December 30, 2014

Marshall and some skewed arguments

Comment on 'Proper use of math in economics'


Mathematics, it is trivial, can be misapplied and abused. But in this case, the misapplication has to be criticized and not mathematics per se. Equally trivial, a false theory cannot be repaired by formalization. For example, the supply-demand-equilibrium model is an inappropriate representation of what happens in a market and this conceptual defect does not disappear by writing f(S)=f(D). Equally trivial: mathematics is sometimes not applicable to the problem at hand. And finally, being a tool mathematics should not dominate the argument but be kept in the background.

So, mathematics can be applied for the wrong reasons but, and this is important for Heterodoxy, it can also be rejected for the wrong reasons. It is pretty obvious that Marshall did so.

“Indeed the fact that leading theorists such as Marshall openly downgraded the role of mathematics enabled the largely innumerate rank and file of professional economists to retain a sense of confidence in their own scientific contribution.” (Deane, 1983, pp. 6-7)

The second wrong reason is to keep the discussion deliberately on the level of loose verbal reasoning.

“Another danger is that you may ‘precise everything away’ and be left with only a comparative poverty of meaning. ... Such a problem was avoided, said Keynes, by Marshall who used loose definitions but allowed the reader to infer his meaning from ‘the richness of context’.” (Coates, 2007, p. 87)

Here the obstinate self-deception of the so-called social sciences makes itself felt. Vagueness is a means to say something without knowing anything.

“By having a vague theory it is possible to get either result. ... It is usually said when this is pointed out, ‘When you are dealing with psychological matters things can't be defined so precisely’. Yes, but then you cannot claim to know anything about it.” (Feynman, 1992, p. 159)

The precision and rigor of mathematics is a good prophylaxis against self-deception.

“Precision and rigor in the statement of premises and proofs can be expected to have a sobering effect on our beliefs about the reach of the propositions we have developed.” (Hutchison, 1960, p. xxiii)

With his burn-phrase Marshall still helps political economics and hinders theoretical economics. Political economics is, as everybody knows, scientifically worthless.

“I refer to the considerable haziness of economic theorizing, to the regrettable fact that concepts are frequently ambiguous, often used in different manners, that their interrelations are not made clear, and, foremost, that the assumptions seldom show a clear relationship either to the facts of everyday life or to those specifically collected and examined.” (Morgenstern, 1941, pp. 361-362)

It seems that Marshall has become the patron saint of all confused confusers of economics (2013). Heterodoxy has no good reason to idealize him.

Egmont Kakarot-Handtke

Coates, J. (2007). The Claims of Common Sense. Moore, Wittgenstein, Keynes and
the Social Sciences. Cambridge, New York, NY, etc.: Cambridge University Press.
Deane, P. (1983). The Scope and Method of Economic Science. Economic Journal,
93(369): 1–12. URL
Feynman, R. P. (1992). The Character of Physical Law. London: Penguin.
Hutchison, T.W. (1960). The Significance and Basic Postulates of Economic Theory.
New York, NY: Kelley.
Kakarot-Handtke, E. (2013). Confused Confusers: How to Stop Thinking Like
an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series,
2207598: 1–16. URL
Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political
Economy, 49(3): 361–393. URL