January 24, 2016

The three pillars of English philosophy: Individualism, Darwinism, Political Economics

Comment on ‘David Sloan Wilson on economics and new developments in evolutionary theory’

Blog-Reference

Wilson summarizes “In short, all of the components of economic theory that made Krugman regard evolutionary theory as a ‘sister field’ in 1996 require foundational changes.”

Foundational changes are indeed required in economics (2014). And it is not the first time that the representative economist is inclined to think that —  after copying from Newtonian physics did not work  —  it is a brilliant idea to copy Darwinian/Neo-Darwinian evolution. As a matter of fact, Veblen kicked off heterodox economics with the question “Why is Economics Not an Evolutionary Science?” Not much came from it because Heterodoxy never rose above naive empirical/historical/partial/sociological commonsense analysis and never formulated anything in the way of a general theory of how the monetary economy works.

The first thing to notice is that Wilson does not introduce a new idea into economics or promotes a ‘foundational change’ but firmly remains within the narrow boundaries of age-old English philosophy.

This philosophy consists of three tightly interlocked meme*
(i) Individualism — variation — pluralism — enlightened self-interest — egoism — selfishness — greed —  pursuit of self-defined happiness;
(ii) Evolution — Darwinism — variation — competition — selection/survival (natural/social) — breeding/eugenics — human progress (Übermensch/super-race);
(iii) Political economics — utilitarianism — competition — creative destruction — Invisible Hand — equilibrium/optimum — strong/dominant nation state — commonwealth.

Exemplary interlocks: (iii)/(ii) e.g. Malthus/Darwin; (i)/(ii) e.g. selfish gene/Dawkins; (iii)/(ii) e.g. Keynes as member of the Eugenics Society; (ii)/(iii) e.g. Social Darwinism**; (i)/(ii)/(iii) e.g. Laissez-faire.

Last, but not least: (i)/(iii) yields the job description for neoclassical economists and a guideline for peer review selectors of what to take in and what to keep out of the economics meme-pool: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.” (Arrow, 1994, p. 1)

This program has run against the wall — scientifically and practically. Wall Street as concrete manifestation of neoclassical economics has become the epitome of human alienation/corruption and economic failure. So, methodological individualism is put back into the box of tools and ‘other social categories’ are taken out, viz. multi-cellular organisms, social insect colonies, bee hives, and other biological manifestations of altruism/cooperation.

Krugman is replaced by Kropotkin! What a turn of events! Why the Russian anarchist Kropotkin*** who found out that in Siberia ‘cooperation and mutual aid is the foundation for dealing with the larger struggle for survival’?

Neither the sorta-kinda-maximization-and-equilibrium Krugman nor the evolutionary anarchist Kropotkin is needed, dear evolutionary economists, the gussied up classics Malthus/Darwin will do. Tune individualism a little down and tune cooperation a little up, that’s all. But don’t call evonomics/evolutionary economics a foundational change.

A truly foundational change requires five steps: (i) to throw the obsolete English philosophy out of the window, (ii) to stop copying/invading other sciences, be it physics, biology, anthropology, sociology, psychology, or what not, (iii) to stop dabbling in politics without sound scientific foundation, (iv) to throw out maximization-and-equilibrium, (v) to make economics a science that stands on its own methodological feet and on entirely new axiomatic foundations.

Egmont Kakarot-Handtke


References
Arrow, K. J. (1994). Methodological Individualism and Social Knowledge.  American Economic Review, Papers and Proceedings, 84(2): 1–9. URL
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL

* Wikipedia
** Wikipedia
*** Wikipedia