In economics, we appear to be in the same situation that Wittgenstein appeared to be when he wrote the Tractatus-Logico-Philosophicus. He said that most problems were not philosophical problems at all, but problems of language. Since he also felt that most philosophical problems had been solved (notably by him) after the first world war, he felt free to go back to Austria and teach at a village school. It is another issue that he got kicked out for beating children at the school, and decided to write another book.
Most economic truths, which were not self-evident before 1991, appear to be so self-evident now, that it seems pointless arguing about them. Is there any major economic problem left?
There appears to be one, and that is the problem of Africa. Different economists have different suggestions. Jeffrey Sachs (and Bono) suggest massive aid. William Easterly, who worked at the World Bank and now teaches at NYU, saying massive aid has already been given and has not been effective. Easterly alone, of all economists, is modest enough to confess that he doesn’t know what is wrong with Africa and what could be done. All he says is that centrally planned, large-scale aid operations are bound to fail.
Now, we have a new book and some more new research from Paul Collier of Oxford. Collier attracted some attention with a paper at some Jackson Hole conference, which offered an interesting, geographical perspective on Africa, which I initially thought was as intelligent as Jared Diamond´s Collapse. So, I just ordered his new book, The Bottom Billion for Christmas reading.
Reading Easterly´s review of this book, I feel I am bound to be disappointed. Collier did his research with the World Bank, and in the words of Daren Acemoglu, his work contains “correlations that are interpreted as causal effects that are really no more than correlations”. We are back with the ghost of Wittgenstein, who intoned “Der Glaube an den Kausalnexus ist der Aberglaube” (Superstition is the belief in the Causal nexus).