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My philosophy of economics

from Lars Syll

A critique yours truly sometimes encounters is that as long as I cannot come up with some own alternative to the failing mainstream theory, I shouldn’t expect people to pay attention.

This is, however,​ to totally and utterly misunderstand the role of philosophy and methodology of economics!

As John Locke wrote in An Essay Concerning Human Understanding:

19557-004-21162361The Commonwealth of Learning is not at this time without Master-Builders, whose mighty Designs, in advancing the Sciences, will leave lasting Monuments to the Admiration of Posterity; But every one​e must not hope to be a Boyle, or a Sydenham; and in an Age that produces such Masters, as the Great-Huygenius, and the incomparable Mr. Newton, with some other of that Strain; ’tis Ambition enough to be employed as an Under-Labourer in clearing Ground a little, and removing some of the Rubbish, that lies in the way to Knowledge.

That’s what philosophy and methodology can contribute to economics — clear obstacles to science.

respectEvery now and then I also get some upset comments from people wondering why I’m not always ‘respectful’ of people like Eugene Fama, Robert Lucas, Greg Mankiw, and others of the same ilk.

But sometimes it might actually, from a Lockean perspective, be quite appropriate to be disrespectful.

New Classical and ‘New Keynesian’ macroeconomics is rubbish that ‘lies in the way to Knowledge.’

And when New Classical and ‘New Keynesian’economists resurrect fallacious ideas and theories that were proven wrong already in the 1930s, then I think a less respectful and more colourful language is called for.

  1. C-R D
    December 22, 2017 at 4:22 pm

    Lars, what is imperative is a complete reformulation. Don’t you agree?

  2. December 22, 2017 at 6:05 pm

    Here’s video from London UK, where a “complete reformation” is underway, with 33 theses being nailed to the door of the LSE: https://www.youtube.com/watch?v=sUEWLqY9DEQ

    • Rob Reno
      December 23, 2017 at 4:30 pm

      Great video Guy, thanks.

    • Tersoo Shimonkabir S.
      December 25, 2017 at 6:10 pm

      Fantastic

  3. robert locke
    December 22, 2017 at 11:00 pm

    “The philosopher Wilhelm Windelband, arguing from the premiss that reality is indivisible, proposed an a priori logical distinction between natural and social sciences on the basis of their methods. Natural sciences, according to Windelband, use a ‘nomothetic’ or generalizing method, since they seek to discover law-like and general relationships and properties, whereas social or cultural sciences employ an ideographic or individualizing procedure, since they are interested in the non-recurring events in reality and the particular or unique aspects of any phenomenon.”

    Accordingly orthodox economists have tried to turn their subject into a natural science, when it should be classified as a social or cultural science. Because of an overweening arrogance, they deny economics is an ideographic discipline, without any convincing proof that it is nomothetic. One should not have to come up with an alternative to a nomothetic economics that is also nomothetic, when the alternative to nomothetic economics is ideographic. Get our knowledge categories straight. See the posting on What are business schools for?

    • Rob Reno
      December 23, 2017 at 3:25 am

      Very interesting. Any recommended reads?

      • Rob Reno
        December 23, 2017 at 3:25 am

        Books I mean.

      • robert locke
        December 23, 2017 at 8:48 am

        In the comments to the posting, “What are business schools for?” we discuss the nomethetic/ideographic distinctions and JC Spender in a comment references an article
        Geisteswissenschaften and Naturwissenschaften in
        A Dictionary of Sociology that gives ample further reading.

  4. Rob Reno
    December 23, 2017 at 3:27 am

    I have learned a lot from you Lars, and I thank you for that.

  5. December 23, 2017 at 5:14 am

    Guy Dauncey

    thank you for valuable information. Yes, it is Time for an Economics Reformation. it is a bit sorry that the number of views as of December 23, 2017 counts only 270. Much more economists, young or old, should look at this You-Tube video.

  6. Frank Salter
    December 23, 2017 at 8:05 am

    The criticism, against his position, described by Lars Syll is inappropriate. However some critical comment is appropriate. By taking a position merely to oppose failed hypotheses, demonstrates an inchoate response. More directed responses are required.

    What characteristics are you expecting to find in “valid theory”? Are you examining new hypotheses in an appropriately critical manner which is likely actually to identify that “valid theory”? Without some ideas about the nature of valid theory, the search continues inchoately. To use a metaphor Lars Syll has applied to current analysis — to search under the lamp post because it is at least searching — is an inadequate methodology.

    Even if valid theory stares you in the face, would you recognise it for what is was? Consider the experiences of Svante Arrhenius — from third class degree to Nobel prize — for essentially the same theory.

    Equilibrium theory is a failed hypothesis. So what is the correct description of the alternative? Disequilibrium has no meaning! The appropriate term is transient not transitory! Time, therefore, has to be introduced in a physically correct manner. The significance of this was discussed by North in his 1993 Nobel lecture.

    Just to say an hypothesis is wrong is important but inadequate. You must then sift through what remains or propose some new analysis! That sounds like hard work! It is! But it must be done!

  7. December 24, 2017 at 7:34 am

    About 12,000 years ago Homo Sapiens created agriculture and domesticated animals. And with these Homo Sapiens also created economics. Being irrational and having an over active imagination several thousand years later humans created philosophy and then science. And still later social science. And then in the most foolish action to that time in Homo Sapiens’ history created economics to study economics. Now in a reflexive move some are beginning to conclude that somewhere along the way a group of prejudices took control of economics (the study) forcing it down some unsavory pathways. Or maybe economists are just morons too stupid for useful work. But there also might be an agenda behind the choices made by economists. Who’s agenda? All relevant questions. Too bad they aren’t examined much or closely! As it stands today economics and economists must change or be changed from the inside out. There are many alternatives from which to choose. Spanning a wide range, from the humanities, to ecology, to corporatism, to social democracy, to state sponsored capitalism. What’s important is dethroning market-based financial capitalism. Easy to say, hard to accomplish. We need concrete political proposals to get this job done. Where to find them?

  8. December 25, 2017 at 5:49 am

    “But there also might be an agenda behind the choices made by economists. Who’s agenda? All relevant questions. Too bad they aren’t examined much or closely!”

    Here’s my hypothesis about that agenda: for about a century and a half the orthodox (neoclassical) economics intentionally has developed as intellectual cover for the development of predatory corporate capitalism. It has been the emperor’s clothes. Financialization may be rendering the emperor naked.

  9. December 26, 2017 at 9:53 am

    The purposes of the American Economic Association are:
    1. The encouragement of economic research, especially the historical and statistical study of the actual conditions of industrial life.
    2. The issue of publications on economic subjects.
    3. The encouragement of perfect freedom of economic discussion. The Association as such will take no partisan attitude, nor will it commit its members to any position on practical economic questions. (1923 incorporation papers.)

    For the most part American economists have followed these rules. Their intent was to remain politically uninvolved. Mostly, they have done so. But from the outset economists also sought to increase both the size and reach of their power. Economist allied themselves with federal and state governments, mostly to improve measurement and reporting, and further economic goals. During and after both WWI and WWII the power of economics grew, both by helping to plan and finance the war efforts and in teaching the American version of economics in all parts of the world. And the tools for all this, as established by the AEA Executive Committee late in 1950 were “mathematics, accounting, statistics, history, logic, scientific method, and foreign language.” Although a bit different in form in some ways, these tools remain the heart of American economics today.

    One of the more important historical processes that shaped the continuing evolution of the American economics profession in the latter half of the 20th century was the unique prosperity the nation enjoyed throughout the 1950’s and 1960’s. In the view of economists and many in the US government, having proved its mettle in the extraordinary years of the world wars, and having continued to do so in the even longer Cold War, modern economic theory was now deployed in an altogether novel exercise—the pursuit and maintenance of full employment growth in peacetime. So optimistic were politicians and the most economists concerning the effectiveness of stabilization policy techniques that it became fashionable by the 1960’s to speak of the “end of the business cycle” and of the ability of policymakers to “fine-tune” macroeconomic performance. In what was arguably the most influential economics textbook ever published, Paul Samuelson wrote that his colleagues “kn[ew] how to use monetary and fiscal policy to keep any recessions that br[oke] out from snowballing into lasting chronic slumps.” He went on to claim that the business cycle was thus a thing of the past. Expert knowledge buttressed by a healthy and resilient economy could now make the periodic deprivation and hardship once believed to be the inevitable consequence of the cycle truly a thing of the past. The focus shifted to growth and productivity. The economy viewed as a kind of positive-sum game from which all could benefit independent of their relative shares outcomes was an essential part of the political-economic ideology of postwar America. And everybody accepted it. With the tools they had chosen, economists, however would fail to use monetary and fiscal policy to clip and stop recessions. Or, to assure continued growth or full employment. The result of a basic flaw embedded in American economics from the outset. The control and influence of economics rested on the image of its work as a calculation of optimal means to a given end rather than the comparison of different and possibly incompatible goals. In the end (today) this wrecked both the discipline and its usefulness. Today economists are helpless in a world they never even considered. A world of ideological belief and political power. Predatory capitalism, neoliberalism, and the other isms of today’s economy are murders of the discipline of economics just as much as murders of the economy we all depend on for survival. The Trump economy is on the way. None but a few of the very rich and biggest corporations will like or survive it.

    • December 28, 2017 at 5:28 am

      What Ken writes here is useful and relevant, true as far as I know as one trained, but not practiced, in the field of economics. I feel that the truth of what Ken writes might be limited to the practice of economics in the United States.

      I wish to add some things.

      I cannot prove (so far) my hypothesis (that orthodox (neoclassical) economics intentionally has developed as intellectual cover for the development of predatory corporate capitalism). It is an intuitive view based upon fragments drawn from diverse sources and my own experience, which extends back to my undergrad years in the early 60s.

      In neither undergrad economics nor grad economics and ag economics, was capitalism and its nature systematically analyzed as a core study. Yes we had required readings in Gardiner Means, J. K. Galbraith, Marx, and others. But, except for a wonderful year in the required study of the History of Economic Thought (no longer even offered in many places), no Veblen or Commons. In graduate school I was specifically told more than once that Institutional Economics was irrelevant.All of my micro instruction was Chicago School, often using Friedman’s Price Theory. Three of my macro instructors were from abroad: RCO Matthews on business cycles, Andreas Papandreou on macro models and Abba Lerner, a socialist (non-math Keynesianism). Otherwise my macro came from hotshot neoclassical/neokeynesians with heavy math orientation, two of whom later won Nobels. In none of this was the essence of capitalism — its inherent instability, its inherent inequality, its inherent instability — systematically presented for analysis. Of course as the environment was irrelevant beyond the necessary exploitations, and as people were reduced to cyphers, these important entities were essentially ignored. Income distribution was the province of the sociologists. Grad school more of the same.

      Hyman Minsky had taught during my undergrad years, I later learned. I would have benefited from his viewpoint, which was more fully developed many years later.

      The required Marx chapters (only two as I recall) did not centrally analyze capitalism. The inherent predatory nature of the ideology was completely ignored, as monopoly was considered an aberration (in spite of required readings in Joan Robinson and Edward Chamberlain). Not until I read (on my own initiative) Kenneth Boulding’s much ignored but wonderful book, A Reconstruction of Economics, did I see the beginnings of such deep analysis and the relevance of systems analysis and ecological analysis.

      In my own personal experience with American CEOs, competition is worshiped; in theory. In practice, when the truth comes out, corporate leadership would love to kill the competition.

      Over the years I have become familiar with the diverse ways economists are marginalized if they don’t toe the orthodox line. The more public work comes from people such as Mason Gaffney, Steve Keen and even our own David Ruccio. I know of several career academic economists, widely and deeply published, whose career paths were adversely shaped by their Marxism.

      I am familiar with the sweet words of the AEA’s stated purposes. But we are dealing with human beings and the quest for power and prestige. The latter often twist those words into a calicified bias. During the Vietnam War protests economists were asked to call out their esteemed colleague, Walt Rostow, for his participation in that slaughter (and he was not alone). Silence. In grad school my professors engaged in contract work with corporate agribusiness. When it came time to address California’s Bracero program and the budding farmworker organizing, silence. No labor economics taught in my classes.

      I may sound like a conspiracy theorist here. But my intuition tells me that I am right, even that my hypothesis may be trite. In an economy and culture where predatory corporate capitalism is so dominant, what should we expect of our endowed and public universities?

      Well I, for one, would be happier with ridding ourselves of the pretense of objectivity (which Gunnar Myrdahl strongly advised) and present some alternatives, instead of working to prop up and justify a collapsing economic system. Our young people deserve no less.

      • December 28, 2017 at 10:49 am

        Econoclast, can’t say much about some of the details of your statements. But your conclusions on two points accurately reflect the history of American economics. First, American economists wanted to be useful to both industry and government. Generally, treating the two forms of work as equivalent. Second, American economists wanted a powerful, a consequential influence in American domestic and foreign policy. They entered alliances with government and business to help gain such influence.

      • Rob Reno
        December 28, 2017 at 4:58 pm

        Thank you Econoclast for sharing this comment.

        Have you read A Perilous Progress: Economists and Public Purpose in Twentieth-Century America by Michael A. Bernstein (http://a.co/jeBceOm). I ask because I believe it supports your basic thesis. As does a number of other books by economists I have read recently, such as Economics as Religion: From Samuelson to Chicago and Beyond by Robert H. Nelson (http://a.co/hMb5ZS4) and Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street by Tomas Sedlacek et al. (http://a.co/e7OBDQa). No doubt there are many others that are weaving this history and story together.

        I think nothing short of a cultural renaissance that takes seriously a deep cultural reflection on how we have come to where we are today that takes the history of science, philosophy, and religion seriously can save humanity from the path of destruction we seem to blindly traveling down today. I view philosophy as the mediator between science and religion; philosophical critical realism performs the role of purging religion of superstition and dogma while purging science of dogma and pseudo-science. Enlightened (i.e., not fundamentalism) critical realist scientists, philosophers, and religionists all have a piece of this mosaic puzzle of the age we live in and part to play. Nelson reveals the deep religious and philosophical roots of economics in the social gospel and progressivist movements of the early nineteenth century and how these early idealistic leaders and their academic progeny as they “professionalized” and “institutionalized” the field lost their soul so-to-speak in the fields secularization in an attempt to create a “science” patterned after Newtonian physics. Thomas C. Leonard in “Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era” (http://a.co/jebDy73) documents the mixed bag of outcomes resulting from the Progressive Era and its social reformers.

        I believe we are at a point of civilizational crisis. Our current state of civilization and economics is not sustainable in the long run. Stagnation is not an option; we will either retrogress or progress (whatever that means?) but nothing in our evolutionary universe remains stagnant. We are living in critical times when civilization is in transit from one level to another. The only question is from what (we are all seeing that now in our postmodern critique of economics) to where and to what? When I was sixteen I read the following in an obscure religious text (I am well aware that it is dated as it was written in 1934), from which I have tried to pull those quotes relevant to our current social/economic crisis using the search term “economic”:

        “Economics, society, and government must evolve if they are to remain. Static conditions on an evolutionary world are indicative of decay; only those institutions which move forward with the evolutionary stream persist. Present-day profit-motivated economics is doomed unless profit motives can be augmented by service motives. Ruthless competition based on narrow-minded self-interest is ultimately destructive of even those things which it seeks to maintain. Exclusive and self-serving profit motivation is incompatible with Christian ideals–much more incompatible with the teachings of Jesus. In economics, profit motivation is to service motivation what fear is to love in religion. But the profit motive must not be suddenly destroyed or removed; it keeps many otherwise slothful mortals hard at work. It is not necessary, however, that this social energy arouser be forever selfish in its objectives.”

        “Political science must effect the reconstruction of economics and industry by the techniques it learns from the social sciences and by the insights and motives supplied by religious living. In all social reconstruction religion provides a stabilizing loyalty to a transcendent object, a steadying goal beyond and above the immediate and temporal objective. In the midst of the confusions of a rapidly changing environment mortal man needs the sustenance of a far-flung cosmic perspective.”

        “Though capital has tended to liberate man, it has greatly complicated his social and industrial organization. The abuse of capital by unfair capitalists does not destroy the fact that it is the basis of modern industrial society. Through capital and invention the present generation enjoys a higher degree of freedom than any that ever preceded it on earth. This is placed on record as a fact and not in justification of the many misuses of capital by thoughtless and selfish custodians.”

        “If any portion of your fortune has been knowingly derived from fraud; if aught of your wealth has been accumulated by dishonest practices or unfair methods; if your riches are the product of unjust dealings with your fellows, make haste to restore all these ill-gotten gains to the rightful owners. Make full amends and thus cleanse your fortune of all dishonest riches.”

        “The right to property is not absolute; it is purely social. But all government, law, order, civil rights, social liberties, conventions, peace, and happiness, as they are enjoyed by modern peoples, have grown up around the private ownership of property.”

        “The present social order is not necessarily right–not divine or sacred–but mankind will do well to move slowly in making changes. That which you have is vastly better than any system known to your ancestors. Make certain that when you change the social order you change for the better. Do not be persuaded to experiment with the discarded formulas of your forefathers. Go forward, not backward! Let evolution proceed! Do not take a backward step.”

        “If men would maintain their freedom, they must, after having chosen their charter of liberty, provide for its wise, intelligent, and fearless interpretation to the end that there may be prevented: 1. Usurpation of unwarranted power by either the executive or legislative branches. 2. Machinations of ignorant and superstitious agitators. Retardation of scientific progress. 4. Stalemate of the dominance of mediocrity. 5. Domination by vicious minorities. 6. Control by ambitious and clever would-be dictators. 7. Disastrous disruption of panics. 8. Exploitation by the unscrupulous. 9. Taxation enslavement of the citizenry by the state. 10. Failure of social and economic fairness. 11. Union of church and state. 12. Loss of personal liberty.”

        “Man should be unafraid to experiment with the mechanisms of society. But always should these adventures in cultural adjustment be controlled by those who are fully conversant with the history of social evolution; and always should these innovators be counseled by the wisdom of those who have had practical experience in the domains of contemplated social or economic experiment. No great social or economic change should be attempted suddenly. Time is essential to all types of human adjustment–physical, social, or economic. Only moral and spiritual adjustments can be made on the spur of the moment, and even these require the passing of time for the full outworking of their material and social repercussions. But religion should not be directly concerned either with the creation of new social orders or with the preservation of old ones. True religion does oppose violence as a technique of social evolution, but it does not oppose the intelligent efforts of society to adapt its usages and adjust its institutions to new economic conditions and cultural requirements.”

        “Mechanical inventions and the dissemination of knowledge are modifying civilization; certain economic adjustments and social changes are imperative if cultural disaster is to be avoided. This new and oncoming social order will not settle down complacently for a millennium. The human race must become reconciled to a procession of changes, adjustments, and readjustments. Mankind is on the march toward a new and unrevealed planetary destiny.”

        “Religion must not become organically involved in the secular work of social reconstruction and economic reorganization. But it must actively keep pace with all these advances in civilization by making clear-cut and vigorous restatements of its moral mandates and spiritual precepts, its progressive philosophy of human living and transcendent survival. The spirit of religion is eternal, but the form of its expression must be restated every time the dictionary of human language is revised.”

        “Institutional religion cannot afford inspiration and provide leadership in this impending world-wide social reconstruction and economic reorganization because it has unfortunately become more or less of an organic part of the social order and the economic system which is destined to undergo reconstruction. Only the real religion of personal spiritual experience can function helpfully and creatively in the present crisis of civilization.”

        “Religionists must function in society, in industry, and in politics as individuals, not as groups, parties, or institutions. A religious group which presumes to function as such, apart from religious activities, immediately becomes a political party, an economic organization, or a social institution. Religious collectivism must confine its efforts to the furtherance of religious causes.”

        “The institutionalized church may have appeared to serve society in the past by glorifying the established political and economic orders, but it must speedily cease such action if it is to survive. Its only proper attitude consists in the teaching of nonviolence, the doctrine of peaceful evolution in the place of violent revolution—peace on earth and good will among all men.”

        “Modern religion finds it difficult to adjust its attitude toward the rapidly shifting social changes only because it has permitted itself to become so thoroughly traditionalized, dogmatized, and institutionalized. The religion of living experience finds no difficulty in keeping ahead of all these social developments and economic upheavals, amid which it ever functions as a moral stabilizer, social guide, and spiritual pilot. True religion carries over from one age to another the worth-while culture and that wisdom which is born of the experience of knowing God and striving to be like him.”

        The Golden Rule, which is expressed in all the world’s major religions, is as important today as it has always been in the past. It is time we reevaluate economics in light of the best of philosophy, religion, and science and reintegrate ethics and morality into economic thought.

        Reference List

        1. Wattles, Jeffrey. The Golden Rule. New York: Oxford University Press; 1996; c1996 pp. 172-174.
        Notes: Social, Economic, and Political Implications

        The golden rule is, first and foremost, a principle in the philosophy of living, expressing a personal standard for the conduct of one-to-one relationships. A Chinese teaching illustrates priority of the personal dimension: “If there is righteousness in the heart, there will be harmony in the home. If there is harmony in the home, the nation will be well governed. If the nation is well governed, there will be peace in the world.” (….)

        In a personal philosophy of living, the golden rule promotes social service, and its most basic systems application is a commitment to social equity. Applications to economic and political affairs extend that underlying commitment. The philosophy of living, in general, and the golden rule in particular, do not offer detailed patterns for social systems, or specific steps for a particular generation to follow toward actualizing ideals. The rule inclines towards peace, but cannot construct proposals for defense and disarmament. When it is clear what military policy is best for political evolution toward enduring world peace, then the golden rule will clearly authorize that as the policy requires. Those whose perspective on economics are clearest can see how to apply the golden rule in that realm. There is just one caveat: the way to apply a moral principle to complex systems is not always immediately obvious. Without wisdom of evolution, moral idealism and fanaticism take bold steps backward. The weakness of much of modern political philosophy is its failure to keep pace with Kant’s appreciation, expressed in his essays on history and politics, of the importance of a gradual and proper evolutionary approach to the ideals of an advanced civilization.[5] Complacent conservatism and attempts at revolutionary social transformations prove equally self-destructive. (Wattles 1996, 173-174)

        What the rule does for systems is to prompt questions that imply norms for systems. In the family, does parental authority degenerate into patriarchy, violating the equality of men and women and making fear predominate in the child’s relation to the parent? In society are extremes of inequality of wealth and power tolerated? Does talk of “community” along ethnic lines betray human kinship? In business, does the profit motive eclipse the service motive? In politics, does a nation go beyond intelligent patriotism to assert its sovereignty without regard for planetary responsibilities? Does an organization benefit those within and those without? By virtue of its implied respect for human dignity, the golden rule is inconsistent with sexism, nationalism, racism, and mistreatment of others based on distinctions of class, age, condition of health, religious belief or disbelief, level of education, linguistic preferences and so on. The rule illumines the ethics of social systems but its primary benefit is to individuals. The golden rule raises the question; a successful inquiry enables a golden rule explication of the result. That much, but no more, can be expected of a moral principle. (Wattles 1996, 174)

        [5] Such an evolutionary perspective does not, of course, require blindness to symptoms of civilizational decline; but decline does not go on forever. Sooner or later we will find the inspired leadership and teamwork to reorient our planetary course, and who can say whether that reversal is not already under way? It is no simple matter to generalize regarding the countless ups and downs that simultaneously and continuously reshape the present and future. During years when I taught world history, I arrived at the convinction that history is like a decatholon in which the power of love competes with the forces of self-centeredness and materialism and destruction; I am not in doubt about the ultimate triumph of love, though in any given event on the horizon, there is uncertainty. There are so many positive persons to work with and so many promising projects to join that courage and faith can dispel anxiety and cynicism. Nevertheless, I believe that nothing short of a spiritual renaissance will have the power to remotivate and redirect our planetary course. Moral teaching and religious doctrine are not enough.

  10. December 29, 2017 at 9:09 am

    David Sloan Wilson’s (evolutionary biologist and anthropologist) article “The Invisible Hook: How Pirate Society Proves Economic Self-Interest Wrong” (found here, evonomics.com/pirates-economics-self-interest-hayek-wilson/) is a brilliant take-down of our current economics situation. It revolves around a conference at which he spoke, titled, “Tensions in the Political Economy Project of F.A. Hayek.” It was held at George Mason University’s Mercatus Center, a Mecca for modern libertarian thought. But the discussion went well beyond the “Greed is Good” libertarianism that haunts us today. But Wilson points out the absolute failure of even the so-called sophisticated libertarianism many of the conference participants support. His article is organized around “The Invisible Hook: The Hidden Economies of Pirates,” by Peter T. Leeson, Duncan Black Professor of Economics and Law at George Mason. The subject of the book is the extraordinary egalitarianism of pirate society. Leeson explains that through standard economic theory. In other words, in terms of individual self-interest. In reaching this conclusion, Leeson isn’t shy about calling “Greed is Good” a central lesson to be learned (p.177) from pirate society. For Wilson, the central lesson to be learned, from both the workshop and Leeson’s book, is that the concept of individual self-interest is incoherent. Per Wilson, this is arguably the major problem with economics and the major contribution that Multilevel Selection Theory (MST) can make in providing a more coherent alternative. Unlike animal societies, human societies are reverse dominance and have been for 2 million years. In our distant ancestors, members of groups found ways to collectively suppress disruptive self-serving behaviors, which provides a more hospitable social environment for cooperation. Since such suppression removes the possibility that one individual succeeds at the expense of others within the same group, the only alternative is to cooperate within your group in competition with other groups, which might take the form of direct competition such as warfare, or indirect competition such as surviving during hard times as other groups perish. In terms of this history, pirates were doing what came naturally throughout the history Homo Sapiens as a species—cooperating within their groups in a way that was rigorously policed and behaving as a corporate unit toward other groups in a way that was adapted to the ecological context. This is what evolutionists refer to as MST. Evolution is group selection even more than individual selection. For only group selection explains “prosocial” actions. Example, the egalitarianism of pirates. “Prosocial” refers to any attitude, behavior, or institution oriented toward the welfare of others or one’s entire group. It is more general than the word “altruism,” which implies a degree of self-sacrifice in the act of helping others. The word prosocial is agnostic on that point. If a person can do well by doing good, so much the better. Two-level selection (between individuals within groups and between groups in a multi-group population) gave evolutionary theory the capacity to explain both disruptive self-serving behaviors (favored by within-group selection) and prosocial behaviors (favored by between group selection) in any social species. The question of which level of selection prevails, or if both operate to a degree (resulting in a mix of antisocial and prosocial behaviors), is an empirical matter that must be examined on a case by case basis. Between group selection is the genetically innate and culturally elaborated psychology that sprang to life on pirate ships during their extraordinarily brief history. This is clearly not rational-choice, individual self-interest. It’s a comparative dynamic in which members of a group compare obsessively, making sure that benefits are shared and calibrated to the contribution to group effort. This is the most common social organization in the history and evolution of Homo Sapiens, supported by the evidence. Not, individual rational-choice, self-interest.

    • January 1, 2018 at 6:41 am

      The Wilson article is very interesting and I recommend it to all interested. Thanks for bringing it to my attention.

    • January 1, 2018 at 9:22 am

      Let me echo Econoclast’s comment. You’ve earned your keep with this one, Ken. Incidentally, this sheds new light on a recent discussion of the need to garner group support for developers of new paradigms and concepts [thinking broadcastable communication as the human alternative to localised application of external force].

    • January 1, 2018 at 10:12 am

      Thanks for the kind words. But this really is not new. It’s taught in departments of Anthropology and Evolutionary Biology across the US. It’s sad that economics graduate students appear to enroll in few courses in these departments.

    • Rob Reno
      January 2, 2018 at 3:41 am

      Thank you Ken for that summary. I have Wilson’s book in my library but have not had the chance to dive deeply into it yet as I am working my way through my stack of books on economics (WEA Books and others) currently unread.

      I have a question for Lars. As I work my through the books you recommended, I read Marqués (below) as doubting this endeavor of achieving a new “scientific” economics based on biology (complexity theory and/or decision theory) as Wilson appears to be aiming for. Is this a reasonable and correct interpretation Lars?

      Reference List

      1. Marqués, Gustavo. A Philosophical Framework for Rethinking Theoretical Economics and Philosophy of Economics. UK: College Publications for World Economics Association; 2016; pp. 5-6. (World Economics Association Book Series; v. 8).
      Notes: Let me advance a brief comment about the relation between science and economics. This book does not take an irrational or anti-scientific stance. On the contrary, in the domain of natural phenomena modern science has shown extraordinary successful results. But the same cannot be said when social processes are at stake, and I have tried to offer some of the reasons (ultimately, ontological) for this failure. So, I do not share the idea of those authors who think that economics can be scientific (as much as natural sciences), and that such an economic theory, once found, would solve those economic problems that the best theoretical tradition assigned to economics a long time ago (growth, employment and development with fairness and equality). (Marqués 2016, 5)

      Particularly, I think that the dream of having a successful theory of expectation formation is largely a chimera, and indeed I dismiss the necessity of having such a theory. Neither governmental authorities nor any other economic actor may count on being able in a sure (scientific) way to intervene and make people entertain “correct” expectations. But as we try to show in this book economic actors (including the state) do not need a scientific theory able to guarantee their goals in order to intervene systematically upon the economy. Instead they can apply feasible sequences as well as direct (practical) knowledge and skills to cope with the situation and push the process in the desired direction. (Marqués 2016, 5)

      It is also important to examine the relation between science and economics from another perspective. Theoretical physics has been successfully applied to a wide range of circumstances of our world. This could be done thanks to the development of associated technologies (different kinds of engineering founded on physical theory). Some may think that nowadays economics is at a pre-technological stage (like physics was sometime ago), and that what is needed is more time (and more knowledge, mainly mathematical knowledge) to develop a sort of economic engineering. Popper was confident in the benefits of fragmentary social engineering. The call to elaborate an alternative economics oriented to solve practical problems of our world could be interpreted this way. (Marqués 2016, 6)

      Our analysis of deliberate mechanisms like Prospect Theory and Decision Making Models gives testimony of the kind of practical results that can be obtained by this road. But I suspect that in reference to more traditional economic problems like those mentioned at the beginning of this section, a similar expectation is unfounded and doomed to failure. As far as economic phenomena result from open ended processes as we have described them there is no possibility of shaping and controlling them by means of social engineering similar to what happens in the case of natural sciences. The specific domains where neither uncertainty nor conflicts between lobbyists that defend different and opposite interests exist. These technologies are designed for “leading” in a scientific way the economic processes. And I suspect that it is not possible to hope that we may count on similar tools in the near future. (Marqués 2016, 6)

  11. Rob Reno
    January 2, 2018 at 2:49 am

    “Just to say an hypothesis is wrong is important but inadequate. You must then sift through what remains or propose some new analysis! That sounds like hard work! It is! But it must be done!” ~ Frank Salter

    But this cannot be realistically done without a cogent critical realist critique of the philosophical underpinnings of mainstream economics along with a history of economics as well. Perhaps critics sometimes sling around the “pseudo-science” label too easily and that was the reason you seemed from my limited perspective to dismiss philosophy. I am not sure that is really your position or not to be honest. I agree, that much of the “doing” of science is the daily slog of just getting on with the gathering of data and carrying out of studies, research, and experiments in various fields of science. But one of the issues that I have learned from Lars (and others) is that some economists have failed to connect their model building to the acid test of empirical reality; experimental testing of hypothesis and theories against real world outcomes. Isn’t that the very reason the 2007-2008 Great Recession has raised so many questions which have in turn led to a so-to-speak ferment and questioning of the underlying foundations of mainstream economic theory?

    It is in times of crisis when old theories and paradigms fail that the real questioning begins. Having studied the history of the earth sciences (from continental drift to plate tectonics) I see many of the same themes playing out. The same goes for the history of evolutionary theory and the recent (and still ongoing) integration of new findings from the fields of developmental biology (evo-devo & devo-evo & epigenetics) and their impact theoretical evolutionary biology (see the Vienna Series in Theoretical Biology, for example: https://mitpress.mit.edu/category/series/vienna-series-theoretical-biology)

    My point, or intuition, if you will, is that during “normal” times when we are not in crisis the scientific community generally just gets on with using the same old methodologies and refining the same old theories while not critically examining the underlying philosophical assumptions so critical to the foundations of the theoretical framework. But when crisis hits just adding one more ad hoc epicycle to fix a fatally flawed theory just won’t do. And that is when serious attention to the fundamental critical assumptions is called for so we can understand the nature of the problem. This is what Lars and Marques and Fullbrook are doing for us; at least that is what I am understanding at this time.

    As I work to understand the various critiques found on RWER I see on the one hand Asad Zaman’s analysis from the Islamic perspective as religionist (and one can see Nelson’s Economics as Religion as the same from the Judeo-Christian perspective), and on the other hand I see the effort to redefine economics in terms of findings in evolutionary biology as found in David S. Wilson’s Complexity and Evolution: Toward a New Synthesis for Economics. I note with some irony that much of Wilson’s theorizing is built upon Complexity Theory and Evolutionary Biology but appears upon my initial (I must read deeper though) to ignore the fact that evolutionary theory itself is going through a the “New Synthesis” aiming to integrate evo-devo (epigenetics and development into Neo-Darwinian theory, which left out development in the Modern Synthesis) which itself is largely an unfinished synthesis and is still ongoing. Does the left hand know what the right hand is doing?

    Perhaps this is what plurality of approaches is going to look like for some time while various lines of research are fleshed out. No doubt critical assumptions are very different in these different approaches. It is the role of philosophy to make explicit those assumptions so we can be fully aware of how our worldviews are acting as frameworks within these different, and sometimes contradictory, paradigms.

    I often think that real entrepreneurs and innovative transformative business models act independent of the ivory tower debates about philosophy, theory, etc., and just get on with solving real world problems. Where do they fit into these discussions?

    • Rob Reno
      January 2, 2018 at 2:54 am

      Please forgive my old mind’s fat finger typos; I trust you can cipher what I meant to say ;-)

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