Home > Uncategorized > Mainstream economics gets the priorities wrong

Mainstream economics gets the priorities wrong

from Lars Syll

There is something about the way economists construct their models nowadays that obviously doesn’t sit right.

significance_cartoonThe one-sided, almost religious, insistence on axiomatic-deductivist modelling as the only scientific activity worthy of pursuing in economics still has not given way to methodological pluralism based on ontological considerations (rather than formalistic tractability). In their search for model-based rigour and certainty, ‘modern’ economics has turned out to be a totally hopeless project in terms of real-world relevance

If macroeconomic models – no matter of what ilk –  build on microfoundational assumptions of representative actors, rational expectations, market clearing and equilibrium, and we know that real people and markets cannot be expected to obey these assumptions, the warrants for supposing that model-based conclusions or hypotheses of causally relevant mechanisms or regularities can be bridged to real-world target systems, are obviously non-justifiable. Incompatibility between actual behaviour and the behaviour in macroeconomic models building on representative actors and rational expectations microfoundations shows the futility of trying to represent real-world target systems with models flagrantly at odds with reality. As Robert Gordon once had it:

Rigor competes with relevance in macroeconomic and monetary theory, and in some lines of development macro and monetary theorists, like many of their colleagues in micro theory, seem to consider relevance to be more or less irrelevant.

  1. January 22, 2018 at 10:43 pm

    I’ve long made the argument that macro economists would provide a far more valuable service to society if they were to put their precious mathematical models aside for a while and simply focus all of their analytical attention on the variables that they plug into them.

    A LOT of economic insight can be gained from submitting these variables to proper analysis without ever bothering to take the extra step of plugging them into a grand mathematical construct.

    All of the error in DSGE models—which has made them unreliable as predictors of reality—can be traced to errors in the assumptions that the modelers make regarding the variables that they feature in their models.

    Again, put the math aside and focus on the variables we are concerned about and how they react to or influence other variables.

    To illustrate the significance of this point, I like to refer to the common belief voiced by most economists—shows up in almost any intro textbook—that an income tax increase on rich people would have a contractionary effect on the economy, when precisely the opposite is true.

    It seems to be sheer intellectual laziness which has persuaded most economists to fail to notice that it is illogical to take a particular economic variable—taxes collected—and claim that changing that variable in a particular way will have an effect on the overall economy that can only be generated when another economic variable is also changed in a compensating way.

    That is what we are talking about when economists claim that cutting rich people’s income tax rates will have a stimulative effect on the economy.

    The only way it is possible to make such a claim is if another economic variable is also manipulated in a way that would compensate for the negative impact (on GDP) that would occur if the government were to reduce the amount of tax revenues it is taking in (and did nothing else).

    At the peak of the Great Recession here in America, one frequently heard the complaint—never challenged by mainstream economists—that “You can’t raise taxes during a recession! That’s crazy!”

    At issue here is the failure of theoretical economists to try to rationally deduce the effects of manipulating a particular economic variable—like taxes—while strictly adhering to the analytical restrictions imposed by the classic “ceteris paribus” assumption.

    When governments reduce their tax revenues in order to give citizens a tax cut and do nothing else to compensate for the loss of revenue, the inevitable result is a forced reduction in government spending. Governments cannot spend money they do not possess.

    If nothing else is done by the government, all else equal, the net effect is a reduction in GDP, for the reduction in G will be greater than the increase in C (cuz richer citizens will save some portion of the tax cut, removing it from the economy). Tax cuts by themselves are nearly always contractionary, never expansionary.

    The “something else” that governments typically do during recessions to maintain or even increase the government’s spending levels is borrow money. The act of borrowing money (an economic variable unto itself) is always expansionary, for it takes money that was removed from the economy by savers (or which did not previously exist) and spends it, instead.

    When governments “cut taxes” to try to stimulate the economy, they are taking an action that will, by itself, hurt the overall economy. They can mitigate those negative effects to a certain degree if they borrow a lot of money to maintain/increase government spending, but why should they take ANY actions that would have a contractionary effect on GDP when the economy is in recession?

    Thanks to the many mainstream economists who cannot be bothered to isolate the impact of changing individual economic variables, like taxes, we have a situation where a majority of the financial/government elite keep repeating the lie that tax increases on rich people would have a contractionary effect on the economy.

    Quite the contrary. Whenever the government increases its spending using money that would have been saved by the economy’s biggest savers, the result is without question a direct stimulus to the economy, all else equal.

    Increasing tax rates (on rich people) during a recession to fund increases in government spending is one of the most effective things a government can do to generate an economic stimulus without increasing debt levels.

    That is what cogent economic analysis of economic variables tells us.

    How many DSGE models have been fatally corrupted by this wrong-headed assumption re: the effects of changes in government tax levels?

    These are the kinds of meaningful explanations of policy options which can be generated by economic analysis alone. Go ahead and plug this adjusted variable into your model if you wish, but…

    • Frank Salter
      January 24, 2018 at 7:38 am

      “The only way it is possible to make such a claim is if another economic variable is also manipulated in a way that would compensate for the negative impact (on GDP) that would occur if the government were to reduce the amount of tax revenues it is taking in (and did nothing else).”

      Is this a case of misunderstanding the nature of functions? A function may apparently be generalised in the form of an equation — e.g. y = f(x,…). But it is not an equation — better written as y := f(x,…) in BNF notation or stretching the formal, f: x,… ↦ y.
      This is a perennial misunderstanding in theoretical economics. With many functions, there are multiple arguments delivering the same value. What then is the meaning of arguments implied from such a function value?

  2. January 23, 2018 at 7:27 am

    Rigor vs. relevance is a forever argument, it seems among economists. To understand what this argument involves we must understand the history of rigor and relevance. In other words, what are they and how did they become that? These are basic points in understanding how to evaluate the role each plays in everyday life and in social sciences like economics. For example, I’m always struck by the ease with which some critics of economic theory and models decry their lack of relevance for the “real world.” Obviously, the real world is not obvious. If it were then these models and theories would be forced to attune themselves to it. Real, like unreal is created by humans in their interactions with one another and nonhumans. So, which “real world” should economics pay attention to? After all, there are dozens of such “real worlds.” Just ask the many Americans whose everyday ways of life (realities) are omitted from dominant sociological, historical, and economic norms.

    The same is the case with rigor. Rigor has a specific history in formal science. Which is very different from rigor in the law or rigor in engineering. The word may be the same but its history of forms, usage, and particularly its significance for such things as status and social hierarchy is variable. Why the variations and how the variations exist is important for scientists, lawyers, and engineers, and for all other members of society. Economists, for some reason seem to treat it as if it has only one connotation, and that one is easy to grasp and the only one of importance.

    • Rob Reno
      January 24, 2018 at 6:45 am

      The lookout on a battleship spies a light ahead off the starboard bow. The captain tells him to signal the other vessel, “Advise you change course twenty degrees immediately!” The answer comes back, “Advise you change course twenty degrees immediately!” The captain is furious. He signals, “I am a captain. We are on a collision course. Alter your course twenty degrees now!” The answer comes back, “I am a seaman second class, and I strongly urge you to alter your course twenty degrees.” Now the captain is beside himself with rage. He signals, “I am a battleship!” The answer comes back, “I am a lighthouse.”

      • January 24, 2018 at 6:59 am

        Rob, unfortunate how often speeding past one another morphs into speeding into one another. Economists it seems do both frequently.

  3. January 24, 2018 at 3:59 am

    Axiomatic and deductive method, if conducted logically, assures the logical rigor. The relevance of the conclusions depends totally on the relevance and range of validity of axioms. In economics, it is true we cannot find universal laws which are valid for all situations and exact in all scales. So, the criticism against axiomatic-deductive method is a good point of criticism, but we have to keep in mind that economics should not remain a simple collection of common senses if economics should be more scientific discipline. Simply insisting the relevance of propositions returns economics to a natural history of economic phenomenon.

    Lars is always right in his criticism, but he has no vision for the reconstruction of the economics. As a philosopher of economics, he may know his limited role, but many readers may be misguided to a belief that it is sufficient that economics is a collection of relevant knowledge of economics affairs.

    The main trouble in economics is, in my opinion, not the mainstream economics itself, but the lack of firm foundation and theory that can replace the mainstream economics. Many of heterodox macroeconomics is a collection of simple expositions of economist’s belief. It may seem relevant at a first sight but we cannot know when such model or law is valid or how it is exact.

    We have to argue the strategy how to reconstruct the economics.

    • January 24, 2018 at 7:09 am

      I often wish Feynman was still alive. The questions I have for him and for those who follow the paths he laid out remain the same and unanswered. Compare the consequences of the guess to “experiment or experience.” Which experience, when, for how long, and how? Sociology and anthropology of science has demonstrated that human experience is limited and selective. Even experiments often lead to various results depending on when and how and by whom performed, with which tools, for what purposes. Human experience or experiment are simply not as simple and straight forward as Feynman imagined. This is even more the situation with social sciences, such as economics.

      • Rob Reno
        January 24, 2018 at 4:53 pm

        Neither are they as untethered from reality as you seem to want to make them seem. Absolute relativism is as much an outlier as belief we can find absolute truth. Then there are conceptual positions in between. Pick one and be consistent as one can be while maintaining enough humility to be open to change. Isn’t that the best we as human beings can do?

        What is called for is humility, and certain degree of healthy doubt. Hasok Chang’s perspective has a pragmatic ring:

        “I also reconsider what it means for science to be ‘mature’, and identify humility rather than hubris as the proper basis of maturity. The active realist ideal is not truth or certainty, but a continual and pluralistic pursuit of knowledge.”

        It seems to me there are degrees of knowing, ranging from certainty to uncertainty, and many shades in between. I am comfortable with self-doubt and simply acknowledging I don’t know and my current position may well be wrong. Yet I also have a certain optimism that truth can be approximated like the asymptote approaching infinity, yet never reaching it. New evidence (facts) emerged from the scientific research of the deep sea floor funding by the US military, and these new lines of evidence were used, along with older evidence already noted by Wegener, to bring about the plate tectonic revolution. It is a constant evolution of dialectic between fact and conceptual understanding. Philosophy and science are handmaidens; one cannot be done without the other. But when one takes a facet of thinking to extremes we end up with what Lars noted in his book “theory induced blindness.”

        To argue we can never know the _real world_ because it is mediated by mind is like the fellow who insists toast always lands butter-side up:

        Two men are making breakfast. As one is buttering the toast, he says, “Did you ever notice that if you drop a piece of toast, it always lands butter side down?” The second guy says, “No, I bet it just seems that way because it’s so unpleasant to clean up the mess when it lands butter side down. I bet it lands butter side up just as often.” The first guy says, “Oh, yeah? Watch this.” He drops the toast to the floor, where it lands butter side up. The second guy says, “See, I told you.” The first guy says, “Oh, I see what happened. I buttered the wrong side!” For this guy, no amount of evidence will falsify his theory.

        ~ ~ ~

        Definition of Scientific Realism

        Scientific realism is a philosophical position postulating that scientific theories are supposed to reveal the truth about the external world. A contraposition would be instrumentalism or anti-realism, which considers scientific theories only to be instruments for predicting phenomena (cf. Ladyman 2002,104).
        Scientific Realism has several aspects, depending on the philosophical angle of view. Ian Hacking summarizes the field of debate as follows: “Most of today’s debate about scientific realism is couched in terms of theory, representation, and truth.” (Hacking 1983, 31). However, he makes it clear that no final argument for or against realism can be found at the level of representation. It is rather the experiment, the intervention, which “provides the strongest evidence for scientific realism” (1983, 262).

        James Ladyman defines scientific realism in terms of three commitments, which he considers to be involved in the concept:

        “scientific realism involves three kinds of philosophical commitment: a metaphysical commitment to the existence of a mind-independent world of observable and unobservable objects; a semantic commitment to the literal interpretation of scientific theories and a correspondence theory of truth; and finally an epistemological commitment to the claim that we can know that our best current theories are approximately true, and that they successfully refer to (most of) the unobservable entities they postulate, which do indeed exist.” (Ladyman 2002,159, my italics).

        Failing to accept all three of those commitments results, according to Ladyman, in anti-realism, which can have different motives, such as skepticism, reductive empiricism, social constructivism, or constructive empiricism (cf. ibid.). But anti-realism is not identical with skepticism. Skepticism is rather, as John Heil puts it, “a meditation on realism: skepticism is realism reflected in the mirror of epistemology” (Heil 1998, 69). The skeptic doesn’t deny the existence of an external world, but he can’t “provide an epistemically noncircular defense of our conviction that we have such knowledge or justified belief” (ibid., 68).

        As far as empiricism is concerned, Hasok Chang deplores that empiricism “is sometimes taken as a rather passive or defensive doctrine, emphasizing that the only source of knowledge we can have is experience and that we should avoid treating other things as legitimate sources of knowledge” (2012, 217). By contrast, in his view, empiricism is as much an active concept as active scientific realism. And if realism sounds just like empiricism, that’s just like it should be, according to Chang (cf. ibid.).

        Arguments pro and contra Scientific Realism
        Two important lines of argument pro and contra scientific realism are the “no miracle” argument introduced by Hilary Putnam and the “pessimistic meta-induction”, ascribed to Larry Laudan1.

        The “no miracle”argument

        Scientists and engineers have developed and built nuclear power plants and Global Positioning Systems (GPS) according to the current state of the art in natural science and engineering. The scientific know-how for these projects included unobservable entities like atoms as well as abstract theories like Einstein’s theory of special relativity. Isn’t it almost compulsory to assume that the underlying entities and theories are correctly representing reality if the power plant delivers exactly the output as calculated in advance and the GPS is able to determine the exact location of a receiving unit on earth with an accuracy of a few Inches? That is exactly the point of the “no miracle” argument, which Ladyman defines as follows:

        In particular, it is the success if science in predicting new and surprising phenomena, and in the application to technology that realists argue would be miraculous if the theories were not, in general, correctly identifying the unobservable entities and processes that underlie what we observe. (2002, 213)
        The argument sounds convincing, but Hasok Chang, among many other philosophers, has a number of objections against the “argument from success”, as he terms this kind of reasoning. He asks how successful modern science really is and answers, that it is “only clearly successful in comparison to older science, and to various dubious enterprises such as fortune-telling, witchcraft, investment banking, and politics”2 (Chang 2012, 228). He claims that we have no guarantee for any lasting success of scientific endeavors. Most of what the “man in the street” finds impressive about science is not really science anyway, but more often just technology or engineering. But inference from the success of a practical device to the truth of any of the underlying theories is not sound. Which theories should we consider to be proven by the success of the GPS system, if its construction required a myriad of different theories, some of them even contradicting each other?

        Another question Chang raises is about the nature of scientific explanation. What standard of explanation do we accept as a scientific explanation? A deductive-nomological (D-N) explanation will not be applicable in most cases, because “a D-N explanation of success by appeal to truth would require a law enabling the deduction of success from truth” (Chang 2012, 231). And such a law is hardly to be found in any science. On the other hand, for a causal explanation, the causal power of a theory to achieve something like success would have to be substantiated, which is not possible in most cases. All in all, Chang presents a number of arguments to demonstrate that inference to and explanation of truth from the success of science is hard to establish. But he has a better idea: why don’t we look for explanations other than truth? Obviously, the suggested alternative consists of looking for active realist values, whatever that means.

        Why do we have to explain the success of science at all? What is the benefit of explaining success? “Why can’t we simply enjoy success and leave it at that?” asks Chang (2012, 232) and concludes that the truth-based explanations of success by standard realism do not deliver useful advice, “since ultimate truth is not an operative category” (ibid.).

        Chang concludes his reasoning against the no-miracle argument with the statement “[t]he success-truth link is fundamentally suspect” (2012, 233). It is not that theories have success, but what scientists or engineers do with them, the epistemic activities they undertake. “And thinking in terms of activities and systems takes us naturally away from thinking in terms of truth” (ibid.). That draws a bow to Chang’s active scientific realism, which is “to let success be, and to do what we can to have more and better success; […]” (ibid.).
        There are many more lines of counterargument to “no-miracle”, which cannot be dealt with in all details in this paper; only the most prominent will be mentioned: the “pessimistic meta-induction”.

        The “‘pessimisticmeta-induction”

        History of science shows that many successful theories that were current for many years, even centuries, were overthrown later and replaced by new – sometimes directly contradicting – theories. Who can guarantee that our current theories will not face the same fate some day? James Ladyman formulates the consequence to be drawn as follows: “By induction, we have positive reason to expect that our best current theories will be replaced by new theories, according to which some of the central theoretical terms of our best current theories do not refer.” (Ladyman 2002, 237).

        This argument goes back to Larry Laudan, who compiled a long list of overthrown theories, which, he contends, could be extended ‘ad nauseam’. (Laudan 1981, 33). And he concludes that “[t]he fact that a theory’s central terms refer does not entail that it will be successful; and a theory’s success is no warrant for the claim that all or most of its central terms refer.” (1981, 47)

        Hasok Chang offers an “optimistic rendition of the pessimistic induction” (2012, 226): Let’s enjoy the fact that we can be successful without knowing the truth, because then “the pessimistic induction can make us happy, if we learn to turn it on its head” (ibid.). If history tells us about scientific theories that were successful over long periods, let’s appreciate that fact! The only thing that is wrong about the pessimistic induction in Chang’s opinion as a strong supporter of pluralism is “the notion that a successful theory should be rejected if another successful theory comes along” (2012, 227).
        The two contradicting views at scientific realism, no miracle and pessimistic induction, gave rise to a variety of different flavors and the following chapter will provide a feeling for the bandwidth available in the spectrum of realist theories in philosophy of science.

        Is water really H2O? Did that become a secure piece of scientific knowledge by the 1860s, after the developments that were discussed in the first three chapters of this book? I conclude that water is H2O, but also other things, really. Inspired by the history of water, I take a new approach to the debate on scientific realism, which argues that realism should be taken as a commitment to maximize our learning from reality, exploring and preserving any promising paths of inquiry. I designate my position as active scientific realism, which differs from standard scientific realism but accommodates useful insights from all sides of the realism debate and incorporates key epistemological insights from a wide variety of traditions from falsificationism to pragmatism. I take reality as whatever is not subject to one’s will, and knowledge as an ability to act without being frustrated by resistance from reality. This perspective allows an optimistic rendition of the pessimistic induction, which celebrates the fact that we can be successful in science without even knowing the truth. The standard realist argument from success to truth is shown to be ill-defined and flawed. I also reconsider what it means for science to be “mature”, and identify humility rather than hubris as the proper basis of maturity. The active realist ideal is not truth or certainty, but a continual and pluralistic pursuit of knowledge.


      • January 25, 2018 at 4:17 am

        Rob, thanks for the great comments. But it’s overkill for responding to my views. The world is relational. In Einstein terms, relativity is the state of being dependent for existence on or determined in nature, value, or quality by relation to something else. It’s difficult to grasp what is because it’s not is. It’s involvements, interactions, relationships, etc. Gravity for example is not a thing. It’s a relationship between matter, space, time, and energy. Human cultures are the same. They are not things. They are dozens, hundreds, thousands, etc. of relationships, of networks if you prefer that now trendy word. This is, of course why figuring out human societies, families, businesses, economies, etc. is difficult, and only partially possible in the best of circumstances. To paraphrase Bruno Latour, relativity needs to be placed at the center of the social sciences. This would change not just the theories, tools, and vocabulary but the entire purpose for social sciences.

      • Craig
        January 25, 2018 at 7:35 am

        The Hierarchy of Human Systemic Administration and Their Current and New Economic Designations

        Top to bottom:

        Ethic/Zietgeist: Current: Mere Power New: Power and Grace

        Monetary Paradigm: Current: Debt Only New: Monetary Gifting

        Philosophy: Current: Control New: Freedom

        Theory: Current: Ideological Justification New: Integration of Opposing Truths

        Policy: Current: Contention/Non-Resolution New: Resolution

        Regulation: Current: Capture By Elite Vested Interest New: Encouragement and Discouragement Based on Both The New Zeitgeist and Paradigm and a Human Individual Model

        Note: Regulation is the systemic way of attempting to deal with anti-social and/or other counter intentions to an ethic, paradigm, philosophy etc. …in real time.

      • Craig
        January 25, 2018 at 8:07 am

        There isn’t so much a “deep state” as there is an obscured one, and recognizing the new monetary and economic paradigm exposes it, clarifies the social and political path forward and focuses that effort.

    • Rob Reno
      January 24, 2018 at 7:33 am

      Yoshinori have you read Lars (2016) Marques (2016) and Fullbrook (2016)? Marques is making a case for a new strategy and approach. I haven’t read Fullbrook yet so can’t speak to his work yet.

      • January 24, 2018 at 8:21 pm

        Yoshinori, mail me via dave@taylor.to and I’ll send you a paper nearer what you are asking for.

      • January 25, 2018 at 10:28 am

        Dear Rob Reno,

        would you give me more detailed references? I have not read any of three books (or papers?).

      • Rob Reno
        January 25, 2018 at 6:41 pm

        On the use and misuse of theories and models in mainstream economics
        by Lars Palsson Syll
        Link: http://a.co/0Q0CD1I

        A Philosophical Framework for Rethinking Theoretical Economics and Philosophy of Economics
        by Gustavo Marqués
        Link: http://a.co/i26ZKjM

        Narrative Fixation in Economics (WEA Books)
        by Edward Fullbrook
        Link: http://a.co/hF7KFdh

        More Heat than Light: Economics as Social Physics, Physics as Nature’s Economics (Historical Perspectives on Modern Economics)
        by Philip Mirowski
        Link: http://a.co/hiYegv8

        These are what I am reading at the moment.

    • Rob Reno
      January 25, 2018 at 11:24 pm

      Reading your Evolutionary Economics in the 21st Century: A Manifesto now.

  4. Rob Reno
    January 24, 2018 at 7:52 pm

    [W]e have to keep in mind that economics should not remain a simple collection of common senses if economics should be more scientific discipline. Simply insisting the relevance of propositions returns economics to a natural history of economic phenomenon. ~ Yoshinori Shiozawa

    How do you define a “scientific discipline” Shiozawa-san?

    The question deserves an answer before you critique Lars, it seems, or you are proceeding before defining your terms. And to argue that we should already know is to beg the question, for, even scientists have different views on the question. So, what exactly do _you_ mean?

    • Craig
      January 25, 2018 at 6:05 pm

      Fully consciously conceiving and perceiving the wholeness, significance and comprehensiveness of the pattern that is a paradigm requires a mental discipline inclusive of, but epistemologically larger than science. The reason for this? A paradigm is a new conscious realization within oneself. It’s not just a different idea alone, (novelty) a new slant on old ideas/the old paradigm (reform) a new organization of factors (theory) or even a new organization of ideas (philosophy). It is not just science applied, which routinely has become a mental discipline that not only does not include consciousness….but rejects it.

      Thus it has become a stumbling block, not the otherwise useful tool that has enabled a great deal of temporal, but now only temporal progress….especially when in the present case in economics and money systems, a new paradigm….the essential component of which is a new conscious personal realization….has become necessary.

      Wisdom and its tools is the necessary mental discipline to remedy science’s shortcomings all the while including science’s tools as well. The insights of the world’s major wisdom traditions and their disciplines/techniques were the science and scientists of their day. An excellent example of this is the zen Buddhist tool of giving the new/overly glib novitiate a koan which is a question that the rational mind cannot resolve…..and yet intensively meditated upon often results in a new insight of wholeness, oneness/significance and comprehensiveness…in other words the definition and all of the essential component parts of a paradigm…including personal consciousness.

      Science since approximately the 14th century has increasingly dominated consciousness and set before us great productivity and insight into the physical universe only…..or so orthodox science assumes.

      Science can once again become Wisdom and instead of being a stumbling block to it, and enable paradigm perception at a time when it is absolutely necessary….for further progress.

  5. January 24, 2018 at 8:15 pm

    The discussion Rob seems to be cutting and pasting is actually very interesting, but contrary to the Guidelines for Comments is here overshadowing the very significant and discussable contribution above by Frank Salter.

    What I would like to suggest to Frank is that an economy is continuous only insofar as it is circular, so the BNF form (good to see that being referred to again) is not y:= f(x) but x[next] := f(x[present]).

    Likewise, I think all the diverse discussion of truth above is missing the point that truths are parameters of what one hopes is a true function. Thus, in the definition of truth:

    “an adequate representation of the facts for the purpose in question”

    the representation of the facts includes the definition of the function as well as the definition of the parameters. Thinking computer, the programming, as well as the values of its variables. It seems to me that our active involvement in the use of it is the crucial difference between pragmatic and correspondence or consistency theories of truth.

  6. Rob Reno
    January 24, 2018 at 8:39 pm

    It is here that I think that some social theorists falter. In economics, the economy is treated as a sphere that can be analyzed as if it were outside the community. What makes knowledge in social sciences possible is the fact that society consists of social structures and positions that influence the individuals, partly since they create the necessary prerequisites for the actions of individuals, but also because they predispose individuals to act in a certain way. (Syll 2016, 5)

    Lars is always right in his criticism, but he has no vision for the reconstruction of the economics. As a philosopher of economics, he may know his limited role, but many readers may be misguided to a belief that it is sufficient that economics is a collection of relevant knowledge of economics affairs. (Yoshinori Shiozawa)

    I think you are presuming too much when you say Lars “has no vision of the reconstruction” of economics. First, knowing what is _not_ true and what is _not_ good science is just as important as knowing what is and aids in pointing the way towards a better reconstruction. If Lars criticism is right then doesn’t his critique by its very logic imply a path forward? For example, if his criticism that mainstream economics errors when it treats the economy outside the sphere of real-world social communities (businessmen owners, stockholders, CEOs, lobbyists, consumers, politicians, and on and on) and their unpredictable and complex interactions driven by interests of individuals and groups; i.e., ground in a relevant and realist open-systems ontology (p.3). If such open ended systems are _not_ able to be captured in oversimplified mathematical toy models then doesn’t this imply that economics is more akin to studies in sociology, anthropology, or cognitive psychology or other such fields? It is ironic that business case studies tell us more about the real working economy that economics in many cases, which overlooks so much that really does determine economic outcomes.

    Simply insisting the relevance of propositions returns economics to a natural history of economic phenomenon…. Many of heterodox macroeconomics is a collection of simple expositions of economist’s belief. It may seem relevant at a first sight but we cannot know when such model or law is valid or how it is exact. (Yoshinori Shiozawa)

    Just as all models come with limitations (which mainstream economics seems to ignore at times) the search for some universal valid “law” by which one may eliminate contingency and uncertainty in the search for the holy grail of exactitude is simply unachievable when it comes to the ontic level of organisms (human beings) and society?

  7. January 25, 2018 at 10:20 am

    Dear Rob Reno,

    thank you for your comments and questions on my post above. You should know that this is not the first time I post a comment with similar claims. As this blog is not well designed, it is difficult to go back to the past comments. Once Lars Syll responded to my comment and argued that it was his style of contributing to economics as philosopher of economics. I still have an opinion that only repeating criticism against neoclassical economics is not productive. It is sometimes destructive by enhancing among laic people disbelief on economics in general.

    What is more destructive is that professional economists also become to believe that criticism is sufficient to make an identity of a school of economics. For example, see Brendan Markey-Towler’s book review on the Oxford Handbook of Post-Keynesian Economics and comments there (including mine).

    Post-Keynesians have many points in common but they are stated almost always negatively (or as criticisms against mainstream/neoclassical standpoints). However, in my opinion, it expresses the weakness or even lack of theories proper to Post-Keynesians. You can see in Markey-Towler’s book review what the problems are. Please remind that I am a part of Post Keynesians (or as a Sraffian, if I define myself more precisely) although I am very critical at the present state of Post Keynesian economics.

    Answer to your question in the post of January 24, 2018 at 7:52 pm is simple. I have no definite definition of science or scientific discipline. I only have some sense on which would be a good orientation or direction. Please remind that I have written “more scientific discipline.” You have omitted “more.” It is a big difference.

    A good orientation (in scientific endeavors) depends on the status quo of the discipline. It is not the question of which is true or not. Most of emerging theories have no definite propositional forms which can be judged true or false. Even though, I have in my mind a firm direction into which I believe we should develop economics. If you like, please read two of my papers:

    The Revival of Classical Theory of Values

    Sraffa’s research program is advancing

    • Rob Reno
      January 25, 2018 at 4:48 pm

      Dear Shiozawasan,thank you for your kind and informative reply. My apologies for omitting “more” in “more scientific discipline.” But please keep in mind that unless one defines “scientific discipline” than what exactly one needs “more” of is left undefined too. It is not a trivial question as 35 plus years of study across different fields of science have taught me that scientists who have reached the night if their fields, founders of entire disciplines, when addressing this question, reveal in their own thinking how nuanced it can be.

      Thank you so much for sharing your papers. I look forward to reading them. There is much to meditate and reflect on. Your comment and papers is where I’ll start. I have read Lars book and have just completed Marques and will begin Fullbrook shortly. I will work on summaries for a blog I am preparing to publish in due course.

      My wife is in Osaka with our two daughters as I write. Her father had a heart attack and they rushed to his side to be with him. Our family lived in Japan years ago when our girls were young. I have many fond memories traveling to the natural onsens throughout Japan.

      If you join the WEA I believe you can then download the ebooks as well. As for myself, with my old eyes, I prefer printed books.

      All the best, and again thank you for sharing your papers.

      • Rob Reno
        January 25, 2018 at 4:50 pm

        Oh my goodness, ‘height of their field.’

      • Rob Reno
        January 25, 2018 at 4:51 pm

        I would be in Japan too, but some must stay home and take care of our four letter children.

      • Rob Reno
        January 25, 2018 at 4:52 pm

        I give up, spell checker keeps changing everything I type.

      • January 26, 2018 at 4:00 am

        Dear Rob Reno,

        I lived in Osaka for about a quarter century although I now live in Tokyo. I worked for Osaka City University until my first retirement age.

        Thank you for references for Lars Palsson Syll (2016), Gustavo Marqués (2016), and Edward Fullbrook (2016). All these three books are in the philosophy of economics genre. I respect philosophy of economics. I once imagined becoming a specialist in this field, because a special field of philosophy of social sciences deserves to be exploited at the side of philosophy of natural sciences. Economics must be a good example for this attempt. However, as an economic theorist who is still working for constructing a new alternative theory, I feel much frustrated by those criticisms of those philosophers of economics including Lars Syll.

        You are now reading Philip Mirowski’s More Heat than Light: Economics as Social Physics, Physics as Nature’s Economics. I have the book and read it. It is a history of economics written from an externalist viewpoint. It may contain some truth but it is not very useful to for an economist in action. It may serve as a general caution but cannot be a guiding principle in our efforts to find out a breakthrough. Even as a history of economics, I think Mirowski’s vision is too schematic and does not explain what really happened in economics. For example, the turn of economics from classical to neoclassical economics is the biggest event (after the emergence of economics) in the history of economics. Mirowski reduces it into importation of the principle of least action and the conservation law of energy. His scheme may explain the mathematization of economics, but does not explain the essential core of the turn. It is a change from economics of production (plutology) to economics of exchange (catallactics) as John Hicks rightly pointed it. Introduction of marginal analysis and optimization is only a change of analytical tools. We must not confuse this change of tools and the change of theoretical structure. The major trouble of economics originates from this turn and the new structure installed by the turn

        There are no many papers written on this theme. Many of history of economics book pass through this big event without arguing why this turn occurred at the second half of the 19th century and in what reasons. I believe I have found one important moment only by chance. Please read my paper: An Origin of the Neoclassical Economics: Mill’s “Reversion” and its Consequences.

        If you want, I can send you a PDF copy of the published version. Send me your e-mail address to y(A)shiozawa.net. Of course, (A) must be replaced by @.

        I say I found this moment “only by chance.” As I have written at the end of the paper citing Professor Takashi Negishi, international economists do not have interest in the history of economics and historians of economic thought are not well versed in the theory of international trade. As I am working in the field of international economics, or more precisely theory of international values from the classical viewpoint, I had a chance to be acquainted to both of them. These kinds of things can rarely be found only by viewing general history of economics.

  8. Rob Reno
    January 26, 2018 at 6:39 am

    Thank you for the paper link Shiozawasan. I have downloaded and will read. Since each history can only be ‘a’ history, I try to read as many accounts as I can from a field. It’s interesting; the more you read the larger the framework from which view the subject. Sometimes one historian highlights something another does not. Since the field is new tome I have so much to learn. I guess I must be patient and work methodically.

  9. January 26, 2018 at 11:48 am

    Thank you for reading my paper: Evolutionary Economics in the 21st Century. Evolutionary economics learned much from evolutionary biology. However, I now think that it lacks an important point. It is the price theory and basic idea how huge system works. I am writing with my young colleagues a book titled Microfoundations of Evolutionary Economics. See my project: Four chapters for two books

    I have written the first chapter but the second chapter is not yet finished.

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