January 7, 2017

Complexity and stupidity

Comment on Asad Zaman on ‘Keynesian Complexity’

Blog-Reference and Blog-Reference on May 2 adapted to context

When economists are at the end of their wits they invoke complexity: “Economies are devilishly complicated things. They are full of obstreperous and notoriously difficult subject matter. Notably people. And people, as we all know, do the darnedest things. They, for instance, change their minds and sometimes even contradict themselves ― with a straight face too. This makes plotting and explaining their activity very hard.”#1

Since Newton’s and Adam Smith’s days, when economists ask themselves why they have failed in both relative and absolute terms one invariably hears the same complexity-uncertainty-hard-stuff refrain: “There is a property common to almost all the moral sciences, and by which they are distinguished from many of the physical; this is, that it is seldom in our power to make experiments in them. ... We therefore study nature under circumstances of great disadvantage in these sciences; being confined to the limited number of experiments which take place (if we may so speak) of their own accord, without any preparation or management of ours; in circumstances, moreover, of great complexity, and never perfectly known to us; and with the far greater part of the processes concealed from our observation.” (J. S. Mill, 1874, V.51)

Or: “Years ago I heard Mr. Cobden say at a League Meeting that ‘Political Economy was the highest study of the human mind, for that the physical sciences required by no means so hard an effort.’” (Bagehot, 1885, PE. 13)

Or: “The motives and conditions are so numerous and complicated, that the resulting actions have the appearance of caprice, and are beyond the analytic powers of science.” (Jevons, 1911, p. 15)

Or: “Knight accuses the positivists of overlooking the complexity and uncertainty of testing in all sciences and argues at length that positivist views of science are particularly inappropriate to economics, which, like all sciences of human action, must concern itself with reasons, motives, values and errors, not just causes and regularities.” (Hausman, 1989, p. 118)

Or: “Economics is a strange sort of discipline. ... 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)

We know from the history of science that Ptolemy’s theory of planetary motion was very complex ― in the end, he dealt with more than 20 epicycles ― and that the complexity vanished into thin air by changing the vantage point. Could it be that complexity is not in the subject matter but in the observer’s mind? Could it be that economists observe and argue, like Ptolemy, from the wrong vantage point?

“Others, the inexperienced students, make guesses that are very complicated, and it sort of looks as if it is all right, but I know it is not true because the truth always turns out to be simpler than you thought.” (Feynman, 1992, p. 171)

Could complexity be an indicator of dilettantism or confusion or scientific incompetence?

Imagine for a moment an aircraft flying from, say, New York to Paris. Now we can ask why? One way to answer the question is to speculate about the motives and reasons of the passengers, the pilot, the crew, the flight controllers, and the managers and stockholders of the airline. The other way to look at flight is to think about the laws of aerodynamics, thermodynamics, and so forth.

We could know in advance that there is no such thing as ‘laws’ of human behavior that could explain flying, not to speak of a particular flight. Real scientists have always been well aware of this.

“The bifurcation of motion into two fundamentally different types, one for natural motions of non-living objects and another for acts of human volition ... is obviously related to the issue of free will, and demonstrates the strong tendency of scientists in all ages to exempt human behavior from the natural laws of physics, and to regard motions resulting from human actions as original, in the sense that they need not be attributed to other motions.” (Brown, 2011, p. 211)

Hume and Adam Smith, though, missed this crucial methodological point and subscribed to the primacy of what was called the Science of Man.

“It is evident, that all the sciences have a relation, greater or less, to human nature: and that however wide any of them may seem to run from it, they still return back by one passage or another. Even. Mathematics, Natural Philosophy, and Natural Religion, are in some measure dependent on the science of MAN; since they lie under the cognizance of men, and are judged of by their powers and faculties.” (Hume, 2012, Introduction)

By anchoring economics firmly in the social sciences Hume and Smith set the discipline on the wrong track and programmed failure: “...there has been no progress in developing laws of human behavior for the last twenty-five hundred years.” (Hausman, 1992, p. 320), see also (Rosenberg, 1980, pp. 2-3)

Economics is NOT a science of behavior (Hudík, 2011); economists have to change their vantage point; economics has to be redefined. Economics is NOT a social science but a systems science:
OLD definition, subjective-behavioral: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.”
NEW definition, objective-systemic: “Economics is the science which studies how the monetary economy works.”

In non-technical terms, this is what a Paradigm Shift, a.k.a. new economic thinking is all about.#2 Because they are unable to perform the Paradigm Shift economists are stuck in the cul-de-sac. To complain about the complexity of reality has always been a ridiculous excuse of incompetent scientists.#3 Asad Zaman, the heterodox muddle head, is no exception. Keynesianism is inconsistent for 80+ years and Post Keynesians have not rectified the foundational error/mistake/blunder until this very day.#4 This has NOTHING to do with complexity but with stupidity.

Egmont Kakarot-Handtke

Bagehot, W. (1885). The Postulates of English Political Economy. Library of Economics and Liberty. URL
Brown, K. (2011). Reflections on Relativity. Raleigh: Lulu.com.
Feynman, R. P. (1992). The Character of Physical Law. London: Penguin.
Hausman, D. M. (1989). Economic Methodology in a Nutshell. Journal of Economic Perspectives, 3(2): 115–127. URL
Hausman, D. M. (1992). The Inexact and Separate Science of Economics. Cambridge: Cambridge University Press.
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
Hume, D. (2012). A Treatise of Human Nature. Project Gutenberg EBook. URL
Jevons, W. S. (1911). The Theory of Political Economy. London, Bombay, etc.: Macmillan, 4th edition. URL
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
Rosenberg, A. (1980). Sociobiology and the Preemption of Social Science. Oxford: Blackwell.
Solow, R. M. (1998). Foreword, volume William Breit and Roger L. Ranson: The Academic Scribblers. Princeton: Princeton University Press, 3rd edition.

#1 Source
#2 From Orthodoxy to Heterodoxy to Sysdoxy
#3 Methodology 101, economic filibuster, and the mother of all excuses
#4 How Keynes got macro wrong and Allais got it right

Related 'Failed critique of failed economics' and 'There is no soft science only soft brains' and 'And the answer is NCND ― economics after 200+ years of Glomarization' and 'The miracle cure of economists’ micro-macro schizo' and 'Do first your macroeconomic homework!' and 'Complexity, scientific incompetence, and the art of asking the right questions'.

REPLY to jrbarch on May 3

Complexity is an issue where one can clearly see the difference between substandard thinkers like economists and genuine scientists. Here is how complexity is properly dealt with.

“The Principia begins with an idealized world, a simple mental construct, a ‘system’ of a single mathematical particle and a centrally directed force in a mathematical space. Under these idealized conditions, Newton freely develops the mathematical consequences of the laws of motion that are the axioms of the Principia. At a later stage, after contrasting this ideal world with the world of physics, he will add further conditions to his intellectual construct ― for example, by introducing a second body that will interact with the first one and then exploring further mathematical consequences. ... In this way he can approach by stages nearer and nearer to the condition of the world of experiment and observation, introducing bodies of different shapes and composition and finally bodies moving in variant types of resistant mediums rather than in free space.” (Cohen, 1994, p. 77)

Economics, too, starts with an idealized world but then it does NOT move nearer and nearer to the world of experiment and observation but in the OPPOSITE direction in order to rationalize an unsuccessful initial idealization. Thus idealization, which is indispensable, becomes counterproductive. There is only a thin line between fruitful abstraction and barren absurdity. To assume that the moon is a mass point is unrealistic but fruitful, to assume that it is made of green cheese is unrealistic but nothing else. Most assumptions/abstractions/idealizations/simplifications of standard economics fall into the green cheese category. This is how economics has become so gaga.

The crucial point of scientific methodology is the undissolvable combination of axiomatics and empiricism. Despite many imitations, this point never got across to the storytellers of the so-called social sciences: “Did anyone ever attempt to found a system of social science or economics on the level of identity with Newtonian rational mechanics or the Newtonian system of the world? In my research I have never found such an example.” (Cohen, 1994, p. 61)

The task of Heterodoxy in general and the methodological loudspeakers Radford, Syll, Zaman, in particular, is NOT to wax so lyrical about complexity but to successfully deal with it.

Cohen, I. B. (1994). Natural Images in Economic Thought, chapter Newton and the Social Sciences, With Special Reference to Economics, or, the Case of the Missing Paradigm, 55–90. Cambridge: Cambridge University Press.


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