Evan Soltas
Jul 20, 2012

The Metaphor in Economics

The metaphor may be a key which unlocks doors of understanding, but it is also a trap which gores the lazy mind. It may be a workhorse of analysis and of rhetoric -- I've used three metaphors so far in this blog post -- but it can be too the ball-and-chain which imprisons free thought.

How does the metaphor both unlock and trap, both pull weight for us and restrain us with weight? The metaphor takes relationships between two or more things and simplifies them through comparison to something simpler and more familiar. Player X is the engine which powered the basketball team to the playoffs. In this example, the effect of Player X on the dynamic of a basketball team has been reduced to a mechanical interaction. 

Such a reduction may help. If I've never seen this basketball team play before, the information that Player X provides the predominant support to the team is valuable. I may choose to watch Player X more closely, knowing that his actions on the court are disproportionately important to gameplay. 

But there are costs to reduction. In our basketball example, we've taken a network of human relationships which exhibit some ordered behavior -- what is formally referred to as a complex system, and in particular, a complex adaptive system -- and via metaphor considered it as a mechanical system, one which is neither complex nor adaptive and exhibits highly ordered behavior. (You may want to look at the links for Wikipedia definitions.)

Metaphors break down when the complex system generates a different behavior or response than what is predicted by the simple system.

Economics is infested with metaphors. Some are explicit. Employment growth ran out of gas in the spring of this year, with gains in nonfarm payrolls in the tens of thousands. Obviously there is no actual gas tank in labor markets, and the metaphor here does provide some help through reduction. The fact that nonfarm payroll growth slowed significantly to a near-stop is valuable information, and the metaphor makes that easier to understand. But the metaphor is costly: labor markets are a complex system, an automobile is a mechanical system. The comparison of systems can be intellectually misleading if it leads us to assume that the behaviors of the two systems will remain similar -- this is an essential insight of the Lucas critique, which considers the special case of policy intervention.

Some metaphors come by stealth -- like "infested," the word I used in the first sentence of the preceding paragraph. When I call pest control, it will be for ants, termites, or mice. Not metaphors. Economists need to be particularly careful of such stealth metaphors. Their surreptitious arrival means that it is hard to tell when they grab the reins and mislead us by equating two different species of systems. When we say Greece is "repenting" for unwise use of debt, we suggest to our own minds that we'd be fools to come between them and whatever heavenly force has an accounting degree. 

The metaphor in economics is troublesome help. Eric Liu and Nick Hanauer published a recent op-ed in The New York Times which said that mechanical metaphors are serially misused in economics, and that it is time for gardening metaphors. They refer to these rivaling viewpoints as "Machinebrain" and "Gardenbrain" respectively:
What we require now is a new framework for thinking and talking about the economy, grounded in modern understandings of how things actually work. Economies, as social scientists now understand, aren’t simple, linear and predictable, but complex, nonlinear and ecosystemic. An economy isn’t a machine; it’s a garden.
Liu and Hanauer provide a valuable reminder that economies and machines are fundamentally two different species of systems, despite occasional similarity in the ordered behaviors of complex adaptive and mechanical systems.

But in a Twitter discussion with Matt Yglesias, from which today's blog post comes, we agreed that the garden metaphor has problems of its own. I concede that the garden metaphor is a step forward, relative to the machine -- at least the garden is in the correct class of system. Yet diversity among complex adaptive systems is extreme: the category includes not only economies and ecosystems, but also immune and neural systems, social organizations from basketball teams to the United Nations, etc. Liu and Hanauer's gardening metaphor contains implications as to behavior -- weeding, watering, and the gardener, for instance -- which they must project from one complex adaptive system to another.

The presence of complex adaptive systems in economics, and indeed in all of the social sciences, should give us caution in any use of metaphor, whether explicit or stealth. There are benefits in reduction by metaphor but also costs which can be most dangerous when unseen.