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Poor Adam

From: Peter Radford

Summer vacation is winding down, I have spent a great deal of time reading papers and books and not enough time doing useful things, so naturally I am continuing to bellyache about modern economics.

Perhaps its that ‘end of summer feeling’, but suddenly I feel bad for Adam Smith. I really do. Remembered as he is for a casual, if powerful, metaphor he always gets mentioned as the progenitor of modern economics. This is a strictly Anglo-Saxon view of course – the Physiocrats, especially Quesnay and Turgot,  were mucking around with various theories before him, and the world was awash with pamphlets, by people like Mun, Petty, and Gresham in England, explaining sundry aspects of trade and so on well before he ever uttered the fateful phrase “a hidden hand”.

Like those before him, Smith was trying to explain what he saw around him. There seemed, to his eye, to be a chaotic burgeoning of local activity, the emergence of factories with production broken down into different steps, businessmen [not, unfortunately, businesswomen] getting together to collude and rig the market, a rapid increase in wealth, and yet a perception of a kind of order on the surface of commerce. To Smith’s eye the local or lower level chaos and this aggregate or higher level order appeared to be a paradox. The two were in contradiction. So, being an inquisitive type, he sought to locate the method, the apparatus, or the mechanism that reconciled them. And by so doing launched economics down its modern path. The scope of his question was more novel rather than his answer. The paradox could only be resolved, he suggested, by postulating the existence of an integrating force, or set of forces, that brought the self-interest of individuals into alignment with the overall, and apparent, betterment of society as a whole.

Thus was born both classical economics and support for modern right wing ideology. Two for one.

The point being that those forces were not controlled by any central authority. Indeed they existed despite and in confrontation with such a central authority. Attempts to defy the forces were doomed and mistaken. Resistance was futile. The authorities, in Smith’s day this meant a King, Queen, Emperor or Empress, could ordain commercial activity, but that ordinance would inevitably diminish the wealth of nations not enhance it.

No. Society, and especially commerce, was best left to self-integrate or self-regulate, and whatever popped out at the end was the best we could all hope for.

Now we must give Smith his due: he foresaw plenty of problems with unfettered business. The proclivity to collude being a salient example. And he argued there were some activities that commerce couldn’t, or wouldn’t, organize well. In this respect he is more modern than his modern followers.

None of this is why I feel sorry for him. He opened our eyes to the complex system that is the economy and the emergent properties that it exhibits at different levels. He didn’t conceive it this way. He couldn’t. The notion of complexity as we now know it didn’t exist. So he used metaphors and notions that were commonplace back in the mid 1700′s. His question was a great one. Our issues are with his language and thus the narrative of his solution. It denied emergent order even though that is precisely the apparent paradox he sought to explain.

No, I feel sorry for him because is is associated – due to his unfortunate metaphor and its subsequent hold over economics – with over two centuries of error. Not just error, but a compounding or increasing error.

He opened the path followed by the great classical economists. Ricardo, Marx, Mill and even Marshall all conceived of great systems driven by even greater fundamental forces that were inevitable. As a footnote: I regard Marx as very Ricardian in this sense. That was bad enough. Worse, he enabled the thinking of Walras whose quixotic and dire search for total order, bedeviled as it is by the mirage of general equilibrium, has perverted the course of economics since the late 1800′s. The Walrasian tradition came to dominate economics at the expense of most all else and lingers on despite the death blow of Arrow-Debreu back in the 1950′s. It was death blow, as I have argued before, because it demonstrated the utter impracticality of the entire enterprise. Nonetheless so haunted, or infected, by the hidden hand had economics become that attempts to rid ourselves of it all failed. Indeed in the modern era it flourished in the hands of Friedman, Lucas, Prescott and their ilk.

So determined were all these folk to establish the supremacy of the great forces that authority could not control, that they drove ever deeper into the bizarre in order to do so. They gave up trying to explain what they saw around them. They abandoned Smith’s question altogether. They took his paradox and dismantled it. At first they sought to explain only the lower level of activity – the behavior of individuals and small business firms. Their problems mounted almost immediately. People seemed to be arbitrary and capricious. They were greedy. They defied neat categories and acted in spite of themselves. So, gradually, all these traits were eliminated from analysis. People were re-invenetd in order to make analysis more tractable. Slowly, but surely, as all the humanity was squeezed out an economics of individual behavior emerged. Nowadays we call it micro-economics. And it is utterly wrong. In its desperation to corral us into an analytical framework it starts from the end and works backwards.

It says, in a nutshell, that since we know(don’t we?) that society is rational and maximizes its resources, the behavior we see, even its more absurd aspects, is a manifestation of this rationality. The preferred activities of us all are revealed by our actual activities. They are one and the same. And since they are the outcome of the rationality we all exhibit they can be shoved into the logically consistent and highly abstract mechanisms economists have constructed to model them. This, you will no doubt have noticed, not a process of enquiry into the world as it is, but is rather an enquiry into the world as economist would like it to be in order to model it. And the more formal the attempt to model the more extreme the eradication of the world outside. Reading most any modern micro-economics textbook is like reading science fiction. It is to enter an imagined world inhabited by made up beings who act and react only according to made up rules. There is no life. Or at least no life Smith would recognize. Nor you. Nor I. But it is accepted and propagated endlessly by economics professors indoctrinated into it.

Smith would be embarrassed to be associated with the fiction.

Now comes the good part.

Having created this fantasy and having come to believe it portrays certain truths about the world, economists – those in the dreamworld anyway – dispense advice designed to bring the world around us into line with their fantasy. So instead of explaining the world they try to construct one. Instead of helping us understand how the economy works they instruct us as to how it would work if only we lived out their fantasy.

This is the exact antithesis of Smith’s project. Yet they do it as part of what they see as his legacy. They simultaneously deface his work and look back to him as iconic. More particularly they ignore him. Smith was intensely attached to the world around him. Most modern economists are intensely attached to their fantasy world.

The final step away from the world about us and thus the final step in closing out humanity from the subject was the sudden urge to ensure that any observation or theorizing about the second part of Smith’s paradox, the order up top, could only be valid if it conformed to the rules made up for the fantasy down below. Aggregate or macro-economics, largely invented by Keynes outside of the fantasy tradition, had to be re-jigged so as to be equally fictional. It had to root itself in the quicksands of micro.

It is all very clever. Remarkably complete and very logical. It sounds highly relevant too. When taught superficially it sounds as if it is addressing the world in the way that Smith intended. That is it sounds as if it is answering current questions about real things. But lurking just off stage is a host of fictional characters, made up forces, kluged rules, and rickety analyses upon which that illusion is built. It all mimics well. It explains only itself. It is all a tour de force of imagination not of scientific enquiry. Its brilliance blinds us to its irrelevance. And, in a curiosity of all fiction, it cannot be “wrong”. Since it is internally consistent, complete, and rigorously conceived it cannot be faulted on its own terms. It is thus “right” within those terms.

As a shiny artifact or a piece of art it works well. As an explanation of reality?

Well, let’s just say “poor Adam” and leave it at that.

  1. Ken Zimmerman
    August 19, 2013 at 10:14 pm

    Peter, I feel your frustration. But I believe you’ve allowed that frustration to push you a bit too far in your criticisms of “modern economics.” You want economists to study and depict only the “real” world of economics and economic actors. Problem is neither they nor any of the rest of us will or can ever know that world directly. Even though we participate in it daily that world is beyond our grasp. Best we can do is follow the advice of William James and make an effort to understand and describe that world. But the descriptions are not literal in the sense of A to A, B to B, etc. They are our best guess of what’s going on and why. They are in a real sense fictions which we try out pragmatically, hoping they will help us make out way in our daily lives. Plus the descriptions follow rather than lead economies. These are made by actors, human nonhuman, in a process that involves successes and failures and re-makings on a regular basis. So whether economists or not we are all involved in building economics/economies, and then as economists we reflect (very imperfectly) on what is made and is being re-made. And one thing we see in this making is that calculative (in the sense of Adam) actions and actors can be made and be involved in economic building. So your conclusion that the models/theories of modern economics are fictions is wrong in the sense that the kind of actions and actors they depict can be and are in fact built as part of building economies. They are not the only actors/actions built, and certainly don’t always control what happens, and sometimes last only a short while and create problems for other versions of economies. But they can be and are made. Your depiction is also incorrect when you say, “So instead of explaining the world they try to construct one.” Explaining and constructing going on simultaneously is the norm. Finally, your presentation is undergirded by a common, but incorrect view of science. Science is not, cannot be a clean and pure effort to describe what is. The only way to describe is to create. Scientists try to examine things from as many standpoints as possible, while recognizing the process is finite and whatever scientists say about their objects is never the “real” of the object. Hopefully scientific descriptions make sense and fit together well. But that’s no assurance they are “real,” or are in contact with the “real.”

    • Paul Schächterle
      August 19, 2013 at 10:43 pm

      I think Peter Radford’s critique points in the right direction. The problem is not that economist create models. Our thinking consists of building mental models of the world. But the problem is that neoclassical models are false. Neoclassical models do not represent the real world because their assumptions are nonsensical and there are logical fallacies built into those models. So neoclassical economics is indeed “fiction” in the sense that it does not provide a valid description of the real world.

      • Ken Zimmerman
        August 20, 2013 at 12:38 am

        Paul, I wish the world were as simple as you hoped it is. But it’s not. There are clearly parts of economies in many parts of the world that look and operate (imperfectly true, and sometime they break a lot) just like the neoclassical models. For example, most commodity transactions (real commodities and not the financial side) generally operate on assumptions very similar to the equal knowledge, blind pricing, sellers/buyers equal, etc. models of neo-classicalism. Also, many one-on-one transactions such as flea markets, collectibles markets, etc. also sort of reflect these assumptions. These are certainly “real” and just as certainly do not reflect all economic transactions anywhere. So neoclassical models’ assumptions are not nonsense, and they do reflect (not perfectly, nothing does) what happens with economic actors and actions. The error made is that a self-identified smart economist who sees these assumptions reflected (within limits) in this or that actual economic transaction then makes a logical misadventure. S/He assumes that all or most economic transactions reflect these assumptions, without checking to see that they do or do not. Such logical fallacies happen everywhere, sciences, arts, literature, not just economics. So economists should not feel special. But the error hurts none the less, but I guess no more than the conclusion that string theory explains the universe.

    • merijnknibbe
      August 20, 2013 at 6:53 am

      Ken, I do think that economics is, in a kind, special when it comes to your point. Economists are often talking about the monetary economy – we use money. And any kind of use of money necessitates a special kind of accounting, i.e. accounting which uses an ‘unit of account’. Remember, ‘eye for eye, tooth for tooth’ should be read as ‘only one eye for one eye, only one tooth for one tooth’ and really is a kind of pre-monetary accounting rule. Read the very interesting wikipedia entry about this: http://en.wikipedia.org/wiki/Eye_for_an_eye And in fact it becomes a kind of arithmetical model. Introducing ‘a unit of account’ into these models which expresses eyes as well as tooths in the same unit leads to a monetary accounting model (And this is what happened and not just in Jewish society, think of ‘wergeld’). Which becomes part of reality – without accounting of money and debts no money! Just like in the case of the ‘dynamite derivatives’ the economic model does not describe reality but it becomes part of our (monetary) reality.

      • Ken Zimmerman
        August 20, 2013 at 8:37 am

        Paul, if your crusade is against bad theories then I pity you. Especially if your idea of a bad theory is one that misrepresents reality. All theories misrepresent reality. You seem to have science turned around. Science isn’t about reality. It’s an effort to allow the object of study to be heard. In other words, it’s about not drowning out what you’re studying behind walls of theory and methodology. Obviously impossible, but unlike the “man on the street” scientists pride themselves on making this effort a central part of their lives. So if you mean by the term “reality” the object of study of economists, economic actions and actors, then yes theories and method obscure it. But all scientists fall short here. If you mean economists deliberately obscure the object of study, that’s another topic. In that case economists have given up science. But discussions of “reality” just have too many epistemological land mines to be productive, and lead down the proverbial “rabbit hole.”

        And of course economics is normative. All sciences and scientists are. After all as any biologist will confirm evolution is preferred over creationism. And you of course can reject those norms (choose creationism for example, regulated commerce instead of laissez-faire capitalism).

        But the part of science that trips up almost everyone is the doctrine of testability. That is, aren’t the theories and models of scientists supposed to be testable by direct comparison to experience? Yes they are. But testability and how to do it are not as simple as they sound. As Heraclitus noted over 2500 years ago it is impossible to step in the same river twice. So scientific propositions and experiments are not testable in the sense of direct comparison. Best we can do when we test A = B is estimate the A, the B, and the =.

        Finally, as to the shortcomings of neoclassical economic theory you cite I agree fully with what you say. The theory is inadequate in many ways and in parts is wholly misleading. But since the parts of the economic actions and actors it deals with are important and we need to study them, I’d prefer we fix the theory (within the limits named above) and try to use it productively.

  2. August 19, 2013 at 10:55 pm

    “Invisible hand”, not “hidden hand”

  3. Paul Schächterle
    August 20, 2013 at 1:23 am

    Ken Zimmerman :
    […]So neoclassical models’ assumptions are not nonsense, and they do reflect (not perfectly, nothing does) what happens with economic actors and actions. The error made is that a self-identified smart economist who sees these assumptions reflected (within limits) in this or that actual economic transaction then makes a logical misadventure. S/He assumes that all or most economic transactions reflect these assumptions, without checking to see that they do or do not.[…]

    Well I guess we disagree on that topic (at least partially).
    I think that neoclassical economics contains assumptions that are simply always false. They are not just a simplification with a certain margin of error or a limited domain of applicability. They don’t have a domain. They are in no case true.
    Example: Neoclassical theory assumes that labour supply decreases as the wage rate decreases. Taken to the extreme a worker, as modelled by neoclassical theory, would choose to not work at all as the wage rate approaches zero. He or she would thus choose to starve in his or her spare time. I would say that is an absurd assumption.
    Also neoclassical theory contains full-fledged logical fallacies, not just the fallacy of applying a theory outside of its domain.
    Example: Neoclassical theory “predicts” that a person’s demand for a good rises if the price (i.e. the unit price) decreases. It can only “prove” that, however, for the so called substitution effect and can say nothing at all about the so called income effect. But any unit price change in the real world causes the real income to change. So neoclassical theory can’t say anything about the effect of unit price changes in the real world at all. They just gloss it over and commit thereby an A1 fundamental logical fallacy.
    What makes it so difficult to criticize neoclassical micro is in fact that it entirely consists of a collection of such false assumptions and logical errors. There are basically no sane parts in that theory.
    Example: Even if we leave aside that in the real world there is no unit price change without income effect, the model from which neoclassical theory deduces the “substitution effect” just described is on its own a fundamentally flawed model. It misrepresents in a thousand ways how real people judge utility and choose goods on the market.
    Neoclassical theory is one misrepresentation after the other glued together with bad arguments. You could write a whole book about all the errors in neoclassical theory — and in fact whole books have been written about them, e.g. Steve Keen’s “Debunking Economics”.

    • Ken Zimmerman
      August 20, 2013 at 4:14 am

      Paul, I am only an amateur economist so I cannot answer your statements in detail. But I have worked on the design of many economic transactions (what most neoclassical economists would call markets). Taking your examples one by one. First, workers may not choose to starve but they choose to leave the process of employment. They could begin their own business or decide to take up full time some hobby they have engaged in part-time. The latter actually happen in Oregon in 2007 and 2008 when the current recession began. Many workers either laid off or unable to find suitable jobs decided to become full-time farmers, something they had been doing part-time for years. Some did poorly, some did well but few actually failed. Of course for workers without such options neoclassical theories are useless.

      Oil is one example of how complex the relationship between price and demand is. We in the energy business stopped listening years ago to economists (of any stripe) who did not recognize that complexity. But calling such economists insane is pointless. As the head of forecasting at Shell used to say, “A simple and direct relationship between the actual price of oil production and its sale price existed and was the norm before WWII; and was in fact enforced by the major political powers in the world.” That relationship could at least in theory be restored today. Practically speaking that’s unlikely since there are no powers to enforce it.

      I grant your statement that neoclassical theory, “… misrepresents in a thousand ways how real people judge utility and choose goods on the market.” But I’ve shown a few examples where it does not misrepresent what “real” people do. Also, there are few, if any science theories, economic or otherwise that do not include misrepresentations. Even more so for theories that deal with everyday collective life.

      But my focus is again a bigger view. Individual agents as calculative actors that seek to maximize their own well-being above that of other agents or society as a whole do exist. Economic transactions that take the shape of such actors interacting in buying and selling what best serves their interests do exist. Neoclassical economists claim these areas as their special province. If their theories fail to protect this province, then that is the fault of the theorists. But I refuse to throw out the baby with the bath water. I refuse to reject calculative actors and actions and their roles in economies just because theorists and model makers are too dumb or distracted to do their jobs properly.

      • Paul Schächterle
        August 20, 2013 at 5:18 am

        Ken, I, too, think that egoistic actors (or whatever term we may choose to use) do exist and that they do economic transactions.
        What I reject are bad theories. I would indeed say that a lot of economic theorists haven’t done their job properly.
        And I would say that other scientific theories do not misrepresent reality the way neoclassical theory does. Otherwise they could not yield the results they do. All the parts of academia I have seen have a much higher level of scientific research than economics. Economics in its current state is just not on a par with other sciences. When I attended my first economics lesson I was shocked at what I saw. And I am still shocked, today even more than 15 years ago.
        I also reject the implicit normative notion many economists tend to further — that it is a good thing if people act egoistically.
        And I reject the Panglossian world view that the “invisible hand” of “the market” leads to general well-being.
        Historically laissez-faire capitalism has lead to horrible things. Slums, starvation wages, child labour, … you name it. The market economy quite obviously is not a self-regulating mechanism. We need to know how the market economy works so we can regulate and maintain it. And neoclassical theory does NOT provide us with that knowledge.

  4. Bruce E. Woych
    August 20, 2013 at 1:50 am

    http://www.ssc.ucla.edu/anthro/faculty/boyd/McBBSPublished.pdf Henrich et al.: Economic behavior in cross-cultural perspective.
    Foundation: Pure self interest and maximizing material gains are a fallacy.

    • Bruce E. Woych
      August 20, 2013 at 1:52 am

      BEHAVIORAL AND BRAIN SCIENCES (2005) 28, 795 – 855
      Printed in the United States of America © 2005 Cambridge University Press
      “Economic man” in cross-cultural
      perspective: Behavioral experiments
      in 15 small-scale societies

  5. Paul Schächterle
    August 20, 2013 at 10:01 am

    Ken Zimmerman :
    […] All theories misrepresent reality. You seem to have science turned around. Science isn’t about reality. […]
    And of course economics is normative. All sciences and scientists are. After all as any biologist will confirm evolution is preferred over creationism. And you of course can reject those norms (choose creationism for example, regulated commerce instead of laissez-faire capitalism).
    […] The theory is inadequate in many ways and in parts is wholly misleading. But since the parts of the economic actions and actors it deals with are important and we need to study them, I’d prefer we fix the theory (within the limits named above) and try to use it productively.

    Well, in my opinion, I have science just the way it is supposed to have. A good theory represents reality (as good as it can). Science is about reality. And, frankly, only in economics you will encounter such statements. That is one reason why I say that economics is not on par with other sciences.
    I consider neoclassical economics as not only false but dangerous because it embeds normative values (egoism, laissez-faire, workers too demanding, capitalists not rewarded enough) in its core “axioms“ and then presents their policy advice as if it was a result of scientific inquiry. But neoclassical theory is in most cases not valid science for all the reasons already discussed.
    Other sciences do generally not demand certain social policies. Your example, the question of Creationism versus Evolution is not a question of social values (good or bad) but a factual question (correct or incorrect). And as a factual opinion neoclassical theory resembles more Creationism than Evolution theory (since it is based on belief, ignores contradicting evidence and arguments and even cherry-picks assumptions). And of course I reject something so unfounded as Creationism.
    I am very much for fixing economic theory. That’s the whole point of my “crusade” as you say. But imagine a physician saying that Humorism is inadequate and in parts wholly misleading but should be fixed and used productively. I would rather turn to better theories.

    • Paul Schächterle
      August 20, 2013 at 10:12 am

      “And, frankly, only in economics you will encounter such statements.”
      = And, frankly, only in economics you will encounter statements that deny that science is about describing reality.

    • Ken Zimmerman
      August 20, 2013 at 10:45 am

      Okay, I guess you all passed up reading Einstein’s General and Special Relativity. Relativity is what science studies. So if that’s what you mean by reality I’m with you. The physical sciences have spent a hundred years working this out. Including Heisenberg’s Uncertainty Principle. So they’re way ahead of the social sciences and economics. Once you take gravity wells and light curvature into account getting to Jupiter is easy. And all this is relativity theory. Check out Hawking or Dawkins to see just how complex finding and traveling to other planets really is. Otherwise you could just apply Euclid to get to Jupiter.

      I object to using the term “reality” for any science. It has no relevance or meaning. Science cannot touch or even know when/if it has found “reality.” Scientists try to figure out how something works (e.g., atoms, gravity, civil wars, economic transactions). We’ve been working on atoms for 2600 years. Our experiences tell us we know a lot, but then atomic and subatomic shows us another face. If you start off thinking there is one atomic (or economic) “reality” you’re likely to lose track of what you’re studying. If relativity teaches us nothing else it is that we need to stay flexible, as the things we study change or reveal new aspects. That’s the sin I think of neoclassical economists. They are certain they know what they’re studying looks and acts like. Such uncertainty is a waste of time for scientists. Living with unending uncertainty is what scientists are stuck with.

      • Paul Schächterle
        August 20, 2013 at 11:02 am

        Economists often refer to physics. But they are not at all entitled to. Einstein’s relativity theory and quantum physics are both result of experiments! They describe reality! And they can predict. And they can be used to achieve technological goals. And of course physicists try to eliminate any logical flaws in their theory and are open to new experiments that disprove them and demand for new theories. Physicists are real scientists in that they actively try to disprove their own theories.
        Neoclassical economist do not search, they ignore. And they use flawed logic. With neoclassical theory there is no uncertainty about whether the theory will be disproved in the future. We know it is a bad theory now. We know it is false. Or you could use the old Pauli quip: we know it is so bad that it is not even wrong.
        And, again:
        “I object to using the term ‘reality’ for any science. It has no relevance or meaning.”
        That statement is so mainstream economics. Tell that to any other scientist and I would like to see the reaction.

      • Ken Zimmerman
        August 20, 2013 at 11:44 am

        Paul, if you KNOW all these things then you are not a scientist. Scientists assume what they think they know is uncertain and will change. And actually there is little experimental verification of quantum mechanics, and many aspects of Relativity, especially Special Relativity have not been “tested” and may not be testable for some time. And you are quite correct that physicists work very hard to figure out what doesn’t make sense as well as what does in their knowledge.

        Your response to my statement is interesting and revealing, “That statement is so mainstream economics. Tell that to any other scientist and I would like to see the reaction.” Physical scientists spend little time debating the language of reality. They have too much work to do. Most scientists spend their careers studying 2-3 specific areas. A few like Hawking, Dawkins, Gould, etc. are able to do more. Looking at the same problem from 10,000 standpoints can take a lifetime, or longer, not to mention all the documentation. I am among other things an engineer and mathematician. As an engineer I solve problems. As a mathematician I just keep working on the same equations over and over again.

  6. August 20, 2013 at 10:05 am

    Ken Zimmerman–leave off this relativist waffle. Good science provides reliable predictions and makes things work. ‘Physics can send a satellite to orbit Jupiter, Economics cannot tell you what happened yesterday.’ And yet economics has the guile to lay down policy norms and tell us what to do. Its priors masquerade as truth.

  7. Paul Schächterle
    August 20, 2013 at 11:59 am

    Ken Zimmerman :
    Paul, if you KNOW all these things then you are not a scientist.[…]

    So you are saying that if one knows that a certain theory contains false assumptions and logical errors one is not a scientist? That supposes a funny definition of a scientist. How do you think the process of falsification works, then?
    I am afraid we have to conclude that we disagree an a fundamental epistemological level.
    As for you remarks on experiments about relativity theory and quantum theory: those theories would not exist if there had not been experiments on the speed of light and the double slit experiment. I leave it for physicists to comment on later experiments.

  8. Robert Locke
    August 20, 2013 at 1:01 pm

    Science does come out of a “reality,” one of the material world that particular people live at a particular place and time. Adam’s particular place was 18th century Britain, which by the force of circumstances was developing into a world commercial, financial, and manufacturing emporium, under the protection of the British Navy. Smith and most of the classical and neo-classical economists who followed him framed their science in market emporium terms, in terms that fit their world. But that was not the only reality. Across the channel great-power rivalries that became chained to nationalism conjured up a different kind of economics than that of the individual operating in the complex market place of the British emporium. As soon as economics becomes a matter of nations and not individuals, the whole discussion needed to change. People who have been outside the Anglo-Saxon emporium looking in have known that for centuries. Talking about economics as a factor in the growth of state power makes the sinews of state power more important than the consumption preference of the individual and the economics that grew out of that 18th century British emporium won’t handle the analytical needs of national economic development. The outsiders: Germans, Japanese, and Chinese for three significant examples, know that and, therefore, classify the economics that provokes endless discussions about itself in Anglo-Saxonia, as a pseudo-science that serves the particular interest of its progenitors.

  9. sergio
    August 20, 2013 at 3:47 pm

    If A. Smith’s book was called “An Inquiry into the Nature and Causes of the Wealth of Nations”, can neoclassical economics be called the same way, as continue of A.Smith’s tradition? Can neoclassical economics even be called an “inquiry”?

  10. Ken Zimmerman
    August 20, 2013 at 10:38 pm

    Sergio. thank you. That is what I’m trying, not successfully it seems to say. If one “knows” all the physical properties of bacteria (for example) then you don’t need to study them. You don’t need to inquire into what those properties are. So it is with economic actions and actors. If you “know” what they are, how they act, and why they act as they do then no inquiry is necessary. But we don’t know and thus we inquire. At a fundamental level we will never know fully what and how these actors and actions exist. That is not within the sphere of what humans can do. So we continue to inquire, building up what we think are “facts” about economic actors, transactions, economies, etc. We use and test these facts as best we can, within the scope of human understanding hoping to confirm them and these use them to build up other facts. If you want some not so light reading on these topics try:
    Bruno Latour. Science in Action.
    Michele Callon. The Rules of the Markets.
    Donald MacKenzie, Fabian Muniesar), Lucia Siu (editors). Do Economists Make Markets? On the Performativity of Economics.
    Mary Poovey. A History of the Modern Fact: Problems of Knowledge in the Sciences of Wealth and Society.

    In building the facts of economics economists are major players, as are lots of others. Thus while economists (some) may study markets many also are involved in making the markets. Same is the case for physics. But there physicists have been a bit more indirect in their work of making physical facts.

    Have fun folks.

    • sergio
      August 21, 2013 at 5:45 am

      It is very sad to read what you have just said. If there were such field of science as “physics of bacteria” it would study speed of movement of bacteria in different circumstances.
      Some can make mathematically sophisticated models, which would include physical properties of bacteria, environment, etc. Some can even calculate what properties bacteria must have in order to move with the speed of 1000 km/hour.
      But! What is the use of such “study”? That is what called “pseudo-science”.
      The true science would however study different bacterias, as they are, using methods of classification and apply rules of logic in analysis. It would never study non-existent bacterias just for the sake to show how smart is researcher in his/her intellectual exercise.
      The “scope of human understanding” is much broader than that of neoclassical economists. Please do not confuse humans and neoclassical economists.

      • Ken Zimmerman
        August 21, 2013 at 10:57 am

        My apology, Sergio. Did not mean to offend. I frankly do not understand your comment, other than you are angry with and reject neoclassical economics. Last time I looked microbiology and bacteriology were considered sciences. One of the things they study is bacteria. I was simply using these as examples of a science. Physics is generally considered the oldest science, dating back about 2500 years.

        It’s only in the last 50 years or so that we’ve begun to examine science and try to understand it, although study of how people know and understand has existed for thousands of years.

        As to “pseudo-science” you’ll have to give me more explanation of just what that is. I agree fully that human understanding and science extends beyond neoclassical economics. But based on what has been said here economists (including the neoclassical ones) consider themselves scientists. It was in that sense that I was looking for the “facts” that scientists build up through consensus. Obviously in economics these facts are few in number and limited, as the conversation here demonstrates. As a science economics is not far along.

  11. sergio
    August 21, 2013 at 2:05 pm

    Ken, I did not mean to offend too.
    Microbiology and bacteriology are sciences. Zoology too. Chemistry and physics are sciences as well. The point is that they use completely different methods of study.
    I cannot imagine bacteriology dominated by former physicists. I cannot imagine how those former physicists would create model of standard bacteria’s behavior, applying laws of physics and mathematic tools in their analysis, and calling those who draws comparative pictures of different bacterias, painters.

    “Physics of bacteria” has no use in microbiology or as science at all. Physics of society, known as neoclassical economics, has no use in inquiry into the wealth of nations.

    Why economics is soo attractive to former physicists? Because this is a filed of their intellectual exercise. Where they can show how smart they are. They create puzzles for themselves, solve those puzzles and give themselves puzzles. They do not want to be exposed that their intellectual game has nothing to do with reality.
    Physics evolved dramatically in last 150 years. Our technology and society changed too. However the vision of economics by neoclassical economists remains the same as 150 years ago.

    We all know what inquiry into the wealth nations would look like if it was dominated by former physicists. This is neoclassical economics. I cannot imagine if economics is dominated by former chemists or microbiologists.

    The point is – economics should be dominated by economists, not by physicists or chemists. Who is economist? It is the one who can explain reality.

    • Ken Zimmerman
      August 21, 2013 at 10:20 pm

      Agreed that from what I know of economists’ models and math, they are based on Newtonian physics. With Einstein’s Relativity Newtonian physics began to decline. But it’s still around in some areas. And I know that from my own experiences sometimes scientists find great comfort in the maths. At least until they face 2nd and 3rd order differential equations. And then comfort turns to panic.

    • August 28, 2013 at 10:54 am

      Just a comment here. I have studied alot of theoretical/mathematical biology. One can note for example that watson and crick (or one of them) began in physics, so one could say molecular biology is a kind of physics of biology. Also, there are many math models of chemotaxis (which includes bacterial motion) which are very abstract, and use almost no specific properties of bacteria (in general, or in particular), yet are used to describe empirical phenomena (such as how they travel through blood). I guess you can go up to biology departments where this is done and tell them they are doing pseudo-science. (one can gio on and on—-brain theory often involves neural nets developed by people like physicist Hopfield; there’s max delbruck and even schrodinger…)

      Also, newtonian mechanics is both empirically known to be wrong, and also logically inconsistant. So i guess newton was not a scientists, but a hisorian or ideologue. Operational interpretations of physics (some of the founders of quantum theory) dont think it describes ‘reality’ but rather onl;y the results of experiments. They leave reality out of it.

      Over varying periods financial time series often appear to follow the efficient market hypothesis. Of course that is wrong, but gaussian or power law processes are often used to approximate phenomena for some scales . Check out models of speciation or extinction.
      Biology can’t really predict speciation or even evolution , partly because like cosmology, in a human lifespan one can’t empirically confirm experiments which might take millions or billions of years.

      The idea that tthe ‘free market’ and associated authority the ‘invisible hand’ does not make people better off neccesarily (as has been noted by marx, proudhon, bakunin, kropotkin, rachel carson, etc.) as is advocated by libertarian types, is obviously true. But it is interesting that many who downplay its successes are often sitting in front of something like a computer in a comfortable western home which they bought using cash aquired by some often relativiely comfortable (paper shuffling) job, and complaining. They also can’t predict why, if maximizing utility doesnt explain anything, the computer was developed—why didnt people remain as hunter gatherors in africa?

      What can the critics predict other than that neoclassical predictions will sometimes or often be wrong? Is the key Minsky or Keynes or Keen? what can they predict? (especially since my impression is people who consider themselves associated with variants of neo/classical econ often write tons of theoretical papers predicting the exact same general ideas—such as financil crashes, etc, often using chaotic dynamics. One can note Arrow was cited as an editor of 2 large collections of papers of this sort of stuff in the 90’s.)

      This looks like a sort of straw man discussion. Straight out of the Wizard of Oz (which i heard was written by an old fashioned racist).. Thats a form of entertainment.

      • Paul Schächterle
        August 28, 2013 at 11:07 am

        Comparing Newtonian mechanics with neoclassical economics is like comparing a map (which would be in your words “empirically wrong” and “logically inconsistent”) with an absurd drawing.
        All theory is an approximation. The problem with Neoclassical theory is that it is not.

      • August 28, 2013 at 11:36 am

        p.s. I meant ‘newtonian cosmology’ has inconsistancies (which is newtonian mechanics applied to the universe , which includes assumptions about the structure of space outside of newton’s 3 laws). J Norton discussed this. Of course newton’s laws are empirically and logically inconsistant with relativity.

      • August 28, 2013 at 12:38 pm

        Your remarks confirm my observation that most scientists today don’t understand science. To suggest Newton was not a scientist is really laughable. On the contrary, he was one of truest scientists of all time. The fact that some aspects of his theories have been superseded does not alter the fact. The opportunity of being a true scientist has become rarer and rarer over time due to specialization.

      • Ken Zimmerman
        August 28, 2013 at 12:41 pm

        Lyonwiss, to satisfy my curiosity could you say why you think Newton was a scientist? I’ve said what I think makes science and scientists. Wonder how close our views are.

      • August 28, 2013 at 8:30 pm

        Science is the body of knowledge obtained through the scientific method, which consists of iterative applications of deductive and inductive methods to achieve consistency between theory and observation.

      • Ken Zimmerman
        August 28, 2013 at 9:33 pm

        lyonwiss, you say, “Science is the body of knowledge obtained through the scientific method, which consists of iterative applications of deductive and inductive methods to achieve consistency between theory and observation.” Please don’t limit science to this. Otherwise you force out much of what is generally recognized as science. As Feynman noted long ago science is about figuring out how things (nature, physical things, universe, or whatever term you prefer) work. This is also consistent with the history of natural philosophy, from which science developed. Feynman’s science: make a guess about how something works, derive predictions from that guess, compare the predictions to experience/experiment. I think Feynman simplified it somewhat, particularly the innocuous sounding “compare to experience/experiment,” but he left the process open to any sort of technical method or technique that worked. How far does this go? Don’t know but it’s something that would be worth considering, formally.

      • August 29, 2013 at 5:57 am

        What I said is not limiting as the definition includes what you’ve said, provided you interpret deductive and inductive methods appropriately.

  12. davetaylor1
    August 21, 2013 at 5:25 pm

    Ken at #23, you’ve hoist yourself on your own petard here, saying “It’s only in the last 50 years or so that we’ve begun to examine science and try to understand it”. Aristotle (400 bc) did so, reacting to Plato, and Aquinas (13th century) did so critiquing Aristotle. Bacon (reacting to Aristotle) and Descartes (reacting to him) did so in the early 17th century; Adam Smith’s mate Hume did so in the 18th century and Kant reacted to him. J S Mill was mid-19th century, Poincare, Pierce and Whitehead at the beginning of the twentieth century, and even Popper goes back to 1934. And that’s just looking through my personal sample.

    I understood easily enough what Sergio was imagining as a Physics of Bacteria. The study of bacterial motions is a pretty useless idea compared with studying the bacteria themselves, and likewise commencing the study of economics with monetary motions (quantitative “laws” of supply and demand) rather than living humans and their different types of communication.

    On pseudo-science, it seems to me we need to untangle several different ideas.

    Emphatically, pseudo-science is not simply immature science. The word ‘science’ originally meant knowledge, and philosophy ‘wisdom’, i.e. the wise choice of the understanding by which we interpret knowledge. Scientists started off like children, with little knowledge, exploring our world, naming and classifying what we found on Aristotle’s “family tree” of knowledge. Bacon started experimental dissection, Hume (mistakenly) reinterpreted Newton’s proof (“epistemology”) as the point of knowledge, and Pierce’s pragmatism came back essentially to Sergio’s point: the proof of the pudding is not in the mathematics but in the eating.

    Today, the likes of Tony Lawson have rejected the smoke-screen of impossible proof by measurement statistics and come back to real science being about ontology, “what things are”. At the time of Aristotle that meant how we saw things (“what things do to us”). In light of what we have learned about how language is understood and translated into action in computers, we can now simplify that to classification in terms of “what things do”; e.g. a chair is for us to sit on. We can now see that we have a philosophical choice. The word ‘economics’ can be interpreted as either about “making money” or about its original, literal meaning: “household management” i.e. “feeding the kids” without “fouling the nest”. The proof of the pudding is that making money is NOT feeding the kids, so the wiser choice is to interpret it as “the management of Spaceship Earth”.

    We oldies should thus be passing on knowledge (science) of what we are and what we are really doing. Local people doing different jobs emptying the supermarket shelves to feed “the kids”, filling them up again, trying new products and withdrawing non-sellers, replanting and fertilizing the earth to grow what is needed but allowing the soil to regenerate etc, and accounting for this work, trade and investment more or less automatically using credit cards or their monetary equivalents. Teaching “the kids” how to understand, maintain, think critically about and improve themselves, their ecological, social and technological infrastructures, and the roles of functional (business) and geographical governments in coordinating the productive and distributional infrastructures.

    That would be real economics. Pseudo-economics instead started with the legal fiction that public property could be sold into absolutely private ownership by a bankrupt king who was previously understood to hold it in trust for God’s children, i.e. the people. Deprived of this religiously based social infrastructure, the dispossessed were forced into “leonine” contracts giving the possessors absolute rights with limited liabilities and the dispossessed absolute duties in return for a minimal livelihood at the whim of the other. With customary rents “in kind” replaced by monetary rents (i.e. interest) and valuable coins replaced by paper tokens of value only because leonine legislation deemed them so, the stage was set for an economics based on lies, i.e. perversion of the meaning of its language by fraudulent money and ownership markets. That, not immaturity in concept or out-datedness in application, is what has turned economics into a pseudo-science.

    • Robert Locke
      August 21, 2013 at 7:42 pm

      Good stuff Dave, erudite but down to earth.

    • Ken Zimmerman
      August 21, 2013 at 10:48 pm

      David, thanks for the feedback. Your history of science (natural philosophy, the nature of how things work) seems spot on. I did not feel justified in running through this. Thus my comment about “only in the last 50 years have we begun to study science.” Which is correct as it relates to the large-budget, large-laboratory, large-project, and generally large scale science since WW II. But as to your comments about economics as a discipline, I can only say as a non-economist that I don’t see many “facts” (see Latour and Poovey above) in economics. Scientists build up “facts” through a long, complex, and at points brutal process of research, publishing, peer review, criticism, renewed research, peer review, criticism, etc. I don’t see much of this in economics. I take it from your comments that many of the things you say are not economic “facts” as they are not supported by a consensus of economists. Sciences move by consensus in establishing facts. It appears economics has not done much of this. If economists have ambitions of making economics a science and scientific (let’s just stick to the general definitions of these: trying to figure out how things work and empirically testing our ideas about this) it has not done much to reach this goal.

  13. davetaylor1
    August 22, 2013 at 6:01 am

    Robert, thanks for those few kind words!

    Ken, I think you are missing the point that your (very clearly stated) version of science is the 1740’s one of David Hume, discredited as Positivism yet still dominant because students hear only the version which gives a social scientific veneer to laws the rulers agree on. (You need to reflect on exactly what Hume is doing in volumes 2 and 3 of his “Treatise on Human Nature).

    Something I’ve read recently re-emerged as a well-known limerick:

    There was a young lady from Niger
    Who went for a ride on a tiger.
    At the end of the ride
    She was riding inside
    Was that foolish young lady from Niger.

    The point is that neo-classical chrematism’s subtle blending of truth and falsehood enables its advocates to hide their dangerous nonsense merely by shifting their ground a little to blur its outline. The technique was particularly well illustrated in their devouring of Keynes.

    • Ken Zimmerman
      August 22, 2013 at 7:02 am

      David, I’ve followed scientists for over 30 years, as have most of the other science and technology studies researchers. There is consensus among this group that this is the current pattern through which scientific facts are built up. As for Hume, there is a lot to recommend about his notions. But I prefer the empiricism of Charles Sanders Peirce and William James. They have clearly separated themselves from the European Enlightenment. Reason follows living, not the reverse. So all the categories Hume finds so useful and informative (e.g., subject/object, reason/morality) derive from living; they don’t form the basis of living. I haven’t read Hume’s 2nd and 3rd Treatises in years. But as I remember they did not impress me.

      But your contention that there is a falsehood or truth to be discovered is disturbing. Scientists build up facts, and use those to test other facts, and technologists use these to make tools and machines. For scientists these facts are truth. From what I see economists have done little of this. Perhaps it is as you suggest because of blurred and misleading visions of facts, intentional or otherwise. If so economists seem stuck when it comes to making science. So I don’t understand how you can be distressed over something that clearly economists have failed to do. And I don’t understand how being angry with economists who call themselves neoclassical helps to inspire economists to pursue facts.

    • davetaylor1
      August 22, 2013 at 7:35 am

      Ken, looking back. I don’t think I did justice to your emphasis on the scientific method of establishing “facts”. Where I wrote “truth and falsehood” I could just as well have written “fact and fiction”.

      My own view is that science has four phases: awareness of a problem, finding the answer, trying it out and encoding it in a form suitable for transmission to future generations. Pseudo-scientists won’t want, of course, to try out lies, and academics too often want to use their own forms of encoding rather than take the trouble to agree new ones.

      Before Newton saw his apple fall he was aware there was a problem explaining why the moon orbited the earth. After it fell he had “discovered” a new fact: action at a distance powered by a gravitational field. By his painstaking quantitative experiments he reduced this to principles and mathematics his peers could agree on, but the “fact” (what he made) was a more or less correct interpretation of what he saw, and that already existed once he had seen the apple fall and recognised action at a distance. It just needed to “grow up”.

      You say “I take it from your comments that many of the things you say are not economic “facts” as they are not supported by a consensus of economists”. On the contrary. I am saying the “facts” are what a correct interpretation reveals, not what some discipline like economics (for its own purposes) agrees on.

      • Ken Zimmerman
        August 22, 2013 at 8:34 am

        David, clearly we understand science differently. I look at what scientists do and see this:
        1. Invent a problem, a concern, a controversy to study;
        2. Propose facts that explain how the problem works and what it does;
        3. Show these facts to others and try to elicit their support for your facts.
        4. Eventually your facts are accepted and others are rejected.
        5. Your facts become scientific facts.

        Of course the process may favor other facts or may find no facts that gain a consensus. The scientist may be a scholar and academic, but s/he is just as much an entrepreneur and salesman for the facts they favor. Newton certainly was.

        As for Newton and gravity, Newton’s mathematics is elegant and the equations solvable. And the mathematics and explanations fit the problem Newton (and others) invented to solve. But even if we don’t change the problem, there are dozens of other sets of facts claimed to explain it that did not reach consensus and thus become scientific facts. And if a new problem to address is invented, as with General Relativity then the process of creating a scientific fact (a consensus) begins again. I’ve never been able to accept the so called “representational” view of scientists do. First, it simply doesn’t reflect what scientists actually do. Second, it’s impossible to do. As you note humans observe. But as I pointed out Heraclitus warned us 2500 years ago that no observation is ever the same as another. So as we observe a statue we look at the front, the back, a side, the other side, the top, the bottom. We sum all these to see a statue. And the summation is to paraphrase Klatu in most instances good enough to end up with us seeing a statue. But it’s always only good enough. Even the most complex and precise instruments and measuring devices don’t change this. That’s why scientists move by consensus and not via the god-like brain of one or another human being. Newton was “correct” because a consensus of scientists say he was. Now a consensus of scientists say Newton is not correct. This is the only correct I know, that scientists know. What you’re searching for (the correct interpretation that reveals the facts) just isn’t there to find. But working together (clearly not always harmoniously) economists might be able to build a consensus on facts in economics actions and actors. Give it a shot.

  14. Robert Locke
    August 22, 2013 at 10:39 am

    I really do not see what physics has to do with human beings. Isomorphism is fraught with peril; there is no reason to conjure up an economic system that concerns people and then argue isomorphically that it is like Newton’s universe, because Newton’s universe can be examined and the imagining of economists cannot. If you can’t examine the economy because it is a fantasy, then people who conjured it up can include “facts” that impinge on each other not according to observable facts but an imagined model. They can also exclude “facts” that others imagine, not because they are unimaginable but because the explanatory (mathematical) system that they use to explain the imagined economy cannot be used to explain other people’s imaginary “facts” And to exclude factors because they do not fit the observation test is not the same thing as to exclude them because they cannot be handled in the economists explanatory model.

  15. davetaylor1
    August 22, 2013 at 11:36 pm

    Ken @ #30 and #32. Let’s start by agreeing on Peirce (sorry I spelled him wrong), whose philosophy of science was much more mature than Hume’s. You’ve long been a student of science and I’ve been even longer a scientist AND a student of science. But we will go round in circles arguing about this if you don’t see what Kuhn had in mind distinguishing revolutionary from normal science.

    Revolutionary science doesn’t change the facts, it changes our interpretation of them and hence our understanding. As it happened, my work was with the bit of revolutionary information science which transformed computing into general purpose data processing. You can study it for yourself by comparing the programming languages Algol-60 and Algol-68 (http://www.fh-jena.de/~kleine/history/languages/Algol68R-UserGuide.pdf). The one is Humean and takes language for granted, understanding computing to be about numeric and alphabetic representations of facts, i.e. numerical data and algebraic objects. The other has two extra layers of language, enabling the mode of interpretation of new types of object to be specified and operators and procedures defined which (contra Hume’s black box understanding of the mind) enable the computer hardware to interpret and process the data (whatever it is) as intended. Where Algol60 enables one to ask the mathematical question, “Is x y”, Algol-68 also enables one to question the prior logical assumption here, that x IS a number. (Op cit p.60). The verdict “True” or “False” (that you object to) refers to the logic linking premises and conclusion, and only indirectly to what is asserted by the conclusion.

    I don’t know what you are arguing about at #32 since your first three phases of science expand to my four when your second is expanded to allow for the testing phase. Your fourth is about professional politics and your fifth begs the question. So you are seeing what professional scientists normally do. You don’t have to tell me that, but perhaps I need to remind you that Newton made his revolutionary discovery as an amateur, and an applied scientist in fields still throwing up problems for fundamental science may well become a revolutionary amateur scientist in his spare time, despite getting short shift from his peers for his curiosity and impertinence. [Do you know Kipling’s story of The Elephant’s Child]?

    Away then from that dig about God-like brains. “What you’re searching for (THE correct interpretation that reveals [ALL] the facts) just isn’t there to find”? That’s not me. Information science is fundamentally about understanding communication as encoding, correctly transmitting and decoding physical signals of any type, much like classifying a book so one knows where to look for it in a memory or library. As applied it searches for reliable and efficient ways of correctly interpreting particular types of fact presented to us as encoded signals from senses and sensors. So I know lots of ways of classifying books, and I’ve tried them out on lots of books as I’ve classified them, but I can’t and don’t need to read and remember everything in every book in the library. If I need to know I simply classify the problem well enough (as you say, “good enough”) to be able to locate appropriate books. Which of course is why it is so important findings get published and why I’m going to the trouble of trying to share mine.

    If we are going to build a consensus, it won’t be “on facts in economics actions and actors”. Shannon’s concept of information capacity has been as revolutionary as Newton’s concept of gravity, and there is no point in seeking a consensus which doesn’t take both types of science into account, especially in economics, which has not even grasped “the fact” that the economy is an information system.

    Robert @ #33: ” I really do not see what physics has to do with human beings”.

    Computers and human beings are physical objects subject to the laws of physics, and how they work involves (post-Newtonian) fundamental physics. (Consider neural activity being electrical, and electrons subatomic particles). A nerve cell is physically an inside-out battery, having a semi-permeable membrane between two liquids as against two plates separated by a liquid. What cells do – what they work at – is communicate both power and information, which is why both physics AND information science need to be taken into account. Note how the power gets used but information can be copied and broadcast. One can physically examine both computers and (in the static forms of switch states, printouts etc) information which programs and/or is being processed by them.

    • Robert Locke
      August 23, 2013 at 3:15 am

      I mean what human beings feel and try to say, like “yearning,” “passion,” “love,” “hate,” “community, “the black dog,” “loneliness,” “despair,” “kindness,” “self-sacrifice,” “loyalty,” “honor,” etc. Maybe there is something to be learned about “human beings” from neuroscience, but I’m clinging to partnership and compassion for my answers in a world full of desperate people, beating each others brains out for senseless reasons. And what do you reply to an aged mother’s question, just before she lost contact with her “educated” son, as she slipped into dementia, “It just doesn’t make any sense, does it?”

    • Ken Zimmerman
      August 23, 2013 at 10:56 am

      David, on Kuhn and revolutionary science and normal science this only works if you believe the world is a certain way and can be no other. That way the facts are what they are and our interpretations of them are either correct or incorrect. Problem is even if this is the way things are, we’d never know it. For us a fact that in wrongly interpreted looks exactly like one that is correctly interpreted.

      Newton was indeed an amateur scientist. He was primarily a gentleman. Most gentlemen scientists at that time were amateurs. But for his work and conclusions to be accepted they needed support from other amateur scientists and most particularly from the Church and the civil government. As a gentleman scientist he was well positioned to obtain both.

      But David most research is neither funded nor published. So of the 90% or so that is neither funded nor published I guess you would say all of it was incorrect, which is why it was not funded or published. Even if that were the case, how would anyone know that was the case. Just saying it does not make it so. Neither does logic.

      Yes, humans and computers are subject to the laws of physics, the laws of the physical universe. These are laws scientists have spent several centuries reaching consensus on. This consensus is all we can know of the laws of physics. Not saying the consensus is right or wrong, only that it is all we can know of the physical universe. Copernicus knew this. Which is why he was reluctant to publish his theories. He knew the devastating impact these might have on the stability of life in his time.

  16. davetaylor1
    August 23, 2013 at 7:38 am

    Robert, I’m so glad you’ve come back with this, as I had returned to my desk to respond to Ken’s accurate diagnosis of my feelings at #30:

    “I don’t understand how you can be distressed over something that clearly economists have failed to do. And I don’t understand how being angry with economists who call themselves neoclassical helps to inspire economists to pursue facts.”

    To deal with the neurophysiology first, unexpected neural activity activates the emotions, (I’m told the hypothalamus) releasing chemicals which activate the appropriate neural batteries, thereby directing the energy and motivation to deal with the situation.

    Why I am not just “clinging to partnership and compassion for my answers in a world full of desperate people” is that we live in a world where the blind are leading the blind, and a shock or even a miracle is needed to stir “wilfully ignorant” leaders into opening their eyes. I’ve opted for the miracle of a Copernican intellectual revolution rather than the shock of a Marxist political one.

    In the Christian narrative the normally compassionate Jesus went about working miracles for desperate people. The three issues about which he clearly was angry concerned the abuse of children, defrauding the workers of their wages, and the money-changers in the temple ripping off those legally required to offer ritual thanksgivings at the temple. What saddened him was a rich admirer with commitments who felt unable to give all his wealth to the poor and follow him.

    That, Ken, is roughly where I’m at. I’m distressed by those economists (to some extent including myself) who feel unable to give up their previous commitments in order to change their ways. I’m angry much more with the fraudulent money lenders forcing even honest businessmen into defrauding workers of their wages by enriching neo-Classical economists willing to persuade innocent children (who may grow up into bankers, businessmen, politicians or independent-minded economists) to accept the monetary fraud unseen or as necessary “fact”. In short, my anger is diffusely directed towards changing the whole system, and only shows as irritation with neo-Classical economists when I happen to be thinking of what they are doing.

    • Robert Locke
      August 23, 2013 at 9:38 am

      You guessed it, it was my mother who asked the question. Had I been you, I could have provided an answer along the lines you have given. But I am an historian, and what I do is report was people say. So I could have said to my mother, that Dave says this, but Hume said this, Hegel said that, and Nietzsche this — but it wouldn’t be satisfactory for a person seeking answers, even if I said the weight of opinion is 10 to 1 in favor of Dave. But had my mom asked her grandson, my son Ken, who was a theologian teaching Christian theology, after studying in Trinity College Dublin, in a small Chinese Buddhist university in Southern California, she would have gotten a positive clear answer — its wouldn’t have been about knowledge but right living and correct behavior. Ken died, age 45, after a long illness. They named a hall after him in his little university because he was a great — inspirational teacher — who would give such clear satisfactory answers to young people who wanted to know about “the meaning of live”
      And to old people as well.

    • Ken Zimmerman
      August 23, 2013 at 11:17 am

      Thanks, David. I understand your anger and upset better now. Compassion, Christian or otherwise is understandable. But it like everything is two edged. Compassion can destroy life and societies, as much as save them. Witness western “compassion” for children of Africa and the East. Did you ever think that some of the people hurt by neoclassical economics and the current economic system actually benefited from that pain?

      • davetaylor1
        August 23, 2013 at 11:57 am

        I need to respond to that at two levels. Yes, teaching about right living and correct behaviour, but teaching from trustworthy, not liars and blind men taught by them. So second, how to tell what is right living and correct behaviour and what is not? Who is going to teach the teachers how to discern untrustworthy teaching? Isn’t trying to establish the trustworthiness of teachings (rather than mere consensus) the point of scientific method?

        At this level we have to address the issue of vocations or “callings”. Since people differ and even generally trustworthy teachers have their blind spots, the meaning of life for an individual is what his talents and situation are calling him to do at a given time of life. Just a few of us progress from being children to being trustworthy teachers, and (to hoist George Bernard Shaw’s ambiguous quip up a level), “those who can, teach; those who can’t teach teachers”. There is good reason why visual thinkers make better scientists than teachers: they see too much at a time to be able to articulate it “on the hoof”.

        So I can point to extra-ordinary teachers of right living I have found to be trustworthy, but who’s looking? I’m thinking of John Ruskin, G K Chesterton and E F Schumacher, all of whom devoted their mature years to economic reforms and ultimately to Jesus.

      • davetaylor1
        August 23, 2013 at 1:50 pm

        Ken @ #39. Thanks for your understanding.

        “Did you ever think that some of the people hurt by neoclassical economics and the current economic system actually benefited from that pain?”

        Yes, but my concern is its indiscriminate nature. Some people are in a state where they need to be challenged (though not destroyed), but others are already too challenged, and in the absence of feasible alternatives are much more likely to be destroyed or viciously and unjustly forced into enduring misery.

        As things stand, every case needs to be judged on its merits, so the current policy of governments trying to challenge everyone who is a financial inconvenience to them is leading to a great deal of injustice, and is contrary to the legal principle of being presumed innocent until proven guilty. One needs to unravel the banking fraud to see how unnecessary this all is in what is effectively a credit card economy, but Ruskin suggested one alternative: give everyone a meagre but adequate stipend ( a “Citizen’s Income”) and trust that if there are jobs worth doing enough people will do them (as indeed financially independent volunteers are able to do now).

        One variant on this is to distinguish work looking after oneself and one’s family from work for the community, understanding Citizen’s Income as supplying the one and challenging people to supplement that by becoming worthy of higher wages or (more sensibly) winning Ruskin’s prizes for actual honourable achievement, drawn from surplus the nation has already produced.

        Another it seems Paul Grignon and I have discovered independently by different arguments is that the starting point for finance is not zero but negative, reflecting how much we all owe our parents and other members of the society whose work has already supported us. The challenge then is to minimise our debt by earning our keep, or alternatively, my “hitch-hiker” philosophy: to express our gratitude for those who have supported us by trying to do likewise for the next generation.

      • Ken Zimmerman
        August 23, 2013 at 9:25 pm

        David, the justice questions need to go to economists generally. The other sciences have a mixed record on dealing with justice relating to the impacts of the sciences on peoples everyday lives. Physicists have been hot and cold on addressing these questions, and they’re probably the best of the group. But these are clearly questions that economics as a discipline needs to address. We call the sciences disciplines for a reason. Rules and guidelines are important for what they do.

      • Robert Locke
        August 24, 2013 at 6:36 am

        So, Ken, to continue this dialogue of the deaf. You talk about the “justice” question like it was separate from economics, just something that economists as people need to consider not economics as a discipline. That’s the opinion of neoclassical economics. As McCloskey put it in “Rhetoric of Economics,” it subscribes to the tenet “Scientists, for instance economic scientists, have nothing to say as scientists about values, whether of morality or art.” That puts economics in the same category as physics. But is this true. It is possible to think of economics as a discipline, whose content is shaped by the way it is institutionized in the educational system. We talk about it in this blog a lot — about how neoclassical economics dominates teaching, research, and publication — which eliminates the “justice” issue from the discipline’s purview. Those of us who wish to consider the impact of economics on economic behavior in terms the way it is institutionalized, run up against another dictum of neoclassical economics “When you cannot express it in numbers, you knowledge is of a meager and unsatisfactory kind.” The influence of institutions is not easily expressed in number, which means, for neoclassical economists they should be ignored. That’s the dialogue of the deaf.

      • Ken Zimmerman
        August 24, 2013 at 9:28 am

        David, justice is one of those topics that is impossible to resolve. It’s also a very dangerous part of what humans do. Justice emerges from a sense of loss or disaffection. And it grants that powerful and intense things may be done in its name. The Germans began WWII out of sense for justice. The Japanese bombed Pearl Harbor in December 1941 out a need for justice. The American South fought the Civil War for justice. Martin Luther King, Jr. spent his adult life working for justice for American Blacks. Abraham Lincoln was murdered for justice. Justice drives the environmental justice movement. Seeking justice is about equality and redress. Most scientists over the history of modern science have not been concerned that what they do and its benefits/costs be understood or shared equally or that the disciplines of science had an obligation to help humankind. But now that what scientists do can and has remade (for good or ill) directly and indirectly the world in general it seems According to Einstein, “When men are engaged in war and conquest the tools of science become as dangerous as a razor in the hands of a child.” What economists have done and will do also provides a razor to create destruction and pain. The last few years have if nothing else made that clear. I, like Einstein want economists to take responsibility for the benefit as well as the harm what they do as scientists (if indeed they are scientists, of which there appears to be some doubt at present) has the potential to create. Working out how to do that should occupy much of the time of economists as scientists. At present, however it actually occupies very little of their time or effort.

      • davetaylor1
        August 24, 2013 at 3:34 pm

        Yes, Ken, to continue this dialogue of the deaf, why do you keep on regurgitating all this Humean guff about what is and is not possible when I’ve already shown why it is guff at #34? Here, if justice is likened to the upright pole in Chesterton’s in “Orthodoxy” – the “ortho” meaning upright, not right – his “Paradox of Christianity” is that “there are an infinity of angles at which one falls, only one at which one stands”. It is easy enough to see the falls from justice I was complaining about, and by definition Hitler and the Japs were not achieving justice for themselves by knocking down everybody else’s poles.

      • ken zimmerman
        August 24, 2013 at 9:40 pm

        David, absolutist notions of justice can’t work. Justice has to be worked out in practice. Your comments remind of the silliness of Pareto optimization. And even Pareto is not above practice since all its terms and equations have to be worked out and interpreted in practice.

      • davetaylor1
        August 28, 2013 at 8:58 am

        Yes Ken, “absolutist notions of justice can’t work”, but you are SAYING that in linear time. How can you SEE it in three-dimensional space? The issue is not an absolute relationship between two facts, but whether you have an absolute relationship between two independent measures (like that between North-South and East-West) BY MEANS OF WHICH you can SHOW what the relationship is and therefore SEE that absolutist (i.e. abstract, one-dimensional) notions of justice are not about a tug-of war over particular issues but about the difficulty of reconciling a static aim with a dynamic context, one aim with many different aims (not merely mirror-image ones) or even cross-purposes between individuals. As Chesterton saw it, with only one point of view one cannot judge positions absolutely. With a Euclidian right-angle or Cartesian coordinates one has trigonometry at one’s disposal and surveyors can triangulate positions.

      • Ken Zimmerman
        August 28, 2013 at 11:21 am

        David, yes indeed. Don’t know where it’s all heading. Peirce’s maxim is still the best summation of pragmatism, “Consider what effects, which might conceivably have practical bearings, we conceive the object of our conception to have. Then, our conception of those effects is the whole of our conception of the object.” Or William James’ “the only things that shall be debatable among philosophers shall be things definable in terms drawn from experience.” So it’s a bit more than “it works.” But constructing relations among experiences that seem to work in helping us do or understand is important, for James at least.

  17. davetaylor1
    August 23, 2013 at 12:09 pm

    So I haven’t responded to Peter’s stimulating original paper.

    ” Society, and especially commerce, was best left to self-integrate or self-regulate, and whatever popped out at the end was the best we could all hope for”.

    Poor Adam! He lived before Shannon/Weiner information science showed us how humans can make self-integration and self-regulation happen, not wait with Ashby in the vain hope Nature will do the job for us before we are all dead.

  18. sergio
    August 27, 2013 at 4:20 pm

    When asking neoclassical economists about real world problems first their answer is – it is all because of government. When no government involved in the issue, they say – our knowledge of the world is not enough, we need better models. When asking them how about (non-neoclassical) views on the problem? The say – well, it is not scientific.
    When challenge them further – their last option is – you better study Mankiw (irritated).

    One thing always come to mind after dialog with neoclassicals is – they do not care about understanding reality. At all. Neoclassical economics is not about economics, as inquiry. It is about neoclassical economics.

    • Ken Zimmerman
      August 28, 2013 at 3:52 am

      Sergio, as far as understanding and explanation are concerned I go with the pragmatists. There is experience (I guess this would be the reality you speak of) and then there is explanation and understandings. But the explanations and understandings simply partition out the experiences into certain categories and words. Some researchers in science and technology studies call these seams. We use these to “make sense” of experiences. Seams have a practical purpose, not a truth one. Now with that out of the way. If neoclassical economists use the seams you suggest, it seems these have little practical value in making sense of experience. I say they are impractical because they do little to help us maneuver about and make decisions.

      • davetaylor1
        August 28, 2013 at 9:06 am

        Ken, you don’t seem to understand that the pragmatic judgement, “it works”, is equivalent to the judgement “true enough” on a verbal statement about the implications of “it”.

  19. August 28, 2013 at 5:51 am

    Ken Zimmerman (#1) starts his discussion with Peter Radford thus:

    “Peter, I feel your frustration. But I believe you’ve allowed that frustration to push you a bit too far in your criticisms of “modern economics.” You want economists to study and depict only the “real” world of economics and economic actors. Problem is neither they nor any of the rest of us will or can ever know that world directly.”

    Let’s analyze this, bit by bit.

    Zimmerman believes Radford is frustrated. In other words, Zimmerman thinks he knows something about the REAL world outside of him.

    Regardless of the truth or falsehood of Zimmerman’s belief, isn’t he doing exactly the same thing he criticizes Radford for?

    More importantly, for Zimmerman’s position, is there a way around this? For, I’ll be damned, but I can see none.

    • Ken Zimmerman
      August 28, 2013 at 6:50 am

      Magpie: Maybe it was just satire.

      • davetaylor1
        August 28, 2013 at 9:11 am

        I did wonder that! Or whether you were a neo-classicist cuckoo in a song-bird’s nest. Anyway, thanks for keeping the discussion going so well.

  20. August 29, 2013 at 12:36 pm

    Your remarks confirm my observation that most scientists today don’t understand science. To suggest Newton was not a scientist is really laughable. On the contrary, he was one of truest scientists of all time. The fact that some aspects of his theories have been superseded does not alter the fact. The opportunity of being a true scientist has become rarer and rarer over time due to specialization.


    actually i was using someone else’s definition of science—peter or something—who said neoclassical economics is not a science because it has logical inconsistancies and is empirically invalid, plus it doesnt predict everything. by the same standard newtonian mechanics and cosmology are similar, as is biology—not sciences.

    i also noted there is a physics of bacteria–indeed both ucsd and harvard have whole courses in the field. by standards of rwer i guess that is pseudoscience. i mean, who needs to understand blood coagulation when you can discuss why bacteria don’t maximize cardinal utility, and personally invesdt in the sotck market and work in finance for some reason beyond social welfare or personal utility maximization ?

  21. August 29, 2013 at 12:50 pm

    Comparing Newtonian mechanics with neoclassical economics is like comparing a map (which would be in your words “empirically wrong” and “logically inconsistent”) with an absurd drawing.
    All theory is an approximation. The problem with Neoclassical theory is that it is not.

    —-i disagree. economics is in the stage like biology around darwin’s time. but its an approximation. and i think alot of its critics actually are like the critics of darwin who they claimed was making religion irrelevant.
    economics is a theory that actually began before adam smith. some was common sense (eg the levelers) and then some came as a result of prosperity for a few (voltaire types). now like physics or biology (we need more advanced weapons and internet surveillance and GMO junk food) its gone down paths pretty removed from ‘fundamental inquiry.

    i suggest you look at J Barkely Rosser of JMU’s book or his web page; the issue of whether that is ‘neoclassical economics’ or whatever is like the ‘post-darwinian’ ideas in biology (or post newtonian determinism’—newtonian mechanics is chaotic (eg saari). ola

    • Paul Schächterle
      August 29, 2013 at 2:11 pm

      Thanks for hint at Barkley Rosser. I found his webpage and would like to quote him instantly: “Where we might disagree is how much mainstream economics has some good ideas as well.” (Rosser/Colander/Holt: “How Can Something so Right as Heterodox Economics Have so Little Influence?”, Conclusion, p13)
      That is probably a good description for our differing views as well.
      I think that Neoclassical economics has entirely false foundations. Basically everything in the core of Neoclassical models is false. The view of time, the view of quantities of goods, the view of individual preferences, demand curves, the view of production, supply curves, the view of the labour market in particular, everything false. A lot is left out. Money, credit, default, distribution between persons.
      Most of it is not testable because of the categorial errors or even logical errors in the models. But as far as you might want to test it you will get contradicting results. (People have no “convex” preferences, firms have no “diminishing returns”, etc.)
      And that stuff is taught as if it were correct to basically every economics student in the world. So mainstream economics effectively tries to derail the thought about the economy from the start up. And they try to keep any criticism of their false models out of the curriculum. The reason is, I presume, an a priori ideological world view. That is why I call Neoclassical economics unscientific.
      Going back to the Barkley Rosser quote: mainstream economics actually can have good ideas only as long they are not based on the false foundations of Neoclassical economics.
      To start to know the criticism of Neoclassical economics, I would recommend to read the following book: Keen, Steve: Debunking Economics. The 2nd edition has been published recently.

      • August 30, 2013 at 2:00 pm


        1. i don’t really want to defend neoclassical econ as often practiced—eg what i have read in american economic review, j political economy, quarterly j of econ, etc. I could write a review of those. I’d say 1/3 of the papers are ‘rigor mortis’ (or publish or perish fodder)— simply excercizes in applying the generic formalism (eg IS-LM) to data. The most interesting stuff are the short papers in the back of AER. Also, standard texts often are so incomplete as to be pretty worthless (they are like ‘vulgar darwinism’ (which Dawkins for example often verges on), meaning ‘everything is in the genes’ (language, morality. history, political or sexual or other orientation, etc. ) They leave out half of what is interesting—innefficient markets, that pareto optimality is useless, bounded rationality, etc. Also, they leave out ideas about alternative economic systems—-eg Participatory Economics of Hahnel and Albert, syndicalism, coops, mutualism (proudhon), anarcho-communism (fields, forests, workers—kropotkin), guaranteed or citizens income or negative income tax, ecological economics (thoreau, herman daly, etc.), issues of social , ecological, human, etc. capital, intangible labor…. If it was up to me, i’d at least cut the salaries of all economics professors by half and use that to let others participate in the discourse or just eat and pay rent. Also, all those expensive journals and wasted paper would be cut in half. Not every kindergardner needs to have their life’s ouvre printed and sold.

        2. i actually got interested in econ via Ken Arrow’s edited SFI volume ‘the economy as a complex evolving system’ (since i had a prof who i was doing a project with who worked at SFI). That is pretty heterodox—though its funny that some of the people involved in that who are major critics of classical stuff like General Equilibrium theory (eg Kirman) —also wrote whole books on the subject from which i learned what i know of the theory. This is stuff like Brian arthur on path dependence, chaos in economic systems (grandmont, etc).

        However i actually consider that to be ‘classical economics’, just as ‘chaos theory’ and its indeterminism (ie you cant distinguish a random process from a deterministic one—see Ramanujan and Hardy on ‘statistical number theory’ or take a look at the number pi) is part of newtonian mechanics (which at one time was thought to follow some sort of comtian or laplacean determinism).

        3. i’ve read a few papers by keen. he actually isnt out of the mainstream to me. Richard Goodwin had papers in the 40’s like that. In fact, Paul Samuelson (who while fairly dated and whose book from the 40’s or so i think is better than many current texts) wrote papers on Goodwin’s model of marxism based on predator-prey models (lotka-voltera) using stuff from theoretical physics (classics). He also used the his studies of the efficient market hypothesis to show that wall street was superfluous — a total waste of time and money. (of course he was wrong, since the efficient market hypothesis is false except over select periods (mandelbrot, shiller), and my impression is groups like goldman sachs have figured out how to beat the market. community banks are better ideas (proudhon, 1850, or credit unions) but actually humans are self-interested, corruptible, and have bounded rationality.

        4. i still find classical econ nice in theory (but then, i also like a lot of theory, which i actually mostly consider ‘art’ (and i also play music which is useless by many standards—it doesnt produce food or pay bills really). The SMD theorem i view to be part of general equilibrium theory (so people like Mirowski just have an axe to grind which they use to pay bills in a different way than say, solving equations). Math Biology is nice too (i like the ‘quantum models of cognition’) but its art—to me biology should focus on preserving the ecosystem, getting rid of the junk food and wasteful energy industries (coal, fracking, petrodollar/war economy) etc. The models of climate and ecosystems can be done for fun.

        4 however, econ is true in the sense that what should be (‘ought’) is not what is . So i’m sympathetic to things like ‘rational expectations theory’ which to me can be tweaked just as newtonian mechanics can be tweaked to create general relativity (or einstein-cartan theory) so the shortest or ‘most rational’ path is actually an apparent random walk in a rugged fitness landscape (due to hidden variables of some sort). Everything (including a universal turing machine) can be written as a path of least action (langrangian—ask Feynman if you can find him) or ‘maximization principle’ of some utility, so ‘get over it’ (as we say—see ‘Marion Barry’ of DC (a small southern town in the northern part of that range) regarding his re-election after getting out of jail for smoking crack.) peace out

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