In this season of apostasy, the high priests of economics face a bitter challenge. As soothsayers they have lamentably failed, showing themselves quite as fallible as the Greek oracles or the readers of sheep's entrails. As practioners, their cures have often proved worse than the disease.
During the long period of sustained innocence that lasted through the '50s and '60s, we basked in the happy conviction that economics was a developed science. The revered prophet, John Maynard Keynes, had taught that we could, by careful demand management, render business cycles as flat as a desert highway, so that, by keeping the faith, we might look forward to a long future of steady economic growth. Economists were, they assured us, on the verge of mastering man's economic ills just as the medical doctors were mastering disease. We assumed, in other words, that economics had reached a level of advancement roughly equivalent to the sulfanilamide age in medicine.
No wonder we were shocked when we found that the state of economic science more nearly paralleled Dr. Harvey's discovery of the circulation of blood. To be sure, that disturbing insight has not stopped the production of new economists; doctoral candidates are still filling thousands of pages with opaque formulas and devising elaborate charts that stikingly resemble a phrenologist's schematic drawing of the human cranium. But honest practitioners no longer try to hide their dubiety; many are quite frankly resorting to leeches and poultices.
At the moment, the doctors are prescribing protracted bleeding in the hope of during the American economy of the high fever of inflation, but, as is traditional with doctors, they stridently disagree. In some quarters there is a great vogue for Dr. Milton Friedman, who is busy prescribing not only for Ronald Reagan but also for Margaret Thatcher. I am grateful to Friedman, for it was he who in the fall of 1974 reassured me that I need not worry about high oil prices, since inflation would render them nagatory while OPEC would promptly fall apart. Today, he is as single-minded as a naprapath. Naprapathy holds that human disease can be cured by adjusting the ligaments; Dr. Friedman would cure the economics dislocations by regulating the money supply.
New healers are consistently emerging, such as the young Dr. Laffer, who asserts that we could painlessly cure our ills by cutting taxes -- a remedy enthusiastically echoed by any number of lay practitioners. But some, like the venerable Dr. Hayek, sturdily adhere to the true faith of Adam Smith, refusing, like the legendary medieval priest, to change his mumpsimus for the new-fangled sumpsimus. finally, a zealous core of true believers still fall back on the time-proven quackery of Dr. Karl Marx.
Disagreement persists even as to the most fundamental issues; thus economic model builders vie with their more classical confreres just as the ancient School of Cnidos, which concentrated on symptoms from the patient, was disputed by the School of Hippocrates, which studied causes and held that disease was the improper balancing of blood, phlegm, yellow bile and black bile.
To an ancient like myself who was in Washington early in the New Deal, all this resembles the orgy of theorizing and experimentation practiced on the American economy by President Roosevelt's changing stable of PhDs. No one knew what nostrums, if any, would work, but that did not discourage us from trying. Today, the American public is playing the same guinea pig role as in the '30s.
Though I have no special brand of snake oil to offer, I have faith that our economy is sufficiently robust to survive. Yet, I cannot forget the infant Louis XV who, after contracting small pox, was saved from death only because his nurse hid him from the ministrations of the doctors whose vigorous attentions killed both his brother and his father. For Americans there is no place to hide, nor, unlike medical doctors, can economists even be sued for malpractice.
No wonder that the patient citizen is worried, baffled and frustrated by the different advice and indifferent results of economists who are equally worried, baffled and frustrated. We are still decades away from economic antibiotics.
Humility is, however, the first requisite to understanding, and it is comforting to discover economists who are at least privately admitting that they no longer have full confidence in their own omiscience. It is a good sign and the beginning of wisdom. They would do well to recall the famous comment of that distinguished medical doctor, the senior Oliver Wendell Holmes: "If the whole materia medica, as now used, could be sunk to the bottom of the sea, it would be all the better for mankind -- and all the worse for the fishes." Unfortunately, Holmes's prescription could never be applied to our economic text books: it would violate the Clean Water Act.