December 31, 2014

Looking through the veil of historical detail

Comment on Lars Syll on 'Proper use of math in economics'


With regard to historical detail, you should know better because economists have the privilege to be the heirs of one of the greatest methodologists. Even physicists listened to J. S. Mill: “They [Einstein and Dirac] agreed that science was fundamentally about explaining more and more phenomena in terms of fewer and fewer theories, a view they had read in Mill's A System of Logic.” (Farmelo, 2009, p. 137)

And what do economists know since 1874?

“Since, therefore, it is vain to hope that truth can be arrived at, either in Political Economy or in any other department of the social science, while we look at the facts in the concrete, clothed in all the complexity with which nature has surrounded them, and endeavour to elicit a general law by a process of induction from a comparison of details; there remains no other method than the à priori one, or that of ‘abstract speculation.’” (Mill, 1874, V.55)

The historicist looks ― metaphorically ― at the flight path of a colored leaf on a windy autumn day. And after observing 1.000 flights he is none the wiser. A physicist regards the historical details as disturbances, throws a cannonball from a tower, and comes up with the Law of Free Fall.

Certainly, the Law of Free Fall is an abstraction and it does not predict the leaf's trajectory. Obviously the historicist and the scientist have different methodologies. Loosely speaking, economics is about laws and not historical detail.

We agree that Orthodoxy is a failure. However, the problem with Heterodoxy is that it is methodologically still in the pre-Millean Neanderthal. A sure sign is that Marshall is cited with approval.

“The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug, 1998, p. 703)

Since all theories are built upon axioms, Heterodoxy has to come up with its own axiomatic foundations. Dead-horse-kicking, loose verbal reasoning, and hiding in the thickness of confusion are not sufficient in the longer run.

Burn your defunct methodology!

Egmont Kakarot-Handtke

Blaug, M. (1998). Economic Theory in Retrospect. Cambridge: Cambridge University
Press, 5th edition.
Farmelo, G. (2009). The Strangest Man. The Hidden Life of Paul Dirac, Quantum
Genius. London: Faber and Faber.
Mill, J. S. (1874). Essays on Some Unsettled Questions of Political Economy. On
the Definition of Political Economy; and on the Method of Investigation Proper
To It. Library of Economics and Liberty. URL