Ducks and Economics

Peter Phillips, an economist with the University of Southern Queensland, Australia, writes:

Financial economics is a peculiar case. It is not necessarily new facts and experiences that emerge, having previously been unknown, to initiate a revision of the metaphorical models constituting the prevailing orthodoxy but a rising to the surface of elements of the financial economic reality that had been pushed aside—though they were always known to exist. The prevailing orthodoxy within the category of knowledge known as financial economics has pushed aside a very large number of the features of the financial economic reality and emphasised those features which are amenable to the construction of mathematical metaphors. The creation of further metaphor within metaphor on this basis further distanced the models of the prevailing orthodoxy from the financial economic reality it once sought to explain. The financial crisis has highlighted the distance that has been placed between the mathematical-metaphorical models of financial economics and the financial economic reality. The interaction of individuals, firms, banking institutions and governments, each attempting to salvage their careers, positions, liquidity, solvency and credibility, may be observed on a daily basis and has no analogue within the structure of the prevailing orthodoxy of modern financial economics. Yet it is the financial crisis that highlights this and brings these elements to the foreground when once they were relegated to the background. This is a financial crisis of metaphor.

The article is ungated on SSRN, here. I found the article to have a very interesting and fairly sophisticated discussion of specific mathematical models and how specific metaphors functioned, though it feels that the main argument is made a little too repetitively.

I did not (until recently) find much of this strain of thought reflected in economic writings, or at least in most of the curricular texts I’ve read. But these ideas are not new; they are described particularly well in the writings of Umberto Eco (Travels in Hyperreality) and the work of French theorist Jean Baudrillard. I am skeptical of a number of the deeper psychological conclusions critical theorists come to and especially in the ways in which Marxist theory seems to infect all strains of critical or cultural theory, but there is much of value to be found in understanding the ways in which metaphors serve to both enhance and degrade our understanding of reality.