(the first draft is the dominant genre of the internet. Between the roughness of this essay and my extensive ignorance of criticism and economics, I'm sure there is plenty of room for improvement here. If any readers have suggestions for taking this to the next level please let me know.)
(you might want to read this New York Times piece by Paul Krugman before going on -- it's the best primer I know of for this debate.)
We'll define freshwater economics as the theory that economic behavior (and perhaps most non-economic behavior) can be explained using the concepts of rational actors and efficient markets and auteur theory as the idea that most films (particularly great films) represent the artistic vision of a single author (almost always the director) and the best way to approach one of those films is through the body of work of its author. Both of these definitions are oversimplified and a bit unfair but they will get the discussion started.
At first first glance, these theories don't seem to have much in common, but as we step back and look at them in general terms, fundamental similarities start to emerge in their styles, their ecological niches and in the way they've been received.
Compared to their nearest neighbors, film criticism and economics (particularly macroeconomics) are both difficult, messy fields. Films are collaborative efforts where individual contributions defy attribution and creative decisions often can't be distinguished from accidents of filming. Worse yet, most films are the product of large corporations which means that dozens of VPs and executives might have played a role (sometimes an appallingly large one) in determining what got to the screen.
Economists face a comparably daunting task. Unlike researchers in the hard sciences, they have to deal with messiness of human behavior. Unlike psychologists, microeconomists have few opportunities to perform randomized trials and macroeconomists have none whatsoever. Finally, unlike any other researchers in any other field, economists face a massive problem with deliberate feedback. It is true that subjects in psychological and sociological studies might be aware of and influenced by the results of previous studies but in economics, most of the major players are consciously modifying their behavior based on economic research. It is as if the white mice got together before every experiment and did a literature search. ("Well, there's our problem. We should have been pulling the black lever.")
Faced with all this confusion, film scholars and economists (at least, macroeconomists) both reached the same inevitable conclusion: they would have to rely on broader, stronger assumptions than those colleagues in adjacent fields were using. This does not apply simply to auteurists and freshwater economists. Anyone who does any work in these fields will have to start with some sweeping and unprovable statements about how the world works. Auteurists and freshwater economists just took this idea to its logical conclusion and built their work on the simplest and most elegant assumptions possible, like Euclid demonstrating every aspect of shape and measure using only five little postulates.
(Except, of course, Euclid didn't. His set of postulates didn't actually support his conclusions. The world would have to wait for Hilbert to come up with a set that did. The question of whether economists need a Hilbert will have to wait for another day.)
Given that we have two similar responses to two similar situations, it is not all that surprising to see that both schools of thought have followed similar paths and have come to dominate their respective fields. I don't think that anyone would argue that any institution has had more impact on economics than the Chicago school over the past fifty years and I doubt you could find a theory of film that comes close to the impact of auteurism over the same period.
This dominance was achieved despite serious criticisms and counter-examples. When the writer William Goldman (Butch Cassidy and the Sundance Kid, Princess Bride, many, many, many others) heard about auteur theory, his reaction was "What's the punchline?" The sentiment was echoed by many writers who pointed out that many of the elements that the critics discussed were determined, explicitly or implicitly in the script. On related grounds, others pointed out how many of the creative decisions were made in preproduction often before the director was hired (John Huston said that a film was mostly finished once you had the cast and the script). Others talked about films that were "saved in the editing room," a common Hollywood expression for films that are radically changed for the better in post-production, usually after having been taken away from the director. Many (including Goldman) argued that films were the sum of many individual contributions and that changing any of them would result in a different movie.
Critics of classical economics question the realism of the school's postulates. They suggest that the proposed 'homo economicus' would have to be a cross between a lightning calculator and a high-functioning psychic. They point to findings from behavioral economics that show individuals failing to act according to neoclassical principles and historical cases where neoclassical models failed to predict economic events.
Both schools of thought partially address these complaints by arguing that their critics are trying to apply their ideas in cases where the necessary conditions don't hold. For auteurists, conditions included technical competence, recognizable style and a sufficient body of work. For freshwater economists, conditions included symmetry of information, a sufficient pool of buyers and sellers, a lack of externalities and freedom from government influence. These conditions did not refute the criticisms but they did provide defensible positions.
There is nothing unusual, let alone improper about proponents of a theory laying out conditions that have to be met before their concepts can be applied. (I could have written essential the same paragraph about Keynesians or deconstructionists.) What makes this notable is the disconnect between this approach and the way lay people use these ideas.
The dominance of auteurism and the Chicago School is, if anything, greater when you venture outside of academia. Most financial journalists, pundits and politicians take the power of market forces as a given and the vast majority of movie reviewers routinely assume that the director is the author of the film they just saw, but in both these cases with very few exceptions, the lay people using these theories have no idea that the conditions of the previous paragraphs even exist.
The problem with auteurism is compounded by the fact that most reviewers have no idea what a director actually does. This was certainly not true of the original French critics who popularized the theory (who were, themselves, directors) or of its primary American proponent, Andrew Sarris, (who went to great pains to discuss exactly and also set out the definitive list of the conditions I referred to).
Today most reviews will use the possessive form of the director's name then proceed to discuss everything about the film but the direction. The strange result of all this is that directors are both the most overrated and under-appreciated of movie makers. They are given credit for the work of everyone else while their own contribution is generally ignored.*
Obviously, the stakes are higher for economics but the disconnect is just as big. Open up any op-ed page or tune in any news conference and you are likely to find someone using freshwater arguments in situations where any serious freshwater economist would tell you they don't apply. For example, it is easy to pundits and politicians who believe we should let the market forces handle global warming instead of having a carbon tax, despite the pro-tax position of economists like Laffer, Cowen and Mankiw. It isn't that these laymen are consciously disagreeing with these experts; they simply don't know that using taxes to address externalities is a fundamental part of the philosophy they think they are espousing.
Finally, both schools had clear winners and have been aggressively promoted by those winners. Directors were the big winners in auteur theory; they gained power and prestige which in an industry that knows how to reward those attributes. It may not have been entirely a coincidence that the original auteurist critics had their careers as directors enhanced by the rise of the theory.
In economics, there is no question that the rise of freshwater ideas and approaches have been advanced considerably by institutions like the American Enterprise Institute and the Heritage Foundation, nor is there any question that much of the funding for these institutions came from companies that directly benefited from the dominance of freshwater economics.
Do these schools deserve their positions of dominance? That's a question for people above my pay grade. I'm just pointing out that widely separated disciplines can be surprisingly similar when you take things to a high enough level.
* For a view of how little influence some directors have on actors' performances check out these comments by Robert Mitchum (cutter in this context means film editor).
note: The Paul Krugman link at the top was added 5/31/10.
Keynes said something along the same lines: "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas."