January 23, 2015

Prophets of Preemptive Vanitization (II)

Comment on Lars Syll on 'On abstraction and idealization in economics'


Paul Davidson has already given the resume “To throw up one’s hand and say we can not know what will happen  is to surrender to fools!”

Of, course, science does not explain everything. Of course, there are different modes of explanation. Of course, they are legitimate. Why? Because we are in a trial-and-error process. That means, we have a distinct feeling that known answers are unsatisfactory or false. And we have a distinct feeling that there must be better answers. This, in a nutshell, is the scientific stance.

Not all people share this stance. They need not! The curious thing is: Why do these people climb on a soapbox and do not get tired of telling everyone that the real world is fuzzy, vague, indeterminate, complex, that there is no absolute knowledge, that there are undecidable questions, that something cannot be done, that something other cannot be known in principle, that nobody can predict the path of a flying feather, and  finally — that they have no clue either.

I leave it to anybody’s guess why these people climb on a soapbox. Suffice it to say that they contribute nothing to science because science is concerned with questions that  with a positive probability  do have a definite answer that satisfies the criteria of material and formal consistency. The rest is for the birds.

The crucial point is: Science does not explain everything, but non-science explains nothing.

Trivially true, we cannot know everything, but from this does not follow that we cannot know something. It is this Something that science is all about, and it this Something that theoretical economics is all about.

In economics, we face a specific problem: there is theoretical and political economics. The goal of political economics is to push an agenda, the goal of theoretical economics is to explain how the actual economy works. From the viewpoint of science political economics as a whole is a no-go. The first problem of economics is that many economists are not scientists but agenda pushers of one sort or another.

Because of this, the argument of complexity, inconclusiveness, incompleteness, or futility means something different in economics than Socrates's 'I know that I know nothing' or Newton's 'playing on the sea-shore ... whilst the great ocean of truth lay all undiscovered before me'.

It is worth recalling that Hayek has recruited Socrates for his own agenda with the well-known argument that because the market system is so complex and we cannot know much about it all government action is futile and therefore all should be left to the invisible hand of the market. And it is quite consequent indeed that Hayek dismissed science as scientism. He simply let the key vanish from sight. If you know nothing, you cannot do anything.

All this is perfectly legitimate in the context of political economics. What has to be emphasized, though, is that political economics is scientifically worthless.

And at this juncture, things become a bit absurd. A heterodox economist simply cannot say all is so complex and we cannot be sure of anything and that empirical tests are inconclusive and that the axiomatic-deductive method is inapplicable in economics. Because in this case, all he has to say is: I do not like orthodox economics. This may be politically relevant but it is of no scientific consequence.

From the fact that abstraction, idealization, or the axiomatic-deductive method have been misapplied by Orthodoxy follows only that the representative economist is scientifically incompetent. It does not follow that abstraction, idealization, or the axiomatic-deductive method cannot or should not be applied by heterodox economists.

Just the contrary, or, in Paul Davidson's words: not to apply them is to surrender to fools.

Egmont Kakarot-Handtke