Bringing science into economics must necessarily entail measurements in the scientific units.
from Ikonoclast
The only real science is hard science; namely physics, chemistry and biology. The rest is not science. This is not to insist on mere scientism nor is it to insist that other subjects are worthless. It is simply to insist on the precision of definition for which those (mistakenly) arguing for precise science and mathematics in economics are in effect calling. Those calling for precise science and mathematics in economics become hoist on their own petard if they use, at any point in their calculations, dollars or “utils” or “snalts” (socially necessary abstract labor time).
If you are calling for scientific and mathematical precision in economics then you must stick to the scientific units laid out in International System of Units (SI). These are base units;
s second time
m metre length
kg kilogram mass
A ampere electric current
K kelvin temperature
mol mole amount of substance
cd candela
and derived units;
radian, steradian, hertz, newton, pascal, joule, watt, coulomb, volt, farad, ohm, siemens, weber, tesla, henry, degree Celsius, lumen, lux, becquerel, gray, sievert, katal.
Does anyone see dollars, “utils” or “snalts” in that list?
This is not a matter of merely being pedantic. If one is calling for science this is how one must work. Subjects outside of science and related to the economy are (for examples) political economy and moral philosophy, worthwhile and necessary subjects but not sciences.
Bringing science into economics must necessarily entail measurements in the scientific units above (plus the utilization of taxonomic schemes for biota). Thus if we assess by scientific studies and measurements that we are causing the 6th mass extinction and forcing dangerous climate change by releasing CO2 from our fossil fuels, then we have assessed that we should stop using fossil fuels. How we stop is the next matter for consideration and then we must examine energy transitions, energy saving and consumption curtailment, all in scientific and technological feasibility terms. Only real resource considerations are meaningful. Money considerations are completely meaningless. This is if we are being entirely logical and scientific.
The new minds of young people will be open to the new empirical evidence.
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1. Sorry, your assertion is unduly dogmatic and has a number of flaws.
First, you’re conflating units with base quantities. It’s perfectly possible to do good science with English units, for example. When I studied physics in the 1970s — when plenty of good science was being done — textbooks relied on a variety of unit systems: CGS (centimeter-gram-second) was especially favored in electromagnetism texts, rather than MKS (as the predecessor to SI was known). Astronomers often use units missing even from your derived list: A.U. (astronomical units, based on the average radius of the Earth’s orbit), parsecs, solar masses, etc. And who can forget the ångstrom?
What physical scientists do work with are base quantities (a/k/a dimensions), and combinations thereof. In your lists, base quantities would be time, mass, length, current, temperature, amount of substance, and luminous intensity. (Most of the units I mentioned explicitly above have dimension of length, other than grams and solar masses, which obviously have dimension of mass. (See generally Sonin (2001), among many other available sources.
A second issue is that in fact scientists often work with dimensionless quantities, which may be derived from base quantities. The Mach number is a well-known example, and the Reynolds number only slightly less so: both are from fluid dynamics. Contrary to your assertion, these don’t have any units whatsoever attached to them.
Third, there are certain branches of science that don’t work with SI units at all. Consider demography and epidemiology, which work with quantities such as births, deaths, and individuals. Good luck finding equations in those fields expressed with reference to taxonomic schemes. And by the way, does your physician prescribe you doses of medication expressed in kilograms?
2. Regarding economics, the real issue to be considered isn’t whether the unit ‘dollar’ is on an approved list, but whether ‘money’ can be said to be a base quantity.
When considered *in a purely formal way,* I think the answer must be yes: money can be treated as a base quantity for purposes of dimensional analysis of equations used in economics. By formal I mean simply that we can check whether the dimensions used on the left side of the equation balance those on the right.
E.g., the usual exposition of the Cobb-Douglas production function, in which certain (non-SI) base quantities are attributed to the various variables, can be shown to be ridiculous by this means (see Sutter 2010, section II.C and text box therein). The original exposition by Cobb and Douglas, used normalized — i.e., dimensionless — values for its variables, and so escaped this problem (Cobb & Douglas 1927).
This formal property of money as a base quantity is also what enables such familiar activities as bookkeeping, balancing the personal or household budget, etc. Whether one wishes to call those activities “scientific” may be a matter of taste, but they do share certain attributes with some scientific measurements, such as an aspiration to precision and/or accuracy.
Similarly, one can define formal base quantities and units relevant to other aspects of economic activity, such as services. Years ago, McDonalds signs used to say something like “100 million served.” The meaning of this isn’t entirely clear — was this burgers, orders of all types, or customers? — but obviously in principle we could assign it some specific meaning. So let’s shift businesses, and suppose we’re talking about a hair salon chain, and we take the 100 million number to refer only to haircuts, colorings and perms, not including manicures or other non-hair-related services. We might be able to express all hair-related services in terms of kg of hair processed (assuming that measurement were available), but that wouldn’t necessarily have economic significance. The relevant base unit would be something like ‘hair-related service session,’ or something like that.
3. The deeper issue, though, is whether money (or services, though I won’t consider that issue further) can be used as a base quantity in a way that parallels the base quantities used in the physical and life sciences. Here I think the answer must be no. Here are just a couple of arguments:
First of all, the ratios of two samples of money-based quantities don’t necessarily stay the same when their units change, since there isn’t any fixed method for expressing one unit of money in another. There isn’t any commonly acknowledged authority for fixing exchange rates between dollars and euro, for example — as any visitor to an overseas hotel or airport knows well.
Second, unlike the other base units, money has social and historical aspects that the others lack. The quantity of kg of wheat or gold that someone can buy per unit of money not only is continually changing but is multivalued along many dimensions. E.g., even at the same spatio-temporal coordinates it can vary according to the identity of the purchaser.
CONCLUSION: So, while I disagree with most of your claims in the above post about how science operates, I’d agree with you that money isn’t the same sort of base quantity one finds used in various sciences, and that in fact it has certain aspects that render it incapable of being used in that fashion.
I’d add, though, that there are many other reasons why economics ought not to be considered a science, and that the question of base quantities might not even be the most compelling among them.
REFERENCES (asterisks have been substituted for forward slashes in URLs):
Cobb, Charles W. & Paul H. Douglas (1928) “A Theory of Production,” The American Economic Review, 18(1), Papers and Proceedings of the Fortieth Annual Meeting of the American Economic Association (1928/03), 139-165.
Sonin, Ain A. (2001) The Physical Basis of Dimensional Analysis, 2nd ed., available at web.mit.edu*2.25*www*pdf*DA_unified.pdf.
Sutter, Andrew J. (2010) “Unlimited Growth and Innovation: Paradise or Paradox?” Working paper (November), available at http://www.ssrn.com*abstract=1709285
Thank you, A.J. Sutter, for your post.
Is your book published yet, and if so where and how can I obtain it?
Thank you for your kind question. Unfortunately, I don’t have anything available, unless you read Japanese. My 2010 paper was a preparatory sketch for a chapter or two in a 2012 book about degrowth that was published in Japan, where I live. Aside from possibly chopping up a more recent monster-sized working paper about degrowth into a couple of bite-sized ones (in English), I expect my next book will be tilted more toward law and politics, and again for a Japanese audience.
We (my wife, who is Japanese, and I) are living in Japan at this time. This is the second time we moved here, having lived in Yokohama (2000) due to our technology companies contract with a major Japanese corporation. I really enjoyed reading your bio. Your classes sound like they would be a joy. I wish I had had teachers like you when I was in business school.
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While my spoken Japanese is poor, I can read it. It would give me a stretch-goal, something to push me further in my Japanese studies, and I am especially intriqued by the concept of degrowth and what that entails.
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I am interested in researching the subject of economic revitalization of depopulating areas in Japan. I just started reading/listening to David Fleming’s “Surviving the Future.” While driving into Nagoya to get fitted for my new cross-country bike I listened to his book and degrowth was discussed as well as much, much, more. I wonder if you have read him?
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What is the title of the 2012 book? Can I order it on Amazon Japan?
I agree with Rob. I would like to thank A.J. Sutter particularly for the links to the Sonin and Sutter papers. Very educative both of them.
Yes, reading them now.
It can be shown via the quantity calculus that the natural unit of output is labour-time. This explains why macroeconomics provides plausible results. Money approximates to labour-time.
I believe the worked example of dimensional analysis at http://www-mdp.eng.cam.ac.uk/web/library/enginfo/aerothermal_dvd_only/aero/fprops/dimension/node6.html may be a very useful exposition of dimensionless analysis.
This reference sounds interesting:
Macagno, E. O., 1971, “Historico-critical Review of Dimensional Analysis”, Journal of the Frnaklin Institute, 292, 391-402.
Have your read it Professor Sutter? And if so could you summarize it if time allows?
@ Rob, Magpie and Frank – Thank you for your kind comments, and the reference to the Macagno paper, which was new to me. Dimensional analysis in the physical sciences has a long history. The mid-20th Century Nobel laureate Enrico Fermi, who was famous for fitting solutions to complicated problems on the back of an envelope, was gifted in this technique. There are many books about it in addition to Sonin’s (which is available for free): if you check Amazon or another book site you can find volumes by Hornung, Lemons, Palmer and Barenblatt (these are 4 distinct books, listed more or less in order of increasing price and page count).
But most of the exposition in these books goes way beyond what’s necessary for reading economics papers. If you ever took a high school physics or chemistry class and had to “balance equations,” or make sure you had the same units on both sides of the equals sign, that level of skill is pretty much sufficient for 90% of economics issues.
What’s mystifying is why something so simple is so neglected. Most textbooks on economic growth tend to launch into the equations for output with only the most hand-waving description of the units attached to the various quantities, or else they omit such description entirely. No one seems to notice that if you have an expression with factors (K^α)•(L^β), then this constrains K and L to be expressed in the same units of the same base quantity — or else to be expressed dimensionlessly, as Cobb and Douglas did. Otherwise you wind up with output whose dimensionality varies according to the values of the parameters α and β. In the first-order homogeneous case where the exponents sum neatly to 1, the same constraint is necessary in order to legitimize adding those exponents.
I do not understand why the editors of RWER blog adopted this article of Ikonoclast. Your answer seems most reasonable.
In this blog, there are so many followers who have least knowledge of physics and mathematics and want to argue that (1) present economics is flawed because it uses mathematics, and in a more strong form (2) social science (or sciences including economics) is impossible because the nature of society (or ontology) does not permit any form of mathematical arguments.
If it is only a misunderstanding, the trouble is small. But, in some cases, it prevents any new attempt which may replace the actual mainstream economics, because they only judge if a paper or a book is full of mathematics or not. They have no custom to judge by the contents.
A. J. Sutter
are you now working for Saint Paul University in Tokyo? Please send me an e-mail to
y@shiozawa.net. I have something to send you.
Thank you. In 2017 I left the law and politics section (hougakubu) of Rikkyo University (a/k/a St. Paul) in Tokyo, and moved to the Global Business program of Akita International University, where I teach currently.
To fix an imprecision in my 2019 July 30 16:11 remark: Actually, the dimensionality of output in the Cobb-Douglas function without normalized (dimensionless) factors will *always* depend on the values of the parameters α and β, unless (i) the base quantities of K and L are the same, AND (ii) those parameters are constrained to sum to a fixed value in all cases (such as 1 in the usual Solow model).
After 200+ years even economics becomes a science ― or does it?
Comment on Ikonoclast on ‘Bringing science into economics must necessarily entail measurements in the scientific units’
The characteristic capability of science ― to turn whatever it might touch into knowledge ― obviously has eluded economics.#1 Currently, economists do not understand how the monetary economy works. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT are mutually contradictory, axiomatically false, materially/formally inconsistent, and all approaches got profit ― the foundational concept of the subject matter ― wrong. Every topic economists take up turns sooner or later into brain-dead blather and invariably ends in the political swamp where “nothing is clear and everything is possible.” (Keynes)#2
Ikonoclast maintains: “The only real science is hard science; namely physics, chemistry and biology. The rest is not science. This is not to insist on mere scientism nor is it to insist that other subjects are worthless.” and “If you are calling for scientific and mathematical precision in economics then you must stick to the scientific units laid out in International System of Units (SI). These are base units; s second time, m metre length, kg kilogram mass, A ampere electric current, K kelvin temperature, mol mole amount of substance cd candela, and derived units … Does anyone see dollars, ‘utils’ or ‘snalts’ in that list?” and “Only real resource considerations are meaningful. Money considerations are completely meaningless. This is if we are being entirely logical and scientific.”
Where is the blunder in this argument? The economy constitutes itself through the interaction of real and nominal variables, therefore ‘money considerations’ are an integral part of economics. After all, monetary profit/loss is a precisely measurable ‘monetary’ variable which does not appear in physics or elsewhere but can be as real as a sack of gold or an entry on the Central Bank’s accounts.
The economic universe contains the physical magnitudes#3 PLUS the foundational economic magnitudes.
The blunder of scientifically incompetent economists is this: microfoundations are given with these verbalized Walrasian axioms: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)
Obviously, the Walrasian axiom set contains THREE NONENTITIES: (i) constrained optimization HC2, (ii) rational expectations HC4, (iii) equilibrium HC5. Every theory/model that contains a NONENTITY is a priory false and scientifically worthless.
Keynesian macrofoundations are also provably false.#4 So, what are the true macroeconomic foundations?
It’s a monetary economy. The most significant and important factor in the monetary economy is free and available individual income to purchase the goods and services of enterprise. Modern technologically advanced capital intensive economies are increasingly cost inflationary due to numerous reasons and so requires continual injections of credit/debt in order to try to prevent the economy from spiraling down into recession or depression (and inevitably fail), because the paradigm of Debt Only for profit making private finance being A CONTINUAL FLOW OF ADDITIONAL costs REQUIRES the new paradigm of Monetary Gifting in order to stabilize the economy.
IOW, it ain’t actually a complexity problem/rocket science. It’s resolved with logic, calculus and observing the economic process with an eye for a place to implement monetary policy that has the most efficient problem resolving effects.
We humans leverage energy to produce an economic surplus. The key objective function we must minimize in this endeavor is waste. In the beginning, human labor, fueled by food energy was an important input. Today, human labor fueled by food energy pales in comparison to our leveraging of fossil fuel energy.
Also missing from your analysis is the importance of information as an organizing principle. Money, for example, is a network externality. The specific network is the payments system which is fundamentally a data network. The power (utility) of any data network scales as the square of the number of nodes (users) in the network. You might try to join this into an entropy model combining human energy leveraging, with the information theory definition of entropy and the second law of thermodynamics. Even this is of course a toy model of great oversimplification, ignoring as it does, the larger ecological system of earth and sun we are embedded in. This is the only way I see to bring hard Physics, Chemistry, and Thermodynamics into macroeconomic theory. The only guy I know who is slightly attempting this is Steve Keen. I recommend him to you.
As I have posted several times before I consider Keen the best economist on the planet, and his research into the energy/entropy problem is of course spot on as well. However, leap frogging the cost inflationary economic problem resolved only by the new monetary paradigm is a fatal error as the current monetary paradigm of Debt Only and its continual flow of additional costs will stymie any action toward sane policies and projects….especially huge ones like off-planeting the most energy/entropy producing means of production.
Intellectuals are necessary, but their tendency to lose interest after merely identifying problems but at best palliative solutions is not a good one.
Plus we get old. Age out. I see that happening to Keen. And to me.
Yes, that is unfortunately an inescapable factor, but only emphasizes the urgency of discovering and understanding the new monetary paradigm.
Craig, have you read, “Post-Capitalist Entrepreneurship Startups for the 99%”. You would enjoy it. He speaks of the gifting economy.
In reply to A.J. Sutter and a number of other respondents above. Thank you for your replies.
I certainly understand Yoshinori Shiozawa’s bewilderment, “I do not understand why the editors of RWER blog adopted this article of Ikonoclast.” I myself feel more than a little nervousness when one of my blog posts is highlighted. It’s one thing for me to bury my fulminations in a thread. It’s another to see them highlighted and exposed to very possibly just criticism as a lead comment. I also understand A.J. Sutter’s statement that I have been unduly dogmatic. Some of my fulminations, as I have termed them here, arise from an enormous frustration with conventional economics, with its general prestige (which is entirely undeserved IMO) and the complete disconnect between conventional economics and all the real systems in the biosphere. I imagine many people here will understand my frustration while not always agreeing with the precise content of my posts.
The International System of Units is based on the concept of the seven fundamental base units of quantity, from which all other units of quantity can be derived. As I see it, a call for measurement in scientific units, in the manner I made it, IS a call for the use of base quantities. But A.J. Sutter nicely highlights the ambiguity in my argument at that point. I should have concentrated more on the base quantity concept proper.
The dimensionless quantities argument goes a little deeper but also does not repudiate my argument, I believe.
“However, especially in mathematical physics, it is often more convenient to drop the assignment of explicit dimensions and express the quantities without dimensions, e.g., addressing the speed of light simply by the dimensionless number 1.” – Wikipedia (if I may be forgiven in a blog for quoting from this source).
In the above category of cases, the dimensionless quantity is traceable back to SI unit(s) which in turn when being used to measure a real quantity fully imply a base quantity is being measured.
The next category of cases is ratios, proportions, and angles, “Dimensionless quantities are often obtained as ratios of quantities that are not dimensionless, but whose dimensions cancel out in the mathematical operation.” – Wikipedia. Hence, dimensions are still implied and thus real quantities are still implied.
I have insisted on a specific unit system (SI) as it is the standard. However, “The Buckingham π theorem indicates that validity of the laws of physics does not depend on a specific unit system. A statement of this theorem is that any physical law can be expressed as an identity involving only dimensionless combinations (ratios or products) of the variables linked by the law (e. g., pressure and volume are linked by Boyle’s Law – they are inversely proportional). If the dimensionless combinations’ values changed with the systems of units, then the equation would not be an identity, and Buckingham’s theorem would not hold.” – Wikipedia.
None of this obviates the assertion that the ratios and products are concerned with real base quantities. I leave aside the issue of dimensionless physical constants. I would have to try to think more about that.
I am not a qualified scientist. You can see my heavy reliance on jumping to Wikipedia above. With more time (time constrained ATM) I might jump to physics dot org or some such site. In the interests of disclosure, I have nothing more than a humanities bachelor degree taken many years ago. By the same token, I completed Year 12 physics in Australia in the 1970s to a level of 6 on a scale of 7 where 7 is the highest. I also got 7s in biology and English and 5s in mathematics. I passed semester subjects of zoology and biochemistry in first year university. Other than that I am an attempted autodidact with some reading in philosophy, political economy, history and economics. Thus I am not of a learned academic standard but I might qualify as an informed citizen (which category of person I consider to be useful in a democracy). The above are the reasons why I am comfortable enough to comment but feel a little intellectually exposed when placed in the “pole position” on a comment thread.
I gave a nod to quantities other than base quantities by referring to taxonomic classification: “plus the utilization of taxonomic schemes for biota”. Humans are part of the biota so this nod certainly covers counting humans demographically as well as just by biomass. This nod also implies I think the issue of counting by classification (taxonomy) in general, though care must be taken or it can rapidly become unscientific (but may still be appropriate for moral philosophy reasoning for example. For some aspects of science, raw human biomass can matter while for other aspects of science and for ethics, sociology, political economy and public administration, the number of humans can matter.
The money argument is also a deep issue. I will come back to that today if I have time.
To append to my comment above, in another thread I am criticized for advocating the (comparative) study of ontology. It is suggested to me that most people survive very well without studying any ontology at all.
The rest of my reply was as follows.
Everybody studies metaphysics (ontology and epistemology) whether they know it or not. The language-learning and enculturation everyone receives in their given society, contains implicit ontology (and epistemology). However, it is often un-reflective and un-comparative ontology. Every religion and every ideology (to give two category examples) contains its own implicit ontology. But when implicit ontology is accepted dogmatically as Truth (with a capital “T”) rather than being critiqued comparatively (and perhaps in other manners) then said implicit ontology remains invisible to the subject holding those views. To him or her it is not metaphysics (any theory of what is true and how we can know it’s true) it is simply true. Common sense is metaphysics which does not know itself.
A book I had suggested for reading is “The Philosophy of Complex Systems” even if one reads only the papers by its editor, Cliff Hooker. It bears on scientific and complex systems ontologies.
Thank you for your clarifications. You’re right to raise the issue of ontology: the social sciences are particularly sensitive to ontological issues, since many statistics speak of “Americans,” “French persons,” “literacy,” and the like. There is a large Francophone literature about such issues, especially in the work of the late Alain Desrosières. His collection of essays, « Pour une sociologie historique de la quantification. L’Argument statistique I » (Paris: Presses de l’École des mines 2008) has a lot that’s pertinent.
@Rob Sorry, I couldn’t reply directly under your question. The book is available on Amazon.jp; in romaji the title is “Keizai seichou shinwa no owari.” As the Japanese term for degrowth was in flux at the time, I used a neologism, “genseichou,” that had been proposed by my translator in consultation with me and my editors at Nikkei, for whom I had been writing magazine columns when I first wrote about the topic in 2008. Since then, however, the term “datsuseichou,” based on a translation of the French décroissance, has become the more common Japanese rendering of ‘degrowth.’
Than you A.J., I think that will get me heading in the right direction.
(@ Moderator: Not sure why some of my replies are appearing with extraneous ‘j’s in my name, but they are from me. — A.J. Sutter)
Somehow, Part 2 of my post got lost. For the full text see
https://axecorg.blogspot.com/2019/07/after-200-years-even-economics-becomes.html