This is a wonderful characterization of what economics in particular and social sciences in general have to offer the “reality.” I am especially fond of this wonderful quote that I’d love to steal.
“Or to steal a line from my friend Suresh, the best way to think about what most economists do is as a kind of constrained-maximization poetry. Makes no more sense to ask “is it true” than of a haiku.”
Or, I suppose, this other quote, which I think is a bit more appropos:
“The statement, say, that “queens are most effective when supported by strong bishops” might be reasonable in both domains, but studying its application in the one case will not help at all in applying it in in the other.”
This is, perhaps, not entirely fair. Economic (and again, social science theoretic) arguments are “true” within the domain defined by their underlying assumptions and are applicable to the “real life” as long as the underlying assumptions constitute reasonable likeness to the reality. That people take economics seriously is often enough to make economic theories relevant. As long as everyone treats sunspots as a force that shapes the markets and make their decisions based on that assumption, sunspots do exert a significant influence on how the market works, even if the effect is not so much sunspots themselves shaping the market rather than people’s expectations about the sunspots, which in turn, shape the market. (I often tell a variant of this story, why astrology is true–unfortunately, people often don’t get the point.)
The problem lies in how to respond when the reality starts contradicting theories. The response of the cargo cultist is to reject the reality and double down on the theories. The response of the scientist is to start investigating where the theory has gotten things wrong. There are far more in the former camp than the latter–and many of the former proudly reside in the land of Rationalia, apparently, mistaking themselves to be “scientists.”
I think the theorizing in social sciences actually hasn’t been all that bad: they are getting a lot of things right. But that they does not entitle them to assert that their theories override when they are contradicted by the reality. That would be the unscientific thing to do.