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Macroeconomic ad hocery

from Lars Syll

Robert Lucas is well-known for condemning everything that isn’t microfounded rational expectations macroeconomics as “ad hoc” theorizing.adhoc

But instead of rather unsubstantiated recapitulations, it would be refreshing and helpful  if the Chicago übereconomist — for a change — endeavoured to clarify just what he means by “ad hoc.”

The standard meaning — OED — of the term is “for this particular purpose.” But in the hands of New Classical–RBC–New Keynesians it seems to be used more to convey the view that modeling with realist and relevant assumptions is somehow equivalent to basing models on “specifics” rather than the “fundamentals” of individual intertemporal optimization and rational expectations.

This is of course pure nonsense, simply because there is no — as yours truly has argued at length e. g. here — macro behaviour that consistently follows from the RBC–New Keynesian microfoundations. The only ones that succumb to ad hoc assumptions here are macroeconomists like Lucas et consortes, who believe that macroeconomic behaviour can be adequately analyzed with a fictitious rational-expectations-optimizing-robot-imitation-representative-agent.

  1. April 29, 2015 at 8:51 am

    In any case of believe or science, one has to make some “ad hoc” assumptions about the in principle unknown reality. Those assumptions then must be checked by experiment. Does it work? No? Go back to alter your Theory….and so on. Condemning “ad hoc” proposition in general is to spit in your own bowl. The question is how can they be checked in detail against reality, by which methods, and what finally is the answer?

  2. Fred Zaman
    May 2, 2015 at 6:49 pm

    Perhaps the ad hocery of social science in general, and macroeconomics in particular, could be greatly reduced by new theory, as perhaps exemplified by the following to be submitted for publication soon.

    On Newton’s Supervenient Physicalism of Free Will: Intersubjectively Transfigured Principles of the Anthropos

    The forces in physics that are “externally impressed” on insensible bodies is metaphysically a “reductive physicalism” that simply is unfit as a theoretical framework for the social sciences, in particular including an existential anthropology of “persons and things,” “power and conflict.” What therefore is absolutely needed is a considerably different “supervenient physicalism” whose forces, rather than being externally impressed mechanistically, instead are “immanent forces” intersubjectively evoked/stimulated externally according to an “intersubjectively transfigured physicalism.” This “Husserlian intersubjectivity” of nature is ontologically based on the Newtonian transfigured, “naturalized intentionality” of persistence (first law of inertia), sensibility (second law of externally evoked/stimulated change), sociability (third law of action-reaction between different bodies), and intentionality (fourth law of external, intersubjective, stimulus/information fields). Nature’s “immanent” forces possess a subjective interior here dubbed the “anthropos,” a naturalized derivative of Rudolf Steiner’s anthroposophy that in principal is not accessible to direct empirical observation by second or third parties. The interior anthropos of immanent force is the first-person repository of subjective properties that “supervene” upon the physical properties of matter delineated by natural science. Although seemingly never suspected, there in truth are two very different mathematical accounts of force possible in Newton’s Principia, because the principles therein are underdetermined regarding the possible physical origin of force, which fact perhaps was the inspiration behind Newton’s hypotheses non fingo in the General Scholium. The existential possibilities created by the “supervenient physicalism” of immanent force – including the physical reality of free will and purposefulness, the ongoing quest for freedom, the apparent constant struggle for power, the pervasiveness of both cooperation and conflict – are all impossible in the current “reductive physicalism” of physics in which the forces of nature are mechanistic and “externally impressed” reciprocally between insensible bodies. When nature’s forces are immanent and form the above defined “supervenient physicalism,” all matter is inherently active and sensibly evoked by external stimuli reciprocally emitted as information communicated between different bodies. The empirical data of classical physics is consistent with both accounts, but causality in biology and social science is far more easily understood as the “supervenient physicalism” of the anthropos.

  3. Fred Zaman
    May 3, 2015 at 6:53 pm

    The physically manifested free will of nature’s immanent forces is here intersubjectively supervenient on physical structures whose immanent forces act in accordance with the aforementioned laws of the anthropos—the higher the level of intersubjective complexity manifested through biological and social evolution, the higher and more developed is the expression of free will created thereby. This radical ontology of Newton’s Principia suggests a natural supervenience of free will in which the empirical data of classical physics is reinterpreted as manifesting a naturalized intentionality of matter that is universally active and sensible. Indeed, it may be a related suspicion of Newton, regarding the existence in matter of a pervading subtle spirit, that led him in the General Scholium to famously state his hypotheses non fingo. The significance of free will in economics is impossible to overstate.

  4. Fred Zaman
    May 3, 2015 at 7:23 pm

    Newton’s Principia (2010 [1713]) in fact explicitly refers only once to a force impressed “externally,” later in the book on the circular motion of fluids (ibid. p. 271). In truth all references to impressed forces in the Principia can be understood both empirically and mathematically – Occam’s razor notwithstanding – with equal validity in a supervenient physicalism of immanent force evoked internally by external stimuli; for in DEFINITION VIII on page 15, Newton states that “I design only to give a mathematical notion of those forces, without considering their physical causes and seats…[which] I call attractions and impulses: in the same sense, accelerative, and motive, and use the words attraction, impulse or propensity of any sort towards a centre, promiscuously, and indifferently, one for another, considering those forces not physically, but mathematically: wherefore, the reader is not to imagine, that by those words, I anywhere take upon me to define the kind, or the manner of any action, the causes or the physical reason thereof, or that I attribute forces, in a true and physical sense, to certain centres (which are only mathematical points); when at any time I happen to speak of centres as attracting, or as endued with attractive powers.” However, based on this caveat of Newton, which the natural sciences universally ignore, it logically is impossible for any scientist to call “pseudo science” any account of matter and force that mathematically and empirically remains “Newtonian” in form, but whose ontology of matter and force nevertheless is intersubjective and intentional, rather than being mechanistic, lacking any real intentionality, and devoid of any conceivable purpose.

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