Comment on asepp on 'Saving=Investment fallacy'
Blog-Reference
It is gratuitous to play ping-pong with Einstein quotes and to cook up the induction-deduction discussion once more. Schumpeter has already settled the matter.
“... there is not and cannot be any fundamental opposition between ‘theory’ and ‘fact finding,’ let alone between deduction and induction.” (1994, p. 45)
Science is about two, repeat two, consistencies: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994, p. 31)
However, as a practical matter, theory comes first: “Indeed, there is no such thing as an uninterpreted observation, an observation which is not theory-impregnated.” (Popper, 1994, p. 58)
Those common sense people who are stating the seemingly plain fact that 'the sun goes up' do simply not realize that they are stating a hypothesis.
Theory in the proper sense is a free invention, the product of pure thought, and, lo and behold, this is exactly what Einstein said (note that he never observed a relativistic effect that kicked off his thinking):
“To this I answer with complete assurance, that in my opinion there is the correct path and, moreover, that it is in our power to find it. Our experience up to date justifies us in feeling sure that in Nature is actualized the ideal of mathematical simplicity. It is my conviction that pure mathematical construction enables us to discover the concepts and the laws connecting them which give us the key to the understanding of the phenomena of Nature. Experience can of course guide us in our choice of serviceable mathematical concepts; it cannot possibly be the source from which they are derived; experience of course remains the sole criterion of the serviceability of a mathematical construction for physics, but the truly creative principle resides in mathematics. In a certain sense, therefore, I hold it to be true that pure thought is competent to comprehend the real, as the ancients dreamed.” (1934, p. 167)
The same holds, of course, in theoretical economics. Political economists, though, are too occupied with pushing their agendas. Thus, they have neither time nor brain space left over for thinking.
So there is absolutely no problem here. Take the structural axiom set or one of its logical implications and test them. Thus, you and I together are doing really good science.
To recall, those who have filibustered about induction-deduction have achieved nothing of scientific value until this sunny morning and will not in the foreseeable future.
Egmont Kakarot-Handtke
References
Einstein, A. (1934). On the Method of Theoretical Physics. Philosophy of Science, 1(2): 163–169. URL.
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield: Edward Elgar.
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality., chapter Science: Problems, Aims, Responsibilities, 82–111.
London, New York: Routledge.
Schumpeter, J. A. (1994). History of Economic Analysis. New York: Oxford University Press.
