August 30, 2015

The philosophy of know-nothingers

Comment on Tom Hickey on ‘What can economists know?’


You say that economists are clueless about fundamental philosophical questions: “These issues can be summarized as 1) what is, 2) what can we know about what is, and 3) how can we know it, what can we say about what we know. These are the fundamental questions of 1) ontology, 2) epistemology, and 3) philosophical logic and semiotics.”

What a compact nutshell! I agree with this summary — except for one point. You tacitly presuppose that economics is a science. Indeed, this is the claim since Adam Smith, but it cannot be taken at face value.

Economics consists of political economics and theoretical economics. In political economics anything goes, only in theoretical economics scientific standards are observed. Most of the economics since Adam Smith has been political economics and is by implication scientifically worthless.

Economists cannot tell the difference between profit and income and because of this, they cannot know anything about how the actual economy works (2014).

Economists are well aware that they know nothing, and they have an explanation for this obvious fact. They say because of complexity and uncertainty not much can ever be known. In other words, in economics ignorance is ontological: “Given these difficulties, it is extraordinary that economics has achieved as much as it has.” (Dow, 2006, p. 51)

Or here, the same argument in the cine-max-version: “Economics is not a Science with a capital S. It lacks the experimental method as a way of testing hypotheses. . . . There are always differences of opinion at the cutting edge of a science, . . . . But they last longer in economics . . . and there are reasons for that. As already mentioned, rival theories cannot be put to an experimental test. All there is to observe is history, and history does not conduct experiments: too many things are always happening at once. The inferences that can be made from history are always uncertain, always disputable, . . . You can’t even count on a long and undisturbed run of history, because the 'laws' of behavior change and evolve. Excuses, excuses. But the point is not to provide excuses.” (Solow, 1998, pp. x-xi)

In political economics, ontology comes in very handy as a fig leaf for scientific incompetence. But, much more important, it serves also a political purpose, viz. if you know nothing you cannot do anything. Ontological opaqueness paralyzes. We are certainly not far off the mark by assuming that this cognitive immobilization has been purposefully applied by Hayek in order to fight Keynesian interventionism or statism in general. Because a central institution is ontologically blind, that is, it can never know what all individuals taken together know, and all economic policy is futile in principle (Hayek, 1945). By the same token is economics ontologically blind; it is science with a small s, or else preposterous scientism.

The fundamental blunder of Hayek as a wandering sociologist is that economics is not about ‘the use of knowledge in society’ but about objective knowledge of the functioning of the monetary economy.

Summa philosophica: lack of knowledge has hitherto been the natural, ontologically justified, and universally accepted condition of the representative economist.

Egmont Kakarot-Handtke

Dow, S. C. (2006). Economic Methodology: An Inquiry. Oxford: Oxford University Press.
Hayek, F. A. (1945). The Use of Knowledge in Society. American Economic Review, 35(4): 519–530. URL
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Solow, R. M. (1998). Foreword, volume William Breit and Roger L. Ranson: The Academic Scribblers. Princeton: Princeton University Press, 3rd edition.

Related 'Stop knowing nothing, start knowing something' and 'Economics: the honeypot for know-nothingers'.


Wikimedia AXEC136g