… is from pages 306-307 of Meir Kohn’s superb Fall 2004 Cato Journal article, “Value and Exchange ” (footnotes deleted):
The failings of the Hicks-Samuelson research program have hardly gone unnoticed. The principal response of mainstream economics has been increasingly to turn away from this program in favor of an entirely different one – the application of econometric methods. While econometrics was developed originally to test or to estimate the models devised by theorists, today’s applied econometrics is largely atheoretical. Applied econometrics rather than mathematical theory is today the high-status field in the best graduate schools and the one that attracts many of the best minds.
The “[John] Hicks  – [Paul] Samuelson  research program” to which Meir refers is the mid-20th-century effort of economists not only to mathematically describe the properties of a price-system-based economy in full, general equilibrium, but – especially in the case of Samuelson – to insist that such description is the sine qua non of a truly scientific economics. Economists who do this sort of work tend to overlook the importance of genuine change and entrepreneurship. And these economists, when not altogether ignoring institutions (such as contract law, homeowners’ associations, and the evolved structure of the retail grocery industry), interpret institutions through general-equilibrium lenses that blind these economists to the actual function of institutions. (Institutions evolve typically to better enable individuals to deal with realities – such as asymmetric information and high transaction costs – that are assumed away by these theorists when doing their high theory.)
The successors in the hallowed halls to these High Theorists – namely, today’s elaborate econometricians – have very impressively mastered the theory of data manipulation but too often, in my view, manipulate data with such a poor understanding of economic theory (particularly of traditional price theory of the sort done by scholars such as Armen Alchian , Ronald Coase , Harold Demsetz , Aaron Director , Frank Knight , and Deirdre McCloskey ) that the results of their econometric investigations are frequently worse than useless.