Comment on Geoff Davies on 'Pluralism is not enough'
Blog-Reference
We agree that the neoclassical paradigm has to be replaced. Unfortunately, there is no alternative paradigm. The minimum requirement of a paradigm is that it is logically consistent. A heap of critique, well-meant proposals, and incoherent theories is not a Paradigm.
So, my point is that Heterodoxy does not satisfy scientific standards. You argue as social scientists have argued before you, yes, but then let us lower the standards. Blaug called this: playing tennis with the net down.
This softening of standards started with J. S. Mill's characterization of economics as an inexact and separate science. There is no such thing. Either you conform to the criteria of material and formal consistency, or you are outside of science.
Therefore, the Einstein-Newton story is entirely misplaced. Economics does not resemble Newton's theory but Ptolemy's epicycle theory. Therefore, it cannot become the special case of a more general theory, but has to go out the window.
That “Truth is a hoary old myth that unfortunately is still widely believed” is a widely employed self-deception among social scientists.
Economists do not really want to get out of the 'thickness of confusion' (Suppes) because wish-wash and inconclusiveness help passably against outright refutation. After all: “... you cannot prove a vague theory wrong.” (Feynman). This saves a lot of jobs.
Egmont Kakarot-Handtke
December 31, 2014
Pluralism and truth
Comment on Geoff Davies on 'Pluralism is not enough'
Blog-Reference
Despite appearances to the contrary, I agree with almost all you have said.
However, it is one thing when physicists who have developed Quantum and Relativity Theory wonder about whether we can know the ultimate Truth. It is quite another thing when you tell confused confusers (2013) that we can never know whether we have arrived at the truth with a big T.
It is a bit like telling someone who has trouble going three steps in a straight line that he will never surpass the speed of light.
The current problem of economics is to get the foundational concepts right (2014).
Let us agree on this: “Although nowadays we have given up the idea of absolutely certain knowledge, we have not by any means given up the idea of the search for truth.” (Popper, 1994, p. 202)
Egmont Kakarot-Handtke
References
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
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality., chapter Models, Instruments, and Truth, 154–184. London,
New York: Routledge.
Blog-Reference
Despite appearances to the contrary, I agree with almost all you have said.
However, it is one thing when physicists who have developed Quantum and Relativity Theory wonder about whether we can know the ultimate Truth. It is quite another thing when you tell confused confusers (2013) that we can never know whether we have arrived at the truth with a big T.
It is a bit like telling someone who has trouble going three steps in a straight line that he will never surpass the speed of light.
The current problem of economics is to get the foundational concepts right (2014).
Let us agree on this: “Although nowadays we have given up the idea of absolutely certain knowledge, we have not by any means given up the idea of the search for truth.” (Popper, 1994, p. 202)
Egmont Kakarot-Handtke
References
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
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality., chapter Models, Instruments, and Truth, 154–184. London,
New York: Routledge.
Pluralism and the long shadow of Bentham
Comment on Geoff Davies on 'Pluralism is not enough'
Blog-Reference
Utility is good enough for engineering but not for science. The methodological problem with the truth was that one can arrive at the truth, but can never be sure because it is always possible that someone else finds a better theory that contains one's theory as a limiting case. Because of this, Popper developed the concept of verisimilitude.
Newtonian physics was considered true and corroborated beyond a reasonable doubt until Einstein showed that things become very un-Newtonian at high speeds. So Newton became the limiting case for low speeds of General Relativity Theory. Relativity Theory is closer to the truth. It can be taken as the truth until somebody else comes up and shows that the Theory of Relativity is a limiting case of the Theory of Everything.†
Your conclusion: “The Newton-Einstein comparison also shows that science is not about proof or Truth.” is absolutely false. What do you think physicists are doing at CERN? For genuine scientists, it is all about proof.††
A well-known irony in the history of science was that Ptolemy's theory was even superior for the purpose of navigation in comparison to the newly developed Copernican theory. Despite its practical usefulness, Ptolemy's theory is false according to scientific criteria.
To replace truth with usefulness is exactly what Blaug characterized as playing tennis with the net down.
It is surrealistic when economists discuss truth because after 200+ years, they still cannot tell the difference between profit and income (see 2014).
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Blog-Reference
Utility is good enough for engineering but not for science. The methodological problem with the truth was that one can arrive at the truth, but can never be sure because it is always possible that someone else finds a better theory that contains one's theory as a limiting case. Because of this, Popper developed the concept of verisimilitude.
Newtonian physics was considered true and corroborated beyond a reasonable doubt until Einstein showed that things become very un-Newtonian at high speeds. So Newton became the limiting case for low speeds of General Relativity Theory. Relativity Theory is closer to the truth. It can be taken as the truth until somebody else comes up and shows that the Theory of Relativity is a limiting case of the Theory of Everything.†
Your conclusion: “The Newton-Einstein comparison also shows that science is not about proof or Truth.” is absolutely false. What do you think physicists are doing at CERN? For genuine scientists, it is all about proof.††
A well-known irony in the history of science was that Ptolemy's theory was even superior for the purpose of navigation in comparison to the newly developed Copernican theory. Despite its practical usefulness, Ptolemy's theory is false according to scientific criteria.
To replace truth with usefulness is exactly what Blaug characterized as playing tennis with the net down.
It is surrealistic when economists discuss truth because after 200+ years, they still cannot tell the difference between profit and income (see 2014).
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
† For a revision see Alexander Unzicker, Einsteins verlorener Schlüssel: Warum wir die beste Idee des 20. Jahrhunderts übersehen haben; Einstein's Lost Key: How We Overlooked the Best Idea of the 20th Century, Kindle.
†† Alexander Unzicker, Auf dem Holzweg durchs Universum: Warum CERN & Co. der Physik nicht weiterhelfen
EconoPhysics and Pluralism
Comment on Geoff Davies on 'Pluralism is not enough'
Blog-Reference
Econophysicists who intend to apply their methods and tools to economics come in two flavors: either they want to beat one of the financial markets or they want to contribute to the social betterment of mankind.
“Into this unstable situation, propelled largely by contracting opportunities in the physical sciences, but sometimes also by a fervent desire to apply the scientific method to the social betterment of mankind, came an unprecedented wave of trained scientists and engineers into economics. The roll call is stunning, and included Ragnar Frisch, Tjalling Koopmans, Jan Tinbergen, Maurice Allais, Kenneth Arrow, and a host of others. For the first time, noted mathematicians such as John von Neumann, Griffith Evans, Harold Thayer Davis, Edwin Bidwell, Wilson, and others were induced to turn their attention, however briefly, to economics and to participate in its elaboration rather than to jeer from the sidelines. When this influx of talent became acquainted with the corpus of neoclassical theory, they discovered that it consisted largely of the formal models which they had already mastered in their earlier training in physics, with the only difference being that the vintage of the model was clearly that of the later 19th century. Thus, with only the most passing acquaintance with the long tradition of economic theorizing, these tyros could jump right in and apply more up-to-date mathematical techniques and metaphors to the neoclassical program and come up with far-reaching results.” (Mirowski, 1991, p. 152)
What got lost in the enthusiasm was that the neoclassical approach was fundamentally flawed, to begin with. As a result, economics got even deeper into the cul-de-sac. The real task would have been to replace the flawed conceptual core construction of supply-demand-equilibrium (S-D-E) and not to update it.
It is a curious phenomenon that econophysicists habitually overlook the primacy of theory.
“The mathematical language used to formulate a theory is usually taken for granted. However, it should be recognized that most of the mathematics used in physics was developed to meet the theoretical needs of physics. ... The moral is that the symbolic calculus employed by a scientific theory should be tailored to the theory, not the other way round.” (Wittgenstein, quoted in Schmiechen, 2009, p. 368)
Before you apply the Omori Law of earthquake aftershocks, it would perhaps be a good idea to try some correct economics for a start (2014c; 2014a; 2014b).
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014a). Economics for Economists. SSRN Working Paper Series, 2517242: 1–29. URL
Kakarot-Handtke, E. (2014b). The Synthesis of Economic Law, Evolution, and History. SSRN Working Paper Series, 2500696: 1–22. URL
Kakarot-Handtke, E. (2014c). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Mirowski, P. (1991). The When, the How, and the Why of Mathematical Expression in the History of Economic Analysis. Journal of Economic Perspectives, 5(1):
145–157. URL
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, volume 1. Norderstedt: Books on Demand BoD, 2nd edition. URL
Blog-Reference
Econophysicists who intend to apply their methods and tools to economics come in two flavors: either they want to beat one of the financial markets or they want to contribute to the social betterment of mankind.
“Into this unstable situation, propelled largely by contracting opportunities in the physical sciences, but sometimes also by a fervent desire to apply the scientific method to the social betterment of mankind, came an unprecedented wave of trained scientists and engineers into economics. The roll call is stunning, and included Ragnar Frisch, Tjalling Koopmans, Jan Tinbergen, Maurice Allais, Kenneth Arrow, and a host of others. For the first time, noted mathematicians such as John von Neumann, Griffith Evans, Harold Thayer Davis, Edwin Bidwell, Wilson, and others were induced to turn their attention, however briefly, to economics and to participate in its elaboration rather than to jeer from the sidelines. When this influx of talent became acquainted with the corpus of neoclassical theory, they discovered that it consisted largely of the formal models which they had already mastered in their earlier training in physics, with the only difference being that the vintage of the model was clearly that of the later 19th century. Thus, with only the most passing acquaintance with the long tradition of economic theorizing, these tyros could jump right in and apply more up-to-date mathematical techniques and metaphors to the neoclassical program and come up with far-reaching results.” (Mirowski, 1991, p. 152)
What got lost in the enthusiasm was that the neoclassical approach was fundamentally flawed, to begin with. As a result, economics got even deeper into the cul-de-sac. The real task would have been to replace the flawed conceptual core construction of supply-demand-equilibrium (S-D-E) and not to update it.
It is a curious phenomenon that econophysicists habitually overlook the primacy of theory.
“The mathematical language used to formulate a theory is usually taken for granted. However, it should be recognized that most of the mathematics used in physics was developed to meet the theoretical needs of physics. ... The moral is that the symbolic calculus employed by a scientific theory should be tailored to the theory, not the other way round.” (Wittgenstein, quoted in Schmiechen, 2009, p. 368)
Before you apply the Omori Law of earthquake aftershocks, it would perhaps be a good idea to try some correct economics for a start (2014c; 2014a; 2014b).
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014a). Economics for Economists. SSRN Working Paper Series, 2517242: 1–29. URL
Kakarot-Handtke, E. (2014b). The Synthesis of Economic Law, Evolution, and History. SSRN Working Paper Series, 2500696: 1–22. URL
Kakarot-Handtke, E. (2014c). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Mirowski, P. (1991). The When, the How, and the Why of Mathematical Expression in the History of Economic Analysis. Journal of Economic Perspectives, 5(1):
145–157. URL
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, volume 1. Norderstedt: Books on Demand BoD, 2nd edition. URL
Related 'Toolism! A critique of EconoPhysics' and 'Your economics is refuted on all counts: here is the real thing'.
***
Graphic AXEC121g
***
Real-World Economics Blog Mar 14, 2021, Blair Fix, Energizing exchange: Learning from econophysics’ mistakes
"What is important about econophysics is that it demonstrates a flaw that runs throughout economics: the idea that we can explain macro-level phenomena from micro-level principles."
For more about the Fallacy of Composition, see AXECquery.
Prophets of Preemptive Vanitization (I)
Comment on Lars Syll on 'Proper use of math in economics'
Blog-Reference
You quote the neoclassical economist Erich Schneider saying: “The most that can be said is that a theoretically correct proposition is not relevant because its assumptions do not apply to the present situation.”
This, of course, is absolutely correct for neoclassical theory. In science, things are quite different.
“To give a causal explanation of an event means to deduce a statement which describes it, using as premises of the deduction one or more universal laws, together with certain singular statements, the initial conditions.” (Popper, 1980, p. 59)
Schneider has to be put into the group of people who think because they cannot solve a problem nobody else can. This logical error is known as the Fallacy of Composition. Let us call this large group of annoying bystanders the Prophets of Preemptive Vanitization. Typical statements of these prophets are that bodies that are heavier than air cannot fly or: “There is no objective truth in economics. Nobody understands the whole picture. Everybody gets a piece of it.” (Roosevelt)
The classical answer to Preemptive Vanitization is: “People who say it cannot be done should not interrupt those who are doing it.” (G. B. Shaw)
Egmont Kakarot-Handtke
References
Popper, K. R. (1980). The Logic of Scientific Discovery. London, Melbourne,
Sydney: Hutchison, 10th edition.
Blog-Reference
You quote the neoclassical economist Erich Schneider saying: “The most that can be said is that a theoretically correct proposition is not relevant because its assumptions do not apply to the present situation.”
This, of course, is absolutely correct for neoclassical theory. In science, things are quite different.
“To give a causal explanation of an event means to deduce a statement which describes it, using as premises of the deduction one or more universal laws, together with certain singular statements, the initial conditions.” (Popper, 1980, p. 59)
Schneider has to be put into the group of people who think because they cannot solve a problem nobody else can. This logical error is known as the Fallacy of Composition. Let us call this large group of annoying bystanders the Prophets of Preemptive Vanitization. Typical statements of these prophets are that bodies that are heavier than air cannot fly or: “There is no objective truth in economics. Nobody understands the whole picture. Everybody gets a piece of it.” (Roosevelt)
The classical answer to Preemptive Vanitization is: “People who say it cannot be done should not interrupt those who are doing it.” (G. B. Shaw)
Egmont Kakarot-Handtke
References
Popper, K. R. (1980). The Logic of Scientific Discovery. London, Melbourne,
Sydney: Hutchison, 10th edition.
History and methodology: no trouble of any sort
Comment on Lars Syll on 'Proper use of math in economics'
Blog-Reference
You say: “If you explain the triumph of theoretical importance as a result of a superior thought system, then you are in deep trouble because almost every day there is a post on this blog that explains that the principles and axioms of neoclassical economics are false.”
You obviously have some trouble keeping things properly apart.
(i) It is one thing to say theory A is true/false.
(ii) It is another thing to say that theory A is supported in various ways in country X to the detriment of theories B, C, ...
Even if we agree perfectly on the historical fact (ii), this does not imply anything about the truth or falsity of theory A. This is an entirely separate question. Scientists focus on (i) and historians on (ii). This is not to deny that both questions get mixed up in the mind of a concrete scientist in a concrete historical setting. However, as a matter of principle, the political success of a theory does not prove anything for or against its scientific value.
What I say is:
(i) Neoclassical theory is a failure.
(ii) The behavioral axioms of the neoclassical approach are not the proper starting point of theoretical economics. This explains (i).
(iii) The set of structural axioms provides the correct formal foundations of theoretical economics. Structural/systemic axioms are methodologically superior to behavioral axioms (2014).
(iv) From the structural axiom set follow testable propositions (see the formula above, for example).
(v) If anybody thinks that the structural axiom set is false, he is invited to refute one proposition that follows deductively from it.
(vi) Methodological discussions are no substitute for a test. In fact, they are a distraction. Only the test counts.
Whether some government agency has promoted neoclassical theory during the Cold War is irrelevant for the true/false question. Neither government, nor church, nor history has anything to say about true/false, it never had, and never will. This is not to deny that these institutions try to exert illegitimate/incompetent influence on theoretical economics. This is an organizational problem, but not a scientific problem.
The best that theoretical economics can give history at the moment is the Economics God Equation, as shown with Graphic AXEC25a
Take it, ignore it, or try to refute it.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Blog-Reference
You say: “If you explain the triumph of theoretical importance as a result of a superior thought system, then you are in deep trouble because almost every day there is a post on this blog that explains that the principles and axioms of neoclassical economics are false.”
You obviously have some trouble keeping things properly apart.
(i) It is one thing to say theory A is true/false.
(ii) It is another thing to say that theory A is supported in various ways in country X to the detriment of theories B, C, ...
Even if we agree perfectly on the historical fact (ii), this does not imply anything about the truth or falsity of theory A. This is an entirely separate question. Scientists focus on (i) and historians on (ii). This is not to deny that both questions get mixed up in the mind of a concrete scientist in a concrete historical setting. However, as a matter of principle, the political success of a theory does not prove anything for or against its scientific value.
What I say is:
(i) Neoclassical theory is a failure.
(ii) The behavioral axioms of the neoclassical approach are not the proper starting point of theoretical economics. This explains (i).
(iii) The set of structural axioms provides the correct formal foundations of theoretical economics. Structural/systemic axioms are methodologically superior to behavioral axioms (2014).
(iv) From the structural axiom set follow testable propositions (see the formula above, for example).
(v) If anybody thinks that the structural axiom set is false, he is invited to refute one proposition that follows deductively from it.
(vi) Methodological discussions are no substitute for a test. In fact, they are a distraction. Only the test counts.
Whether some government agency has promoted neoclassical theory during the Cold War is irrelevant for the true/false question. Neither government, nor church, nor history has anything to say about true/false, it never had, and never will. This is not to deny that these institutions try to exert illegitimate/incompetent influence on theoretical economics. This is an organizational problem, but not a scientific problem.
The best that theoretical economics can give history at the moment is the Economics God Equation, as shown with Graphic AXEC25a
 |
| The Economics God Equation |
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
History in the formal nutshell
Comment on Lars Syll on 'Proper use of math in economics'
Blog-Reference
Here is the answer in a formal nutshell: Graphic AXEC25.
Into this formula, which applies to the economy as a whole, the specificities of time and place have to be inserted just as you have to insert these specificities into a physical formula.
Explanation is different from the description of a historical event. For example, from the laws of physics follows how the Titanic sank, but not why the ship and iceberg met at the specific time and place. These initial conditions have to be taken as given.
For the theory that underlies the formula above, see “The Synthesis of Economic Law, Evolution, and History” URL. It may also be helpful to learn what Popper said about ‘explaining in principle':
“My thesis is that only in this way [explaining in principle] can we explain and understand a social event (only in this way because we never have sufficient laws and initial conditions at our disposal to explain it with their help).” (Popper, 1994, p. 168)
Theoretical economics does not explain specific historical events. No science does. Moreover, the formula above covers the ECONOMIC aspect of history and NOT the social aspect. It does not predict but can be tested with an accuracy of two decimal places with historical data.
With regard to the future, the formula above represents a stochastic simulation that replaces the set of deterministic equations of the orthodox approach. You can run it on a spreadsheet.
Egmont Kakarot-Handtke
References
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and
Rationality. London, New York, NY: Routledge.
Blog-Reference
Here is the answer in a formal nutshell: Graphic AXEC25.
Into this formula, which applies to the economy as a whole, the specificities of time and place have to be inserted just as you have to insert these specificities into a physical formula.
Explanation is different from the description of a historical event. For example, from the laws of physics follows how the Titanic sank, but not why the ship and iceberg met at the specific time and place. These initial conditions have to be taken as given.
For the theory that underlies the formula above, see “The Synthesis of Economic Law, Evolution, and History” URL. It may also be helpful to learn what Popper said about ‘explaining in principle':
“My thesis is that only in this way [explaining in principle] can we explain and understand a social event (only in this way because we never have sufficient laws and initial conditions at our disposal to explain it with their help).” (Popper, 1994, p. 168)
Theoretical economics does not explain specific historical events. No science does. Moreover, the formula above covers the ECONOMIC aspect of history and NOT the social aspect. It does not predict but can be tested with an accuracy of two decimal places with historical data.
With regard to the future, the formula above represents a stochastic simulation that replaces the set of deterministic equations of the orthodox approach. You can run it on a spreadsheet.
Egmont Kakarot-Handtke
References
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and
Rationality. London, New York, NY: Routledge.
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