What Are Economists Actually Doing All Day?

By John-Michael Kuczynski

It might sound brutish or philistine to say it, but I’ll say it anyway: a great deal of what modern economists do—especially those trained in elite institutions—is actively damaging.

I’m not talking about Adam Smith. Not Thorstein Veblen. Not people who actually looked at the world. I’m talking about the mathematicized modern economist whose job seems to be spinning internal models of equilibrium and utility and preference as though they were discovering deep structures in nature. They’re not.

The economic world is downstream from everything: politics, culture, religion, war, psychology, and—perhaps most unpredictably—technological invention. Yet modern economic theory often pretends it can predict outcomes by modeling internal variables alone, as if the economic system were a sealed vacuum chamber. It's physics envy: a desperate, defensive attempt to turn economics into Newtonian mechanics.

And what do we get from this? Arrow-Debreu equilibrium models based on assumptions no real economy has ever satisfied. Rational expectations models that presume people are Bayesian calculators. Beautiful math that maps perfectly onto... nothing. At best, it describes the behavior of a toy system. At worst, it blinds its adherents to the reality of the systems they claim to study.

This isn’t harmless. When a highly trained economist enters a foreign economic environment—say, the economy of an indigenous or postcolonial society—what tools do they bring? Not anthropology. Not language. Not cultural history. They bring a set of equations and axioms. And they begin the process of intellectual colonization: mapping a living economic culture onto their pre-approved grid of utility functions and supply-demand curves.

It’s as if someone were told to understand an Incan labor ritual by asking for its marginal rate of substitution.

Even if you can reinterpret everything through your theoretical lens (e.g. "That’s a form of non-monetary taxation!"), what does that achieve? Understanding? Or just translation into a different and alien language?

There is a place for formal modeling. There is a place for elegance. But when models take precedence over direct observation—when they are treated not as lenses but as filters that pre-define what counts as economic activity—you no longer have a science. You have a ritual.

Economics, in its idealized form, promises prediction. It says that if we account for X, Y, and Z, we can anticipate the next collapse or the next boom. But can we? Can we really predict economic events using only economic data? Or is that just a secular fantasy?

The collapse of 2008 was not predicted by mainstream models. Nor was the rise of cryptocurrency, or the social/market impact of COVID-19. That’s because these events weren’t "economic" in origin—they were political, technological, and biological. Economics simply absorbed the impact after the fact.

Trying to predict economics with economics is like trying to predict ocean currents by modeling only the surface of the water. It misses the tectonic shifts beneath—shifts that don't announce themselves in interest rates or inflation curves.

In short: a lot of economists aren't studying the economy. They're studying a set of idealized objects that vaguely resemble it, and then mistaking their models for the world. And the more elegant the model, the greater the temptation to believe in its truth.

But elegance isn't truth.

And a model that blinds you to what’s really going on is worse than useless. It’s dangerous.