Science restricts itself to things that can be known. In marked contrast, non-scientists prefer to spend their lifetime on questions that cannot be answered. Let us face the fact, it is not so much solutions that most people are really interested in, it is more the perpetual inconclusive talk about beliefs. Solutions only spoil the fun.
Economists are traditionally fond of talking about nonentities like equilibrium, utility, or rational expectations. It seems that this bad habit has a debilitating effect also on mathematicians. Our actual question is not whether statistical mechanics is good enough for physics and there is absolutely no need to discuss the finer points of quantum mechanics. Why? Because quantum mechanics and locality and all the rest is irrelevant for economics. All that is relevant about uncertainty and unpredictability is known at least since J. S. Mill and has been stated unmistakably by other well-known people.
“The phenomena with which this science [of human nature] is conversant being the thoughts, feelings, and actions of human beings, it would have attained the ideal perfection of a science if it enabled us to foretell how an individual would think, feel, or act, throughout life, with the same certainty with which astronomy enables us to predict the places and the occultations of the heavenly bodies. It needs scarcely be stated that nothing approaching to this can be done.” (Mill, 2006, p. 846)
“The future is unpredictable.” (Feynman, 1992, p. 147)
“We are very far from being able to predict, even in physics, the precise results of a concrete situation, such as a thunderstorm, or a fire.” (Popper, 1960, p. 139)
“... it has even been argued that economic explanations involving rational choice are a species of ‘folk psychology’, explaining actions in terms of beliefs and desires, variables that cannot be measured independently of the actual choices we want to predict, so that they are no genuine predictions at all.” (Blaug, 1994, p. 113)
Keynes only used more words to restate the obvious.
“The sense in which I am using the term [uncertainty] is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence, or the obsolescence of a new invention … About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know.” (Keynes, 1937, p. 214)
It is remarkable that the representative economist simply does not accept the obvious even when politely told by one of the greatest mathematicians.
“Walras approached Poincaré for his approval. ... But Poincaré was devoutly committed to applied mathematics and did not fail to notice that utility is a nonmeasurable magnitude. ... He also wondered about the premises of Walras’s mathematics: It might be reasonable, as a first approximation, to regard men as completely self-interested, but the assumption of perfect foreknowledge ‘perhaps requires a certain reserve’.” (Porter, 1994, p. 154)
What Walras’s neoclassical heirs can either not see or not accept is that they are in the wrong research program.
“The failure to find such a law [between desire, belief and action] or any approximation to it that actually improves our ability to predict consumer behaviour any better than Adam Smith could have resulted on the one hand in a reinterpretation of the aims of economic theory away from explaining individual human action, ...” (Rosenberg, 1994, p. 224)
And this is the spoilsport. “... if we wish to place economic science upon a solid basis, we must make it completely independent of psychological assumptions and philosophical hypotheses.” (Slutzky, quoted in Mirowski, 1995, p. 362)
Because economics is definitively ‘not a science of behavior’ (Hudík, 2011), the aim of economic theory has to be changed.
- Old definition, subjective-behavioral: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.”
- New definition, objective-structural: “Economics is the science which studies how the monetary economy works.”
Blaug, M. (1994). Why I am Not a Constructivist. Confessions of an Unrepetant Popperian. In R. E. Backhouse (Ed.), New Directions in Economic Methodology, pages 109–136. London, New York, NY: Routledge.
Feynman, R. P. (1992). The Character of Physical Law. London: Penguin.
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
Keynes, J. M. (1937). The General Theory of Employment. Quarterly Journal of Economics, 51(2): 209–223. URL
Mill, J. S. (2006). A System of Logic Ratiocinative and Inductive. Being a Connected View of the Principles of Evidence and the Methods of Scientific Investigation, volume 8 of Collected Works of John Stuart Mill. Indianapolis, IN: Liberty Fund.
Mirowski, P. (1995). More Heat than Light. Cambridge: Cambridge University Press.
Popper, K. R. (1960). The Poverty of Historicism. London, Henley: Routledge and Kegan Paul.
Porter, T. M. (1994). Rigor and Practicality: Rival Ideals of Quantification in Nineteenth-Century Economics. In P. Mirowski (Ed.), Natural Images in Economic Thought, pages 128–170. Cambridge: Cambridge University Press.
Rosenberg, A. (1994). What is the Cognitive Status of Economic Theory? In R. E. Backhouse (Ed.), New Directions in Economic Methodology, pages 216–235.
London, New York, NY: Routledge.
* For cross-references see here