In a recent blog on the nomination of Ben Bernanke as the Fed Chairman, Tyler Cowen explains that to be at the head of the Fed, the chairman “should have a mastery of data and an understanding of the macroeconomy. He must not be a dogmatist.” The good news is that Bernanke is not a dogmatist, as he understands what it means to crunch data and what the macroeconomy is all about.
The term “dogmatic” is often used in a negative way. Those who are dogmatic don’t really know what they are talking about because they don’t pay attention to what reality says. They blindly follow a certain direction – a dogma – without trying to develop alternative explanations.
The word “dogma” is of Greek origin (dokein) and has been used by the Roman Catholic Church (RCC) for instance. The RCC distinguishes the “deposit” (original information given to the Apostles) from the “dogma” (body of truth that has been affirmed by the councils of the Church and the Magisterium over centuries) from the “doctrine” (the development of RCC thinking on the basis of deposit and dogma).
So being dogmatic is to follow the dogma and in the case of the RCC, it is to follow what the Church considers to be the truth. The dogma of the Church is in fact very important, as it is the way for her to keep the deposit, that is, to protect the message from being corrupted.
All this is good for the RCC, but outside of the context of the Church, dogmatism cannot exist we are told, as we have no message to protect from corruption. Au contraire, science progresses precisely by corrupting old thinking, thereby renewing itself all the time. Dogmatism hinders this process and thus must be rejected.
So must be ideology, which is another version of dogmatism. According to Joseph Schumpeter in his famous paper Science and Ideology, ideologues are those who hold on to ideas that should have been removed through scientific inquiry. Their thinking of the world doesn’t evolve even in the face of evidence.
In contrast, many say that pragmatists have a good sense of what reality is about. They have no privileged idea (except precisely that they have no privileged idea) and they are willing to change their thinking, to adapt to circumstances.
In the world of policy for instance, pragmatists are taken seriously (for more on this see NZ Business Roundtable Roger Kerr, who has a good speech on Ideology and Pragamatism in Public Policy). In a debate at the New Zealand Treasury on Economic Transformation, David Skilling, one of the protagonists favoring a rupture with the past and its reforms, said to me that he saw himself as a pragmatist. Defending free market ideas, as I was doing, was too ideological. I had to understand that the circumstances of NZ had changed and thus the free market approach was not valid anymore.
Pragmatists, in their search of a “dogma-free economics”, are confused. The trouble with the dichotomy between dogmatism and ideology on the one hand, and pragmatism on the other is that it has no real raison d’être in economics. After all, Austrians are dogmatic ideologues: they believe that the corpus of economic laws is logically true (dogma) and cannot be subject to empirical testing (ideology). Moreover, historical work is necessary to understand the context in which economic laws operate. One could call the latter pragmatism if pragmatism is about understanding existing circumstances. So Austrians are pragmatists as well – and in the true sense of the word perhaps. Being “dogmatic ideologues” is precisely what makes Austrians correct!
It is interesting to note that someone like Gunnar Myrdal singled out the Austrian school for not being linked to a political or ideological agenda. Moreover, after the collapse of the Soviet Revolution in 1920, Nikolai Bukharin was the only soviet to admit that the criticisms of the communist system provided by Austrian economists were the most powerful ones because of their scientific merit (see Peter Boettke's work on this). And this is in spite of the fact that the Austrian school was seen by many (especially the soviets) as the most dogmatic school!
Many will rejoice in the fact that Bernanke is not dogmatic. However, they may be surprised if he introduces through the back door certain principles (should I say ideology?), such as his dislike for deflation, that he sees as vital to the good conduct of monetary policy. Then and only then, they may regret his lack of (Austrian) dogmatism (for an example of that, see, as Pete explained in his previous post, George Selgin’s work on free banking in general and the meaning of deflation in particular).
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