July 21, 2016

Substandard reasoners

Comment on Lars Syll on ‘Why economists can’t reason’

Blog-Reference and Blog-Reference on Jul 22

The simple fact is that about one percent of a population can reason. The rest merely recycles stories of different degrees of absurdity according to Tertullian’s motto ‘Credo quia absurdum est’.#1 Unfortunately, economics has been done since Adam Smith by the ninety-nine-percenters. This happened because “... we can never make sure that the right man will be attracted to scientific research.” (Popper, 1960, p. 157)

The failure of economics proves that it has been particularly attractive for substandard reasoners.

Science is special because it is the systematic attempt to establish truth which in turn is well-defined by material AND formal consistency. Scientific truth is double-checked, everything else is storytelling.

About the logical part, Scriven says: “Reasoning is the process whereby we get from old truths to new truths, from the known to the unknown, from the accepted to the debatable … If the reasoning starts on firm ground, and if it is itself sound, then it will lead to a conclusion which we must accept, though previously, perhaps, we had not thought we should.” (See intro)

The key term is “firm ground” or, as Aristotle put it: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.”#2

Scientific methodology is old stuff for more than 2300 years but economists never could get their heads around it.

What does the “firm ground” of economics look like? Standard economics is built upon this set of foundational propositions, a.k.a. axioms: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub, 1985, p. 147)

With this “firm ground” sound logical thinking with iron necessity arrives eventually in a parallel universe. Clearly, with manifest NONENTITIES in the premises, the inevitable outcome is a bubbling angels-on-a-pinpoint discourse. The real question is why so many economists could ever accept HC1 to HC5. Obviously, the motto ‘Credo quia absurdum est’ applies as ever and has only to be translated into modern English as ‘You can sell any crap to an economist’.#3

The curious thing is that there is no difference between orthodox and heterodox economists in this respect. What is, in fact, different between them is the color of their methodological tinfoil hats. Orthodoxy says HC1 to HC5 is firm ground, and Heterodoxy subscribes to anything-goes or optionally to nothing-goes.

Scientists have always known one crucial thing about firm ground: “We are lost in a swamp, the morass of our ignorance. ... We have to find the roots and get ourselves out! ... Braids or bootstraps are necessary for two purposes: to pull ourselves out of the swamp and, afterwards, to keep our bits and pieces together in an orderly fashion.” (Schmiechen, 2009, p. 11)

In order to pull themselves out of the swamp, economists have to replace the microfoundations HC1 to HC5 with macrofoundations. There is no hope at all that the old swampies can do the trick.

Egmont Kakarot-Handtke

Popper, K. R. (1960). The Poverty of Historicism. London, Henley: Routledge and Kegan Paul.
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, volume 1. Norderstedt: Books on Demand, 2nd edition. URL
Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL

#1 Wikipedia Credo quia absurdum
#2 Wikipedia Posterior Analytics
#3 Mental messies and loose losers