-ornamental sense. The more obvious metaphors in economics are
those used to convey novel thoughts, one sort of novelty being to compare economic with
noneconomic matters. “Elasticity” was once a mind-stretching fancy; “depression” was
depressing; “equilibrium” compared an economy to an apple in a bowl, a settling idea;
“competition” once induced thoughts of horse races; money’s “velocity” thoughts of swirling
bits of paper. Much of the vocabulary of economics consists of dead metaphors taken from
non-economic spheres.
Metaphor, then, is essential to economic thinking, even to economic thinking of the
most formal kind. Metaphor, further, evoke attitude that are better kept in the open and under
control of reasoning. This is plain in the ideological metaphors popular with parties: the
invisible hand is so very discrete, so soothing, that we might be inclined to accept its touch
without protest.

V. Consequences of Rhetorics

The field of economics proves to be a matter of metaphor and storytelling - its mathematics is
metaphoric and its policy-making is narrative. Economists have begun to realize this and to
rethink how they speak. A research was done involving both theoretical and applied
economists that explored the consequences of the rhetoric and the conversation of the field of
economics.
Rhetorics gives the power to understand the persuasive power of diagrams in economics,
their metaphors and their symmetries. By this it would be easy to admire the beauty of
economics. Rhetoric provides a place to stand from which the different metaphors of
economic life can be criticized radically. The tolerance in rhetoric is not the thoughtless
pluralism forced on values it is principled pluralism, insisting that people defend their values
openly. It is not apolitical. It is a theory of democratic pluralism and of general education in a
free society.
Economics doesn’t face its arguments. It doesn’t recognize its own rhetoric and it has been
this way so far. Unrhetorical economics claims to test its hypotheses by confronting the facts
and scrutinizing the theory. A rhetorical approach would show most of macroeconomics to be
misled. Rhetoric notes that economic theory is a way of speaking which is convenient to
human purposes. A rhetorically alert economist can see that there is no standard for the
openness or closedness of an economy beyond a certain limit. And when something is
decided for one economy, we have implicitly decided for economies to be open to the
standards that we create.
Modern macroeconomics is erroneous. The econometrics is mis-specified and therefore
biased. The theorizing is misinformed and therefore irrelevant. By ignoring the rhetorical
character of science and the human persuasion on which it turns, leaving the argument to
economists who in turn realize that they have wasted their time. The point made here is what
differentiates and separates economists.
An economist or philosopher will claim that using a rhetorical approach would not have any
standards. This is a wrong assumption made by them. The present standards such as standard
of consistent theory of good prediction are as low as to the point of fraud. These are hurdles
over which the economists have to leap with huge efforts to show that their assumptions are
right and their efforts are shown. A non-rhetorical economics had low argumentative
standards. The standard of a rhetorical economics would be higher. There would be
persuasion to read but with honesty. Yet the problem is that a rhetorical approach to
economics does oppose the narrowing of the science and philosophy of economics. It would
affect the philosophical thinking of economists and make then to analyse it more
argumentatively.
A rhetorical economics would be tougher and more cumulative. This sounds paradoxical, but
it’s because the Methods Of Science usually looks down upon the arguments of humans.
Arguments are not arbitrary. They will get settled if they get joined. Most of the arguments in
economics have not been settled yet. A rhetorically sophisticated economics would get down
to work and the arguments in economics would be taken more seriously.
The rhetoricians of economics are accused sometimes of being “trendy”. If the change that
they bring about in the way economists think is labelled as trendy then it would be difficult to
bring about some considerable changes. It has come to the point where the economists have
to grow and bring changes in themselves.

VI. McCloskey’s Explanation

All argument, economic argument included, is rhetoric. The art of paying attention to one’s
audience is called rhetoric. All intellectuals borrow figures of speech to put forth their
arguments in a convincing manner so that what they have explained may not be unique, but
will seem convincing. Humans are talkers and so figures of speech are used. It’s not about the
originality of the idea but how well and convincing the point or theory is to be put across.
The study of rhetoric is not a way of attacking speech but is always a way of understanding it.
Persuasion. The important thing in an argument is its ability to persuade. There is no
dependency on its truth but on its convincing power and acceptability. The practice of
economics needs no more methodological guidance than the rules of a good conversation.
When put across in persuasive and convincing manner acceptability is gained and the will to
counter the point is not exercised. In this way politicians and diplomats exercise their power
of speech and convincing powers to seem to be doing the right thing.
Economists are scholars in a conversation and a successful scholarship is necessarily a good
conversation. Science is supposed to have nothing to do with anything as ordinary as
conversation or persuasion. Scientific methodology is authoritarian, a method of compelling
proof and experimentation aimed at prediction and control. It requires quantitative analysis
and hypothetic deductive reasoning. It can be seen that science is based on hard and fast facts
and with thorough experimentation they are able to deduce and come to a conclusion. The
rule-of-thumb approach is not always followed.
Economics is a science. Like evolution explains about plants and animals, economics
explains about as much about business-people and resource allocation. But economics is also
humanistic as that is all a human can be. Economic arguments can be described as in the
same terms as political arguments as poetic assertions. Good poets, though not scientists, are
serious thinkers about symbols; good historians, though not scientists, are serious thinkers
about data; in this way good scientists use language too. They use the cunning of language
without particularly meaning to. With a good presentation of the facts available at hand and a
strong delivery of this they are, sometimes, able to mask the discrepancies that could exist
within.
The methods of economic scientists are in fact literary. The scientist is a linguistic actor and
his assertions are speech acts are made in a scene of scientific tradition for the purpose of
describing nature of mankind better than the next fellow. Economists persuade themselves of
statistical proportions on the basis of heavily aesthetic criteria. By the mere act of speaking of
equity versus efficiency we import into the argument as though it were uncontroversial, a
utilitarian ethic. The point is that not one form of speech is “reality” and the other “rhetoric”.
We ought to be conscious of what we speak, and therefore be conscious of how we speak.
The laboratory techniques of economic experimentalists are necessarily limited and their data
inconclusive, so they are forced to rely on analogy. The inconvenience of an error term of
infinite variance would cause statistical estimation and so in an aesthetic way assumptions are
made. And so they use rhetoric in the Platonic sense as a cosmetic where it is used to hide the
problem rather than finding a solution or analysing it correctly so as to lead to the
development of a future solution.
The conversational habits of economists lead them to confine their arguments to what they
regard as scientific and not openly admit that they are openly influenced by literary
considerations. This denial will create barriers in economic dialogue. The conversation
should be more open, more productive and more to the point. It should retort the economists
to use the full arsenal of arguments from which he derives belief. Economists would be more
tolerant of other schools. An economist won’t be a Marxist but can be a better neo-classical
economist if they are willing to listen to them once in a while. Similarly Austrian economists
would drop their methodological hostility to mathematical models to mathematical models
and econometrics if they found arguments persuasive to some people. With introspection and
full understanding the economist will know what he is talking about.

VII. Rhetorics in Microeconomics:

So far we have been seeing what rhetorics is and its play in various fields including
Economics and its consequences. Let us put our understanding of rhetorics into application in
Microeconomics.
Economics, which started as political economics, has been defined by many economists like
Adam Smith, Alfred Marshall, Lionel Robbins etc. These economists make effective use of
the language to persuade their ideas. For example, Alfred Marshal in his “Principles of
Economics” (1890) defines economics as follows:
 “Economics is a study of mankind in the ordinary business of life; it
examines that part of individual and social action which is most closely
connected with the attainment and use of material requisites of well-being”

Here in his definition of economics, Alfred Marshall tries to convince us saying that
economics is concerned with only those who lead an ordinary business of life and doesn’t
include the non-material requisites. The definition also ignores those goods that are harmful.
The “Invisible Hand” concept introduced by Adam Smith in his “Wealth of Nations” in order
to explain the importance of private enterprise in maximizing social welfare was only to
provide a quasi-religious sanction for capitalism. He also argues in favor of capitalism
through his say, “We expect our dinner not because of the benevolence of the butcher, baker
and the brewer but because of their regard for their own self-interest”.
Few of Alfred Marshall’s analogy used to explain certain economic scenarios are also
examples of such rhetorics. According to him, both deduction and induction methodologies
are necessary in economic theory as left leg and right leg is necessary for walking. On the
nature of economic laws, he says, “Economic laws can be compared with the law of tides
rather than the simple and exact form of gravitation”.

VIII. Rhetorics in Macroeconomics

In macroeconomics, the very definition of it, given by Prof. Boulding as,

“Macroeconomics deals, not with individual quantities, but with

aggregates of quantities; not with individual incomes, but with national
incomes; not with individual prices, but with the price level; not with
individual output, but with national output”.

uses a simple language to make others understand the concept behind macroeconomics while
hiding a major assumption that these economic aggregates are precisely measurable.

To explain Mercantilism, which is to be understood in order to study classical

macroeconomic theory, economists have used metaphors like, “More gold, more wealth and
more power”, “Money, more money and still more money”, “Export more, import less and
get the difference in terms of Gold and Silver”, “Every exporter is a friend and every
importer is a foe”.
One of the Keynesian Theory, “Theory of Consumption”, calls for psychological explanation
of human behavior in order to convince that the consumption is not just the function of
income but the behavior of humans towards consumption too. This he calls as “Propensity to
Consume”.
Thus to explain both microeconomics and macroeconomics, economists have used analogies,
metaphors, paraphrasing and various other rhetorics of language in order to persuade and
convince the reader to accept their idea.

IX. The McCloskey Critique

The McCloskey critique refers to a critique of post-1940s “official modernist” methodology

in economics, inherited from logical positivism in philosophy. McCloskey believes that
methodology neglects how economics can be done, is done, and should be done to advance
the subject. It is recommended to use good rhetorical devices for "disciplined conversation."
McCloskey wants economics to make interesting, new, and true statements about the real
world, and argues that proving the hypothetical possibility of an effect within an analytical
framework is not a constructive way of doing this. She cites many examples in which
professors of econometrics were able to use the same data to both prove and disprove the
applicability of a model's conclusions.

McCloskey identified the economists whom she accuses of leading economics astray in the
1940s:
1. Paul Samuelson: In her view, Samuelson wanted economics to resemble more closely the
hard sciences (especially physics), and elevated the "vice" of "blackboard proofs" and other
mathematical (but not necessarily scientific) values to accomplish this.
2. Lawrence Klein was the econometrician she says is responsible for the modern "mistake"
of confusing statistical significance with scientific significance.
3. Jan Tinbergen she considers responsible for the third vice of social engineering, which is
based on the other two. McCloskey says that this presumes to know more than it can, and
raised the prestige of the mathematical "modernist methodology" above other ways of
performing economics.

Her complaint against the modern profession, and against the Nobel Prize winners above, has
provoked a strong defense from the economic mainstream.
Critics of McCloskey and Her Responses

Critics of McCloskey claim that she ignores examples where economic analysis is
conclusive, and that her claims are illogical.
Some of the criticisms and her responses to them are as follows:

William Butos:
1. The first criticism Butos makes is that McCloskey ignores the idea of spontaneous
order. Yet, she counters, ignoring the spontaneous order in science or life would be
hard for an economist who knew his or her trade beyond the mathematics of
engineering.
2. The second criticism he makes is that McCloskey adopts “anything goes”, but he fails
to find a place in her text where she does so. McCloskey defends her statements,
saying that she believes in rules for games, and carries them out, but rules at the level
of morality, not at the level of shortcut formulas for thinking.
3. The third criticism he makes is that McCloskey is “reluctant” to use the “rhetorical
theory literature”. She counters this saying that, in fact, she has referred to and cited
much rhetorical theory literature in her writings, including the work of Aristotle,
Cicero, Quintilian, and many more.

A.W.Coats:
Coats has criticized McCloskey’s Rhetoric of Economics for not dealing adequately with
economic methodologists now writing. In her defense, McCloskey says that she was simply
trying to avoid error in too many fields at once. She also makes the point that economic
methodology in practice does not, unfortunately, follow what the most enlightened economic
methodologists are presently thinking. However, she has read them after finishing the book
and her reading suggests that they are natural allies of a rhetorical approach.
The one important disagreement between Coats and McCloskey is that he says “No
significant change is likely in this state of affairs.” McCloskey thinks contrary to this: That
once economics is recognized as a serious matter of words, it only requires the learning of
some other languages to change it.

Steven Pressman:
Pressman agrees that economic rhetoric needs to be reconsidered but criticizes McCloskey
for “not going far enough.” His claim is that “McCloskey… does not provide guidelines for
improving our rhetoric.”
McCloskey counters his criticism by saying that, in the restricted sense in which he
understands “rhetoric,” namely as style and “clear communicating”, she has provided
guidelines at some length in her work The Writing of Economics (1986). In a broader sense,
she has provided “guidelines for improving our arguments” on the subject of quantitative
arguments in economics in The Rhetoric of Economics (chapters 8 and 9) itself.
References

The following articles are referred to draft the article.

• A conversation with McCloskey About Rhetorics

• Economics as a Historical Science
• McCloskey Critique
• Responses to my critics
• The Consequences of Rhetoric
• The Rhetoric of Economic Development- Rethinking Development Economics
• Towards a Rhetoric of Economics

These articles are found in http://www.deirdremccloskey.org/articles/#10