Home > Real-World Economics Review > RWER issue 56: Wolfgang Drechsler

RWER issue 56: Wolfgang Drechsler

 Understanding the problems of mathematical economics: A “continental” perspective
Wolfgang Drechsler   [Tallinn University of Technology, Estonia]

1.             Introduction

            Within the heterodox and especially the post-autistic, real-world-focused critique of Standard Textbook Economics (STE), often published in this journal, attention to its literally fundamental method, quantitative-mathematical in general and mathematically modelling specifically, and how this method steers economics away from reality, is and has been almost inevitable. Just the last issue of this journal featured a lead article by Michael Hudson on “The use and abuse of mathematical economics” (2010) which kindly quoted my quip that “mathematics has helped enthrone irrelevance as methodology.” (5)

            What generally informs even this critique, however – and not surprisingly so – is its intellectual and science-sociological rootedness in the Anglo-American discourse, in which specific questions must be addressed because they are considered, and thus are, relevant for and within that context. But while this discourse has globally won the day, at least for now, the insight that STE might be the economics precisely of that context, and thus that bowing to this context might not always produce the best results given the realist agenda, may make it helpful to look at an alternative discourse which may tackle the problems of the use of mathematics in a different, and even perhaps in a more immediate way.

1.1.       Understanding and context

            An obvious candidate for such an alternative discourse is the “Continental” (European) one, within which I would like to focus here on that particularly German tradition which we can call understanding-oriented (verstehensorientiert) or, more professionally and contemporarily, hermeneutical. In economics and the social sciences, this approach is part of the German Historical School of Economics (GHS), especially the younger (headed by Gustav von Schmoller) and youngest (headed by Werner Sombart, Max Weber’s antagonist and friend). In contemporary philosophy, it is mainly represented by the late Hans-Georg Gadamer, the father of philosophical hermeneutics, Heidegger’s most eminent student and one of the most important philosophers of the 20th century. That approach invariably and continuously connects back to two matrices of “Western” thought, Kantianism and Ancient Greece, i.e. Plato and Aristotle. In philosophy generally and also in epistemology specifically, hermeneutics and its larger context of “Continental Philosophy” is perhaps the most orthodox heterodoxy today, even within Anglo-American academe. It is certainly much more so than the GHS is in economics, where, in spite of continuous attempts at re-evaluation and resurrection (I only mention, for their work in English, Ha-Joon Chang, Geoffrey Hodgson, Erik S. Reinert and especially Jürgen G. Backhaus), it remains obscure.

You may download the whole paper at: http://www.paecon.net/PAEReview/issue56/Drechsler56.pdf

  1. John Duffield
    March 27, 2011 at 2:03 am

    A representative sample of reasons why Drechsler’s paper is unhelpful: (1) The approach you (Drechsler) advocate includes the claim that your theory “mirrors reality.” Yours is an unargued statement of what the philosophically literate know as the Correspondence Doctrine of Truth; which (a) has long since been discredited for the philosophical cognoscenti on the grounds that it commits the fallacy of begging the question–e.g., your idea or proposition is True if it corresponds to (“mirrors”) Reality–but this, please note, assumes that you already . . . know what reality is; and which (b) is antithetical to Continental Philosophy in its common acceptation, which is a misological subjectivism for which, “There is nothing outside the text.” (This “mirrors,” pardon my pun, the worthlessness of Anglo-American mainstream philosophy, a.k.a. Analytic Philosophy, for which, in W.V.O. Quine’s pretentious boast, “Ontology recapitulates philology”–in plain English, Saying it’s so makes it so.) (2) It is public knowledge of long standing that the problem with neoclassical economics is not that it employs mathematics but that it does so fallaciously, i.e., in terms distorted ideologically in service to the bourgeois status quo. For example, Joan Robinson long ago denounced as “theology” the leading preoccupations of neoclassical economics, such as Free Trade, utility (a.k.a. indifference curves) and the concept “capital” (such as employed in the Cobb-Douglas production function, and exploded in the Cambridge Capital Controversy). Said Mrs. Robinson in 1964 (Economic Philosophy, p. 70): “Just as the problem of giving an operational meaning to ‘utility’ used to be avoided by putting it into a diagram, so the problem of giving a meaning to the quantity of ‘capital’ is evaded by putting it into algebra. ‘K’ is capital, [delta-]’K’ is investment. Then what is ‘K’? Why, capital of course. It must mean something, so let us get on with the analysis, and do not bother about these officious prigs who ask us to say what it means.” In a like vein, Wm. Barnet has well illustrated the dimensional incoherence of the neoclassical production function. (See the Wikipedia article, “Dimensional Analysis,” for the reference to Barnet’s paper–well worth a read.) (3) Your paper fails to state your “hermeneutic” theory of economic value–the sine qua non of any economics with a claim to be taken seriously. Please state this for your readers; then explain how your economics is going to “mirror reality” without recourse to applied mathematics.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.