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A priesthood of economists

from Robert Locke

Ken Zimmerman’s reference to the hermeneutic circle in Asad Zaman’s post about the Education of an Economist sent me scurrying in my mind back fifty years to the seminars on historiography I took in my PhD studies in history and to Widepedia, where I found the following about the hermeneutic circle:

Friedrich Schleiermacher‘s approach to interpretation focuses on the importance of the interpreter understanding the text as a necessary stage to interpreting it. Understanding involved repeated circular movements between the parts and the whole. Hence the idea of an interpretive or hermeneutic circle. Understanding the meaning of a text is not about decoding the author’s intentions. It is about establishing real relationships between reader, text, and context.[1] Even reading a sentence involves these repeated circular movements through a hierarchy of parts–whole relationships. Thus, as we are reading this sentence, you are analysing single words as the text unfolds, but you are also weighing the meaning of each word against our changing sense of the overall meaning of the sentence you are reading, or perhaps misunderstanding, or maybe this sentence is reminding you of, or clashing with, another view about interpretation you have, in the past, advocated or disparaged. Hence we are brought to the sentence’s larger historical context, depending on its location, and our own circumstances.”

Kenneth A. Locke (my son) in The Church in Anglican Theology: A Historical, Theological and Ecumenical Exploration (Ashgate, 2009), noted that the Protestant theologian Schleiermacher (1768-1834) who stressed the importance of the hermeneutic circle took a contrary view to Roman Catholicism in matters of authority: whereas Tridentine Roman Catholicism tends “to see the Church as a priesthood without a people,” Protestants like Schleirmacher “tend to see the Church as a people without a priesthood.” (Locke p. 113)

If we consider economics to be the “secular theology” of the modern world, then the idea that authority within it is maintained postWWII by a priesthood whose seminaries are the elite departments of economics and business schools using the logic of neoclassical economics and mathematical modeling seems to be an inevitable result of the academization process that went on in economics 1960-1980.  But such a conclusion is incorrect.

Following the hermeneutic circle, we learn that the academization of the study of economics actually took place in Germany in the late 19th century. The vehicle that propelled the evolution of knowledge was research, carried out in seminars and laboratories by undergraduate and graduate students working with their professors. The footnote, the PhD dissertation, the Habilitionsschrift were integral to this process. As a result, as KeithTribe observed, the ‘German university [became] the international model, enjoying qualitative and quantitative supremacy over universities in Britain and France…’ (Tribe, K. (2002).  “Historical Schools of Economics:  German and English.”  Keele Economics Research Papers. KERP No. 2002/02, p. 2)

Americans, as their country came of age industrially and commercially in the late 19th century, ‘seeking advanced teaching in economics naturally gravitated to Germany, since in England there was very little systematic teaching of economics, and no graduate qualification as in Germany…Having gained doctorates in economics that were still unobtainable in the United States, many American students returned to teach in a rapidly expanding university system, later contributing to the development of American institutional economics, which drew heavily in its method and content on German historicism’, and, following the German example, established graduate research seminars in economics in American universities. (Tribe, 2002, p. 2)

There are three points to be made here.

  1.  Little about the process of academization of the study of economics in itself led to the triumph of neoclassical economics and econometrics in economic studies.  On the contrary, 19th century German academic economics that US students studied pretty much ignored neoclassical economics.  The historical and institutional economics that thrived in German academia vanished because of the outcomes of geopolitics – the total defeat of Germany in WWII, which was not an academization process, except that German universities were closed down.
  2. If the establishment of this postwar priesthood of economists almost exclusively in Anglosaxonia was accidental, the knowledge they have created not only excludes the people in that it is esoteric in its axioms and scientific toolkit but in that it is of such a nature as to deprive the priesthood of economists of the kind of knowledge about cultural, historical, and literary contexts that is essential to their understanding their subject.
  3. Therefore, the denizens of the priesthood of economics, in order to examine economics within the hermeneutic circle must admit people into its ranks with the kind of knowledge necessary to an interpreter’s understanding and give them voice. Or….?
  1. April 30, 2016 at 5:10 pm

    In a nutshell, “economics” is all about word-spin to justify and bolster self-interest.
    Those who have accumulated wealth hire the services of the spin doctors that make them feel good about it and give them the platform to brainwash the population at large into accepting the authority of the spin doctors.
    What’s new, pussycat?

    • blocke the
      April 30, 2016 at 6:11 pm

      This is not the point at all. Whereas US economics certainly establish a platform to brainwash the population, the Volkswirte in German academia, some of whom were very famous, Sombart, Weber. etc. did not establish a science that served the self interest of German industry, but an academic discipline in its historicism that was quite critical of the social context of the industrialization process, e.g., Verein fuer Sozialpolitik, but you won’t learn about it through the toolkit of neoclassical economics.

  2. April 30, 2016 at 6:18 pm

    While the hermeneutic process is useful, I think it has to be placed in the context of inductive/deductive reasoning — you either build up to an argument (central theme) from analysing data, or you have an argument supported by data.

    I’m a history major with a pretty good background in economics and finance (right on up to the graduate level). History is not a science; but, it does use inductive/deductive reasoning. I know the economic theoretical orthodoxy wants to treat economics as a science; but, if economics is or wants to be considered a “science” (or social science), all I can say is its logic is all over the place.

  3. April 30, 2016 at 8:04 pm

    Very good post and subsequent comment. Thank you, Robert Locke.

  4. April 30, 2016 at 10:31 pm

    Yes, very interesting. I would appreciate Professor Locke’s reactions to Popper’s critique in “The Poverty of Historicism”.

    • blocke the
      May 1, 2016 at 10:30 am

      As I understand it Popper in Poverty of Historicism identified historicism with the idea that there are “inexorable laws of historical destiny,” to which he objected, but his view of historicism is not what most historians think historicism means; on the contrary, they think that historicism means quite the opposite, i.e., Historicism “tends to be hermeneutical, because it places great importance on cautious, rigorous and contextualized interpretation of information, or relativist, because it rejects notions of universal, fundamental and immutable interpretations.” Widepedia.

      Since historians deal with the specificities of human experience in time and place, they say that Popper’s essay expressed the views of an Austrian who lived through a terrible time when Nazis and Stalinists, who preached “inexorable laws of historical destiny,” in their name committed great crimes against humanity. Had we picked another period, the last half of the 19th century, most people we would find, including historians, thought differently about the “inexorable laws of historical destiny;” they believed in the inevitability of human progress, for instance, which post-modernist call and condemn now as modernism.

      This does not mean that historians are radical relativists. If a study of history does not confirm the existence of any “inexorable laws of historical destiny,” or allow us to predict the course of history, it does enlighten us about the conditions necessary to the sustainability of civilization. Confucius noted prehistoric cultures maintained themselves by eating from the cake of custom and more advanced civilizations by deliberately fostering a moral order. Historians are relativist when reporting about how this order is expressed. Some believe that the existence of a moral order requires the presence of a Church, e.g., Roman Catholicism, others that it requires the absence of Church, i.e., Jeffersonians, that is, it is relative to time and place, but the importance of a moral order to sustain civilization seems to be universal. Accordingly, the economists neglect of moral order in their “science” is a descent into barbarism.

      • May 2, 2016 at 3:40 pm

        Thank you for this. I found it a helpful in straightening my own confused reaction to Popper’s book. The end of your last paragraph, though, does leave me wishing historians and philosophers of science (not to say moral theologians) would actually look at the Christian understanding reported in the Gospels. If science is about finding universal meanings, then Jesus is quite clearly suggesting it is at the level of ethics (“Love God and your neighbour as yourself”) and that moral codes exist for man, not man for moral codes. The German philosopher of science Kant more or less agreed with that, but also saw that the force of a stable moral code depended on the existence of an unchanging God to underwrite it, and likewise, against Hume, that one could not have stable science and observed change without stable mechanisms of causation and change. That points to the difference between basic science at that level and applied science seeking the particular causal mchanisms operating stably in particular types of case. The last sentence, Bob, is of course spot on.

  5. Chuck Willer
    May 2, 2016 at 3:37 am

    I believe much of the author’s point has been explored by Philip Mirowski in his history of economics work. More Heat Than Light would be a intro text about the rise of neoclassical economics via the authors issues.

    • blocke the
      May 2, 2016 at 12:18 pm

      Since people educated in economics have little idea about its history before WWII outside British tradition, it is frustratingly difficult for them, it would seem, to follow the argument presented here.

      Mirowski’s books are very post WWII focused; my comments focus on pre-1940 German academia, which Mirowski ignores, and on how the German academic discussion of economics differed from that Mirowski covers in his post WWII histories of economics, which are about how physics reflected in the development of information science shaped the ideology and content of the discipline, mirroring the concern of big business, and the cold war military establishment. The German tradition, rooted in the hermeneutic analytical circle produced a much different kind of academic economics in the late 19th century.

      We find the influence of the German tradition through Werner Sombart in the work, for example, of Thorstein Veblen.

      In his 1918 book The Higher Learning in America: A Memorandum on the Conduct of Universities by Business Men, he provided a critical perspective on the role of the schools of commerce within the American university and, by consequence, their effect on the society as a whole. Veblen asserted that “the college of commerce (now called colleges of business), if it is to live and thrive, may be counted on to divert a much larger body of funds from legitimate university uses, and to create more of a bias hostile to scholarly and scientific work in the academic body, than the mere numerical showing of its staff would suggest.” (Veblen, 1918, 157) Furthermore, he wrote about the consequences that a “habitual pursuit of business” has on the ideals, aims and methods of the scholars and schools devoted to “the higher learning”. Put simply, “The consequences are plain. Business proficiency is put in the place of learning.” (Veblen, 1918, 142). Veblen considered US business schools, to use his colorful language, as a “parasitical force” because they do not peacefully serve “the entire community,” that is, in Veblen’s view, promote “business efficiency” at the expense of knowledge. I discuss this in “Reassessing the Basis of Corporate Business Performance: Modern Finance Economics, rwer, Issue 64, 2 July 2013, 110-123.

      This is institutional economics, which was not Mirowski subject, but very much that of the Germans.

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