Home > Uncategorized > Finding a progressive methodology

Finding a progressive methodology

from Asad Zaman

Ever since the Global Financial Crisis, there have been an increasing number of voices calling for change in the economics curriculum/syllabus. However, even people who are sharply critical of mainstream (Rodrik, Stiglitz, Krugman) merely suggest minor and peripheral changes, and do not question the fundamental methodological basis on which neoclassical economics rests. In fact, a radical paradigm shift is required. According to current nominalist methodology, any model which produces a match to observables is a good model. The economists have lowered the bar further by not even requiring a good match, and not even comparing model results to reality. See “Friedman’s Methodology: A Stake through the Heart of Reason.” When the methodology is seriously deficient, people are allowed officially to make crazy assumptions, as long as the model produces a match with reality. For example, Paul Romer says in the Trouble with Macro: (macro) models attribute fluctuations to imaginary forces (like phlogiston), instead of agent behavior.  This methodology is such that a good model can only emerge by a random accident — just as the theory of evolution holds that life emerged by accident. I have explained how this seriously mistaken methodology came to be adopted, as a result of the wrong side winning the battle of methodologies; see “Method or Madness?

Keynesian models remain substantially superior to modern RBC and DSGE models because they can explain voluntary unemployment, which is ruled out by assumption in the latter models. They can also explain how money, banking, and debt have significant impacts on the real economy, unlike modern macro models. Nonetheless, . . . read more

  1. Craig
    July 4, 2018 at 12:24 am

    Asad,

    You are right about economic theory needing a meta level solution. I submit to you that what I refer to as the cosmic code of wisdom [( A x Z) C ] described as the dynamic integration of a duality and/or conceptual opposites within an equally dynamic integrative thirdness greater oneness process…is the very method you refer to and that economics needs. This equation/method is coincidentally also the very process of wisdom itself which is the discernment of truths, workabilities, applicabilities and highest ethical considerations of opposing perspectives/situations….and also the definition of wisdom’s pinnacle concept of grace as in the dynamic interactive flow of several and/or opposing factors.

    Couple this with the fact that an aspect or aspects of the natural philosophical concept of grace have always been the operant factors in every paradigm change in human history…and you’re talking a set of very high level meta coincidences.

  2. Helen Sakho
    July 4, 2018 at 1:09 am

    Could anyone please explain to me WHY we are still talking about any of this?
    Why not just develop a new curriculum on the fundamentals, each specialising in what we are best at, and moving on?

    I would be delighted to co-operate via emails and work towards organising a conference with all colleagues and students who may wish to attend. Any one interested, please do get back to me on either emails available for me on the net. In not too distant a future, the resultant work could be turned into a new book, based on collective knowledge and called “Old Ideas for a New Era” or exactly the opposite: “New Ideas from Old Eras”.
    I am sure, better titles will emerge. That was just off the top of one’s head.

    • Frank Salter
      July 4, 2018 at 6:45 am

      Surely, the problem is that economists WILL NOT apply the scientific method to their work. Without this, all the rubbish remains circulating forever. The mountains of rubbish continue to grow and even worse at an ever increasing rate.

      As the author of the only paper which solves physically valid differential equations over time, (I know of no others) I would be happy to come on board any attempts to arrange a meeting of minds. I am not sure that another book per se is indicated. What is needed is a change of mind set, which is always difficult!

      • Craig
        July 4, 2018 at 7:33 am

        Precisely. A new paradigm being simultaneously a single unifying and defining concept that creates an entire new temporal pattern that also becomes a part of virtually everyone’s mindset. Studying new paradigms/paradigm changes is an exceedingly informative and enlightening activity. Here are a few of their signatures to look for:

        Conceptual opposition to the old/current paradigm

        Beneficial inversion/transformation of a current major problematic duality or ratio

        Unmistakable and unimpeachable progress and hence un-reversable progress, that is everything adapts to a new paradigm….not the other way around

        Invention of a new tool/process and/or perspective, or the re-discovery of old ones that enlighten new ways to see, understand and resolve problems

        Greatly increased abundance within the area of the paradigm change

        Brings to an end the dominance of the dominant structural entity of the old paradigm

        They are par excellence integrative in all ways which means that paradigms that have persisted for a very long time have integrated themselves into many aspects of human existence often keeping their now problematic effects in stimulation/suspension…so that when such a paradigm change does take effect it has positive, constructive and permanent effects overlapping into areas other than the specific body of knowledge/area of human endeavor the paradigm change takes place in. The last time such a paradigm change took place was the one from hunting and gathering to agriculture and IMO the new monetary and economic paradigm is one such change.

      • Craig
        July 4, 2018 at 7:47 am

        I’ll also add here: I am four square for science in every way….except where and when it becomes the onlyness of an orthodoxy. Wisdom is integration and its pinnacle natural concept, grace, is continual dynamic interactive integrat ING.

    • July 4, 2018 at 3:16 pm

      Helen, read more of Asad to see my response on his Pedagogy website. Briefly, WHY we are still talking about this is because the scientific establishment and the non-scientists advised by them are still using, teaching and expecting a philosophy of science suitable for establishing how to make machines work but not language-using people and societies. Physical Science continues to get them nowhere, but Information Science is for them non-existent, as it has not even got into their language.

      Information science includes physical science but not vice versa. Thus it concerns the computer as well as its programs, brains as well as memories, physiology and psychology, neural architecture and the mapping of language in it first noted by Chesterton. But you want a new syllabus? See the last three comments in the thread on how to be a great economist.

    • Edward K Ross
      July 5, 2018 at 2:18 am

      Congratulations to Dr Helen Sakho July 4 2018 at 1:o9am.
      Although I am not an economist or academic it seems to me that many economists and academics are locked into an academic framework that is oblivious to the real world of reality. Your second question I also agree with you, on the need for a new curriculum. However in my opinion from real world experience, it is not only a new curriculum that is needed, it is firstly teaching people how to think not what to think. From my real world experience and logic this involve listening to peoples concerns and discussing possible solutions. Thus in my humble opinion this approach could create meaning full respect between academics and the disadvantaged.

      Some time ago on this basis I started attempting to write an essay beginning with Descartes cogito ergo sum, because of his emphasis on the importance of thinking as the first step in attaining knowledge. The next aim of the essay was to show interested students and readers from a number of quotes from concerned economists. Taken from WEA books and blogs such as Piketty’s Capital in the Twenty-First Century, that basic economics is something that effects us all.
      In the early stages of trying to write that essay my friend Thomas Diefenbach whom I first met at the 2004 Cambridge conference, now Pof of business management at Darwin Unuversity suggested I explain how my lived experience and observations influenced my understanding of the failure of main stream neoliberal economic rationalism to promote a fair and just democratic egalitarian society for all. On this basis if you or anyone else is interested I would be pleased to email you a copy. Here the aim of the essay was to promote and encourage healthy conversations about the issues that affect interested members of the public and students and perhaps the way economists teach the subject.

  3. C-R D
    July 4, 2018 at 3:23 pm

    First thing first: In Asad’s piece, the word “methodology” should be replaced by “method”.

    In Frank Salter”s:
    “As the author of the only paper which solves physically valid differential equations over time, (I know of no others)”. Well! What about:

    https://mpra.ub.uni-muenchen.de/id/eprint/84182;
    https://mpra.ub.uni-muenchen.de/id/eprint/83203;
    https://mpra.ub.uni-muenchen.de/id/eprint/78716

    • Frank Salter
      July 5, 2018 at 8:42 am

      About these papers:

      84182: There is a single differential equation mentioned in this paper! To quote “… the Legendre Transform posits: …”, which merely describes the transform. The “D”s are not Euler’s derivative notation but the Hausdorff dimension. Time is merely used to divide measurements into time series!

      83203: (80408) has no differential equations and does not discuss changes in time at all!

      78716: (78694) deals with equilibrium and expressly states time-invariant.

      None of the papers mentioned deal with solutions of differential equations over time. You have not provided a counter-example! I stand by my initial assertion.

  4. Paul DAvidson
    July 4, 2018 at 7:56 pm

    The radical change from mainstream classical and monetarist and new Keynesian models is — (1) the future is uncertain and not reliably predictable –therefore no decision maker can make spending decisions tha are rational in the sense of deciding what wil be bought today and every day in the future. The Walrasian classical micro foundation system– which underlies Samuelson’s Keynesian theory and Krugman,, Stiglitz, etc new keynesian thoery is based on Walrasian microfoundations — so today’s income is spent on goods and services produced not only today but is committed to spend on goods and services produced in every future date.

    While Keynes argued bcause of uncertainty regarding the future, today\’s income earners put aside some of today’s money income into liquid assets (Which have “essential properties” of zero elasticity of production and zero elasticity of substitution wit producible assets) —so today;s savings in the form of liquid assets produces a lack of aggregate demand for producibles in the current period.. Liquidity permits holders to make decisions in the future as to what they want to buy [even if they do not have enough income earned in the future period] via legal monetary contracts –where legal money denominated contracts are the basis of all market transactions –see my new book WHOS AFRAID OF JOHN MAYNARD KEYNES?

  5. Helen Sakho
    July 4, 2018 at 10:12 pm

    I give up! An open and honest declaration – body and soul – quite honestly I am lost for the right expression right now.

    • July 5, 2018 at 9:21 am

      Perhaps what you are looking for is Hilaire Belloc’s “Economics for Helen”? The problem with it is that economics is complicated by conflicting philosophical assumptions and strangled by those of monetary finance. Historian Belloc didn’t entirely understand that himself, whether or not his little girl could have.

      If you are genuinely interested in this, may I ask you to contain your impatience. I am 81 and Paul Davidson even older, and we have so much experience it takes time for us to separate the wheat from the chaff.

      I became interested in Tony Lawson’s Critical Realist work on the philosophical assumptions back in 1998, as a result of reading a book very well aimed at serious students:

      Prichitco, D L, ed: Why Economists Disagree: An Introduction to the Alternative Schools of Thought, 1998, State University of New York Press [SUNY].

      Rereading that now, I can see why I tried to team up with Lawson, because his chapter captured very precisely the philosophical conclusions I had already come to back in 1958, when my scientific and Catholic understanding was confronted with David Hume’s 1730’s version of scientific method and “Enlightened” democracy. (Hume was Adam Smith’s mentor).
      Dialog with Belloc/Chesterton “Distributism” had stalled because of Helen-level economics.

      Filling in some gaps in my reading of Prychitco, however, I have come across another paper in it which captures the understanding of economics from my own Catholic perspective:

      Waters, W R: Social Economics: A Solidarist Perspective. [Ibid, chapter 8, pp. 179-210].

      If you have been following Prof Robert Locke’s comments on the historical difference between German and American management styles you can get some idea where it is going. Like me it ends up in the self-financing Mondragon cooperatives of Spain, but it gets there not by telling us what to do but by combining philosophical concepts with the technical development that mainstream economics largely ignores, voluntarily restrained as in E F Schumacher’s “Small is Beautiful”.

      Here’s a tit-bit I didn’t know [in Waters’ note 2, p.207]:

      “Schumachers daughter reported … that Keynes had singled out Schumacher as one worthy enough to be his successor”.

      • Edward K Ross
        July 5, 2018 at 11:42 am

        To Dave Taylor as an eighty plus I find that age is no barrier to those concerned with the present economic chaos and as Helen Sakho writes never give up. Also Tony Lawson was very helpful to me when I met him at the Cambridge conference in 2014 and I certainly support his call for the inclusion of critical realism and a new ontology. Ted .

      • July 5, 2018 at 3:47 pm

        Thank you, Ted. Yes, I’m very appreciative of Tony. Went to his Cambridge Realist Workshops for years until with ill health the travelling became too much.

        PS to the above. Water’s paper was a Presidential Address to the Association of Social Economics; he was from dePaul university. Both names worth looking up.

  6. C-R D
    July 5, 2018 at 2:04 pm

    To Frank Salter”
    The Number of degrees of freedom are irrelevant here. The modern market economy is an infinite-dimensional construct that is dissipative, non-ergodic, heavily interconnected and subject to risk and uncertainty. Such a system is approached “qualitatively”.
    Or the alternative is to reconstruct its hyperbolic attractor. For more on this please see” Takens (1981), Mane (1980) Liu (2009), Medio (1992), etc.

    • Frank Salter
      July 6, 2018 at 7:28 am

      I do not understand your reference to the relevance of “number of degrees of freedom”!

      Your assertion, ‘is approached “qualitatively”‘ and I assume that implies NOT quantitatively appears to be simply that, an assertion! There are no problems with qualitative analyses, but quantitative first principles analysis is the best possible.

      In your post above (July 4, 2018 at 3:23 pm), you asserted that I was wrong in my statement “the only paper which solves physically valid differential equations over time”. Your claimed counter-examples were spurious. (See my comment, July 5, 2018 at 8:42 am) The author of all three of them did not introduce a single differential equation into his analyses.

      Then the amazing introduction of “hyperbolic attractor” with references:
      Takens (1981): “Detecting strange attractors in turbulence” — dealing with fluid flow.
      Mane (1980): not found by google
      Liu (2009): “The fractal dimensions of the spectrum of Sturm Hamiltonian” — dealing with quantum states.
      Medio (1992): not found by google.
      Which brings us round full circle! The concept of attractors is associated with solving differential equations!

      Why do you not deal with my actual paper? (Rather than introducing irrelevant references)
      Is it, that it does not correspond to your preconceptions? I would very much rather discuss relevant issues rather than follow spurious counter examples. A valid discussion might actually lead to a better understanding of economic reality!

  7. Helen Sakho
    July 5, 2018 at 11:12 pm

    Dear Dave (and Paul),

    I sincerely apologise for looking impatient. That was not my intension at all. I took issue with our colleague (Mr. Zaman) only when he addressed me directly, inviting him and others to please address (If they so wish) the key issue of entrenched religious positions and therefore positioning.
    I do know that age is not a figure, although I wish it was! And I assure you that in own (often too long, but occasionally very short) life, I have witnessed enough tragedies for a lifetime of any span. With age come all sorts of weaknesses and disabilities. With age should also come a certain degree of clarity of mind and position for us as critical, independent scholars.
    Thank you very much Edward for your encouragement. It is much appreciated.
    Nobody knows when they are going to take their very last breath. To introduce a small piece of tranquility into this dialogue, let me please quote here (In English) a brief extract from an ancient poem, which I dedicated many years ago to the most wonderful scholar I knew on the occasion of his untimely passing (Neil Smith – CUNY) along with messages of solidarity from colleagues all over the globe in different languages. His unique analysis ” Uneven Development” remains so.

    ” In search of wisdom,
    I was always bold;
    There were few secrets,
    that I could not unfold;
    And yet, I found out
    That I know nothing:
    Although I am 72 years old.
    In my childhood,
    To a teacher I went;
    My latter days, as a teacher I spent;
    Guess what will befall us in the end?
    From earth we rose and to earth we shall be sent.

    Until then, then, nobody gives up!

    Any “impatience” from me will be towards economic analyses to take teaching and education for granted, rather than treating it as basic human right after some water and a piece of bread.

    • July 30, 2018 at 1:00 pm

      Helen, I’ve come across this belatedly. No offence was taken, and again, your encouragement not to give up, like Edwards, is appreciated.

      In our different ways Frank (above and below) are both on about the neglect of development in economic teaching. You might be interested to know that my “framework” model (suggesting where to look, to differentiate it from the detailed description Frank is arguing about) itself follows evolutionary development to the point where economics is not just about animals pre-occupied with feeding their young, but about people growing up. About adults teaching as well as feeding the kids, and when the young have flown the nest, developing their own education so they might have something better to pass on.

      The worm in this structure is very much what Paul is on about. I see you’ve reacted to my historical version of this yesterday on “Radical Paradigm Shift”, but focussed on a different legal problem. The issue, surely, is how do the lawyers get paid?

      • July 30, 2018 at 1:07 pm

        My eyes are dim … Should be “Frank (above and below) AND I …”. The issues, surely, are “how do the lawyers get paid, and politicians educated”?

  8. C-R D
    July 6, 2018 at 2:18 pm

    You are the one who first refer to the number of equations, and now you claim that you do not know what “degree of freedom” means!
    I can see that we are not on the same wavelength. For what it may be worth, let me say that it has been clearly demonstrated that the modern economy is a :MULTIFRACTAL. In that context bringing in the number of equation is truly irrelevant.

    • Frank Salter
      July 6, 2018 at 3:57 pm

      You make another incorrect assertion, “You are the one who first refer to the number of equations”. I am only mentioning the number of equations now. This is the first time!

      I know the meaning of degrees of freedom. I did not know to what you were referring.

      On the final paragraph:
      Fractals arise in pure mathematics from working with complex numbers. Complex numbers do not arise in the workings of the economy.
      You are the only one bringing the number of equation into the discussion!
      It is worth remembering, “A model which took account of all the variegation of reality would be of no more use than a map at the scale of one to one” (Robinson, 1962, p. 33). You seem to be looking for such a map and rejecting the usefulness, without testing, of any other. I offer a theoretically and empirically justified mapping of manufacturing, which you appear to be rejecting — apparently out of hand — because you have offered no coherent criticism — only invalid rhetoric.

      Each time I have responded to your incorrect assertions, you rapidly move on to more equally invalid assertions. I challenged you to discuss my first principles analysis and its mathematical solutions. I repeat the challenge.

      Reference
      Robinson, J. (1962), Essays in the Theory of Economic Growth, London: Macmillan.

  9. July 7, 2018 at 10:05 am

    First, let me note that Steve Keen developed a system of differential equations model based on differentiating macro level accounting identities. Then he noted that this model had solutions which had a Great Moderation – a long period of stability, followed by a sudden collapse, just as happened in the GFC. On this basis he predicted the GFC. So I am not sure of the sense in which Salter’s model is new. However, the main point of my post is different.
    In response to my post, many authors agree that a major paradigm shift is needed. They go on to say that they have ALREADY created the required new paradigm. However, they have not been able to get a consensus on their improved model. This is the MAIN point. Given a conventional model A, and a contender B, can we create consensus on methods for evaluating them both and assessing which model is better? Currently we have no such methodology – anybody can come in with a model C and say my model is better – there is no way to PROVE or to DISPROVE such an assertion. After explaining how the models of Lucas and Sargent were completely ridiculous, Solow goes on to say that these models do not pass “the smell test”. This then is the ONLY methodology available to the TOP experts in the field. Given two models smell both of them – the better model will smell better. If this is the best method available, it is no wonder the field is a mess.
    We have witnessed many debates and arguments about good and bad models and alternatives, all on an ad-hoc basis. We need to move to a META-level – HOW do we decide on such arguments? Can we create a consensus on how models are to be evaluated and compared. The current implicit consensus is that you can make any model you like, if it has maximization and equilibrium is it a good model. If it produces match to real world observations that is even better, but it is not required. This is a hopelessly bad methodology.

    • Rob Reno
      July 7, 2018 at 2:32 pm

      Modern mainstream economics is chasing an illusion that science alone can solve our economic problems. This is the illusion of secular materialism. Nelson (http://a.co/bxcvLtD), Sedlacek et. al. (http://a.co/gU2IYAK), and Asad Zaman have spoke eloquently to this very point. The META-level is moral, ethical, and spiritual, and as long as we are blinded by secular materialism to these meta levels of human reality economics will continue to be mired in endless cycles of boom and bust, and mankind will condemned to endless cycles of peace and war, with each cycle becoming more destructive than the last. I fear we are well on our way to a Dark Ages 2.0.

      I read this when I was sixteen and today I see it coming true:

      “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.

      “The profit motive of economic activities is altogether base and wholly unworthy of an advanced order of society; nevertheless, it is an indispensable factor throughout the earlier phases of civilization. Profit motivation must not be taken away from men until they have firmly possessed themselves of superior types of nonprofit motives for economic striving and social serving—the transcendent urges of superlative wisdom, intriguing brotherhood, and excellency of spiritual attainment.” (Urantia Book)

      • Frank Salter
        July 8, 2018 at 9:14 am

        Rob Reno continues to assert his disbelief in the value of science in economic analyses. I point out that my analysis predicts from first principles solutions to the equations which correspond to the reality of manufacturing. This is a counter-example to his assertions. I offer the same counter-example, yet again!

        I agree with the problems caused by profits.

    • Craig
      July 8, 2018 at 4:46 am

      Macro-economic theory is at the same point that the Copernican helio-centric hypothesis was after Gallileo used the invention of the telescope to see the moons of Jupiter but before Kepler discovered the ellipse and Leibniz and Newton invented calculus. As I have posted here before one of the primary signatures of a paradigm change is the discovery of a new tool or insight/re-discovery of an overlooked prior tool, that examined, presents new insights. That re-discovered tool is double entry bookkeeping and its new economic and monetary insight is that, the pricing, money and accounting systems being digital (equal amounts of money and prices, money and debt and debits and credits equal to zero) a discount/rebate policy of equal amounts at the point of sale throughout the entire economic process and at its terminal ending point at retail sale….can be used to painlessly linearize price deflation throughout that same process and effectively double individual’s free and available incomes when the policy is finally executed at retail sale. These are its temporal universe effects not just a theory.

      The meta level economic discovery is that the natural state of the temporal universe, despite a lot of interesting seeming scientific randomness due to space and time, is merely a large scale perception problem of its actual and deeper almost utterly integrated quantum state of process and flow, and that hence the various aspects of the natural philosophical concept of grace as in a dynamic, interactive and integrative process and flow…..are the guideposts for economic theory.

    • Frank Salter
      July 8, 2018 at 9:05 am

      Steve Keen’s model did indeed numerically integrate differential equations and its results are very interesting. However the claim I had made was of physical validity. Steve Keen’s model includes exogenous change, which of itself is without fault, but it does exclude physical validity, which I consider the most import aspect of my analysis. Integration, applying the Kaldor-Verdoorn relationship. is another method of solving growth equations. However, that is not the point of this response.

      I am in complete agreement with the necessity of resolving the methods of economic analysis. This is why I have made frequent references, on blog postings, to applying the scientific method correctly. I am less sure that moving to the meta-level is useful. One of the criticisms of economic analysis is that there is too much discussion at the meta-level and too little at the concrete level. Boland (2014) has written about methodology, after many years of studying the subject. I think the most notable absence from his book is that there is no mention of analysis from first principles, a cornerstone of scientific analysis.

      I agree with your assessment that the methods, of what is essentially peer review. are so poor that little is excluded. Hypotheses which fail the empirical reality test need to be discarded. The Solow “smell test” is far too vague a concept.

      Is the way forward, then, to set up a WEA discussion group to thrash out specific methods which may be applied? It should be of great interest.

      Reference

      Boland, Lawrence A (2014). Model building in economics: Its purposes and limitations. Cambridge University Press

  10. July 9, 2018 at 3:13 am

    I have not yet had the time to read Lawson, highly recommended by many whose judgments I trust. I just started on his Essays on the Nature and State of Modern Economics, and find it very much in conformity with my views. The following paragraph provides an apt summary of exactly the same methodological point I am trying to make. Criticizing someone else and then proposing an alternative model is NOT the way to make progress: Quote from Lawson:

    Most of these individuals unhesitatingly presume that the recourse of
    criticising substantive claims (typically modelling assumptions) of others
    and thereafter substituting (equally questionable) alternatives of their
    own is always sufficient and proper procedure (the sort of error that I am
    here seeking to dispel). To the extent that a few of the individuals in
    question do reveal some awareness of somewhat philosophically oriented
    critiques, the resort typically is to avoid the effort of engaging by instead
    displaying overtly dismissive postures, suggesting for example that their
    formulators know no economics, have hidden agendas, cannot do the
    mathematics, are ‘economic flat-earthers’, merely hide behind terms
    ending in ‘ism’ and ‘ology’, and so forth. The inevitable consequence is
    that discussions of the state of the modern discipline remain largely
    superficial, criticism is mostly misdirected and overly tame, and supposed/
    proposed alternative approaches or projects (some of which receive
    significant financial backing) end up, in the main, being essentially more
    of the same.

    • Craig
      July 9, 2018 at 4:52 am

      Asad,

      Correct. And then we have my approach which is complimentary toward the heterodox and only wanting true and actual integration of the best aspects of their separate theories. That plus pointing out where economists are not looking and how looking there will enable them to see ways of implementing all of the things the heterodox say is needed in modern economies like additional individual income, more, and more rational government spending, policy means of integrating large normally opposing political constituencies because the policies greatly benefit both sides of such artificially maintained “differences”, ending the rule of private finance and making it take its proper, smaller and non-dominating place ALONGSIDE every other business model, which anyone with a particle of objectivity must acknowledge is both the current structural and paradigmatic dominant force.

      And all it would entail is a little closer look at the economic significance of the point of sale, recognizing the digital nature of both the pricing system and the integrative tool (double entry bookkeeping) that guides, records and would enable policy to be seamlessly integrated into the economy.

    • Frank Salter
      July 9, 2018 at 6:56 am

      The reasons quoted are exactly why analyses falsified by empirical data must be rejected as having theoretical validity. This is a cornerstone of the scientific method.

      Models may provide useful insights. However, the most important mode of analysis is from first principles. It is common in the physical sciences. It is virtually unknown in economics.

      Actually to act on the two principles described above would be a paradigm change. The effects on economic analysis would be to create a wholly new level of discourse.

    • Rob Reno
      July 23, 2018 at 10:45 pm

      Asad: To the extent that a few of the individuals in
      question do reveal some awareness of somewhat philosophically oriented
      critiques, the resort typically is to avoid the effort of engaging by instead
      displaying overtly dismissive postures, suggesting for example that their
      formulators know no economics, have hidden agendas, cannot do the
      mathematics, are ‘economic flat-earthers’, merely hide behind terms
      ending in ‘ism’ and ‘ology’, and so forth. The inevitable consequence is
      that discussions of the state of the modern discipline remain largely
      superficial, criticism is mostly misdirected and overly tame, and supposed/
      proposed alternative approaches or projects (some of which receive
      significant financial backing) end up, in the main, being essentially more
      of the same.

      To be clear, having observed the discussions on this forum for a while, in my view, only two discusants have been so arrogant as to engage in the disingenuous behaviours that you describe above. Frank Salter and the other I will not name as he has seeming become more reasonable. Frank Salter fits the description above to a tee. This degreades the overall value of the discussions as others ignore his whining pleading that he has found THE UNIVERSAll TRUTH and modeless modeling, which is ironically an oxymoronic intellectual fallacy he is blissfully (apparently) unaware.

      • Frank Salter
        July 30, 2018 at 8:47 am

        So some two weeks later you reiterate your unjustifiable attacks on me. You are the one who degrades discussion, This has been pointed out by others.

        I have challenged you to find a model in my analysis. You have failed to do so, because there is NO model. You continue in your mumpsimus.

      • Frank Salter
        July 30, 2018 at 9:01 am

        PS. I forgot to mention the nearly two million scientific papers with mathematical analyses which have NO models.

        Apparently RENO never checks anything. There is nothing like the “facts” you invent to prove you are right.

  11. July 9, 2018 at 7:33 am

    I agree completely — scientific theories are created to explain empirical phenomena and rejected or revised in face of conflicts with empirical phenomena. This VERY SIMPLY and ALMOST OBVIOUS methodology is NOT the dominant methodology — in fact, the dominant methodology conflicts strongly with this idea. This was noted by Keynes, who said that economists do not seem to care if the data conflicts with there theories. Similarly, Romer was outraged by economic theorists complete indifference to conflicts between their theories and reality. How did such a BIZARRE methodology come to dominate the profession? We need to learn this history to understand how the train went off the tracks, and how we can try to put it back on track. In this connection, my earlier post on Economists Confuse Greek (axiomatic, pre-scientific) Methodology with Science, provides some clues as to what happened. I have also studied this question elsewhere, particularly in Economics for the 21st Century, where I show that there were THREE different DEEP methodologlcal mistakes in the course of intellectual progress (/regress) which led to the current methodology. We need to correct all THREE to have a chance at a viable methodology for the current century/millenium.

    • Craig
      July 9, 2018 at 7:46 am

      Here’s three methodological flaws off the top of my head:

      1) choosing abstraction over direct looking at/examining data, temporal universe structures and problematic relationships

      2) making abstraction an orthodoxy and hence further restricting full examination

      3) Not having a good study of paradigms and their signatures, hence not being able to clearly see or understand both the current and the new paradigm, hence having an excess of abstraction, theory and confusion and a dearth of actually workable and effective policies.

      • July 30, 2018 at 10:02 am

        So what’s the flaw in perception that has led to these methodological mistakes? Surely it is not just mistaking the abstraction for the reality (Whitehead’s “fallacy of misplaced concreteness”) but also, not seeing the abstraction as giving you some idea of where you ought to be looking?

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