Ontology, framing, and all that jazz
from Peter Radford
The collection of papers edited by Uskali Mäki and published in 2001 under the title: “The Economic World View, Studies in the Ontology of Economics” seems to be quite pertinent given the reaction to my recent comments on complexity. It is a wonderfully rich source of thought about what, exactly, economics is, which is something that seems to confound a great number of people. Quite often I get the sense that some critics are upset with economics because it isn’t physics, or chemistry, or, more controversially, biology. No it isn’t. Nor are they economics. Hopefully we all agree on that. Nor is it history or any other thing. It is economics. Which is something that has coalesced around certain ideas over the last couple of hundred years. Quite what it is, though, remains a work in progress.
Economics is way more complex than the “natural” sciences simply because it involves us and our confounded intentionality, controversy, whimsy, and so on. Physicist have it easy: atoms don’t “think”. Which is why those economists who try to nail people down as if they are atoms do what they do. It simplifies what is otherwise an enormous fog. I happen to think they oversimplify, but I don’t criticize them for trying.
Buried in Mäki’s own contribution, which is rather cheekily entitled “The way the world works”, is an illuminating comment from Ronald Coase who, as you know, is one of my favorite economists. Coase let’s us know that he sees the relentless fixation on economics as being a theory of choice as harmful because it detracts from other significant features of real economies:
“This preoccupation of economists with the logic of choice … has nonetheless had, in my view, serious adverse effects on economics itself. One result of this divorce of the theory from its subject matter has been that the entities whose decisions economists are engaged in analyzing have not been made the subject of study and in consequence lack any substance. The consumer is not a human being but a consistent set of preferences. The firm to an economist … ‘is effectively defined as a cost curve and a demand curve’ . Exchange takes place without any specification of its institutional setting. We have consumers without humanity, firms without organization, and even exchange without markets.” — Coase, 1988, “The Firm, the Market, and the Law”.
Narrowing economics down to being a theory of choice fits within the tradition of what I have called, at my peril apparently, the war on scarcity. It allows for the excessive formalization I and many others decry. It makes economics into a kind of applied mathematics which satisfies the sort of economist who might have started out early in in life studying mathematics, physics and so on, but leaves aside other perspectives that reveal insights intractable to that approach.
The existence of scarcity is a primordial condition of humanity. The battle for subsistence in a landscape that presented few opportunities for prosperity was the basis of existence for millennia. It created the illusion of stability. Yet within each of those periods there was a low level but relentless improvement taking place. Invention or innovation was slowly allowing our ancestors to cope better with scarcity. In other words despite the illusion of stasis it was becoming possible to tame nature. We were winning the battle with scarcity.
Eventually, of course, it was possible for the economy, whatever we decide that is, to escape from the social and ethical limits put on it through those millennia. There is even a good argument to be made that it was entirely due to the steady erosion of scarcity that society became affluent enough to turn its attention to costly activities such as religion, politics, and state building. What appeals to me about economics is that it is the study of how that affluence is created and distributed. Or, rather, that’s my basic point of view. And in order to get at answers to those questions we need to think about what an economy is. Which is where I wander into thinking about information and so on.
Which returns me to the Mäki article. Information is something economists talk about a great deal. It is usually in the context of communication rather than structure or learning in the way that Hidalgo sees information. To my mind this is excessively narrow, but it is the way in which economists devoted their early attention to information. Mäki quotes Richardson, another of my favorite thinkers on economics, as being critical of how restrictive this focus on communication has become:
“if we are led to study the informational aspects of social systems only in terms of a rigid conceptual framework borrowed from physics, we shall certainly obtain a distorted picture. Prices, for example, and particularly the current values of prices, assume from this point of view an undeserved prominence, because it is in terms of them that a quasi-physical signaling mechanism can be elaborated and given mathematical expression.” Richardson, 1960, “Information and Investment”
Richardson’s belief is that looking at an economy is such a limited and almost mechanical way leaves too much out. I agree. Which is why I think we need to look for an expression of reality that better accommodates itself to the task of economics.
But that brings us back to deciding what task[s] that is.
To reveal my hand a little more, two articles in the Mäki book stand out to me: “Economics without mechanism” by John Dupre; and Jack Vromen’s”Ontological commitments of evolutionary economics”. The latter, in particular, is worthy of further discussion as we all ponder what economics is.
Before I came across the Mäki collection I was influenced by Tony Lawson’s “Economics and Reality”. So I will end this little grab bag of thought with a longish quote from Lawson as he gets to grips with the issues of economics:
“Economics, then, in a more obvious way than natural science perhaps, is necessarily historical-geographical. In addition, if by virtue of their dependency upon human agency, social structures must continually be reproduced, it follows that economics is concerned with inherently dynamic matters. The terminology of process is thus fundamental to social science. By this I do not mean … merely a sequence of events. Rather, process denotes here the genesis, reproduction, and decline of some structure mechanism or thing, the formation, reformation and decay of some entity in time. Clearly, if society is intrinsically dynamic, social science must be alert, and its methods tailored to, this condition. Furthermore, the dependence of social structure upon human agency also entails an inescapable hermeneutic moment in social science, one that … may be of greater consequences than any similar or comparable moment in natural science. In addition, the impossibility of engineering, and the absence of spontaneously occurring, closed social systems, necessitates a reliance upon non-predictive, purely explanatory, criteria of theory development and assessment in the social sciences.“
One last thing, the introduction in Robert Ayres terrific book “Information, Entropy, and Progress: A New Evolutionary Paradigm” sets up the terms and concepts nicely for anyone who wants to follow Lawson’s path. It’s always worth remembering that the paths we tread are well-worn, and that, more often or not, our revelations are humdrum in the context of the entire conversation that is economics. The classic along this path, of course, is Georgescu-Roegen’s “The Entropy Law and the Economic Process”. But that’s for another day.
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Real-World Economics Review Blog 
This is the question of Complexity, which Warren Weaver presented as the next target of sciences in the second half of the 20th century. He classified in his seminal paper Sciences and Complexity (1948) three kinds of problems: problems of simplicity, of disorganized complexity and of organized complexity. First two problems were already attacked effectively by the first half of the century and Weaver thought that the next challenge was the third problem, i.e. problems of organized complexcity. (Strangely, there is no mention on this important contribution by Weaver in the Wikipedia article on Warren Weaver retrieved on July 22, 2020.) He was a good prophet with regards to molecular biology and computer simulations. Complexity is now a full-fledged concept or idea in many natural sciences and engineering.
Similar attempt was made in economics but this concept was not fully adapted to economics. Many economists tried to apply to economics complexity mathematics such as chaos, catastrophe, fractals and power laws. In this web site (RWER), a symposium was held under the title Economic Philosophy: Complexity in Economics in late 2017 and a transaction was published this year as a book edited by John Davis and Wade Hands.
I have participated to the discussion and I admit there were many interesting contributions. But, it is also necessary to point that Complexity in economics is not the question of non-linear dynamics, on which majority contributions were made. The central question must be the Complexity for human being. As Peter Radford emphasized, we must consider how complexity means for economic agents, for their behavior and decision making. So, the question must be man or woman in face of complexity.
If we consider a human agent in complexity, we have to consider that we have only limited capabilities in (1) information collection, (2) rational judgment and calculation, and (3) ability to execute something. Herbert A. Simon formulated this question by the term bounded rationality. As I have argued in my Chapter 1 Microfoundations of Evolutionary Economics in a book with the same title, human purposeful situation is full of intractable problems if one tries to solve them as optimization. We are obliged very often to judge the situation, solve the problem and make a decision by satisfycing principle (H.A. Simon).
This is the reason why we should focus on routines and their evolution in my comment on July 15, 2020 at 7:36 am posted as a reply to another article by Peter Radford More Compleixty (July 15, 2020).
I made it possible that everybody can download the first draft of Chapter 1 of our book Microfoundations of Evolutionary Economics. There is no big change in the content with the published version but I must ask to cite from the published version if you officially cite any part.
In my own reaction to Peter’s thoughts at https://rwer.wordpress.com/2020/07/20/heterodox-economics-needs-to-develop-an-agreed-ontology-and-agreed-modeling-methods/#comment-170942, I asked whether, even after all this time, we know who our friends are. I outlined the terms and concepts which need to be agreed on. Peter now says “the introduction in Robert Ayres terrific book “Information, Entropy, and Progress: A New Evolutionary Paradigm” sets up the terms and concepts nicely for anyone who wants to follow Lawson’s path”. I have counted Tony Lawson as my friend for over twenty years, even if I understand him better than he understands me; but I haven’t followed him: I JOINED him, because I had already come to a similar understanding of the underlying problems. I shall read Robert Ayres’ book in hope of finding another such “friend” in the sense C S Lewis discusses in “The Four Loves”, but from my experience of authorities not having a clue about information theory, my expectations are not high. As Peter concludes: “It’s always worth remembering that the paths we tread are well-worn, and that, more often or not, our revelations are humdrum in the context of the entire conversation that is economics”. The flip side of that is that there ARE exceptions, hence Keynes on the likes of Gesell and Lawson’s line in “Reorientating Economics” on the need for “contrastive explanation”, or seemingly my own experience: of our simplifying communication and computing (and indeed of operating vehicles) by increasing the complexity of their logic.
Sadly, poor health and discouragement from being repeatedly misunderstood kept me from contributing a paper to the WEA conference on complexity mentioned by Yoshinori. Again, I accept my need to study that, despite being disappointed when I skimmed it. If only more of the critically minded academics here would study rather than skim through what I’VE been saying, not developing their understanding by reflection or asking questions, just looking for something to object to.
Apologies for some clumsy phrasing. For “of operating vehicles” please read “the operation of vehicles”. I was, incidentally, trying to take account of maintenance as well as driving.
PS. For those who have not come across C S Lewis’s “Four Loves”, he describes them figuratively as:
1. Familiarity: being used to and accepting the ways of those around us.
2. Eros: lovers face to face and seeing hardly anything else beside each other.
3. Follow my leader: one behind the other, seeing only where the leader goes.
4, Friends: walking side by side; not needing to say much to each other because they are seeing the same thing, which leaves them free to get things done.
In some threads touching on ontology, there are those who express skepticism about ontological investigations. Implicitly, this amounts to an expression of the view that there can only be speculative ontologies but no empirical ontologies.
I am still working on a fuller reply than this. In the interim, let me run by people the following intentionally specious proposal.
A proposal.
We can fix the economy and climate change as follows. Take 3 parts unicorn manure and mix it with 1 part pixie dust and 1 part Galadrial’s Earth. Reduce to dust in your dragon bone mortar and pestle. Take a pinch of this dust four times over and release a pinch to each of the four winds This will fill all creatures with love, all will grow well, all will be prosperous and the earth shall be healed.
Analyzing the proposal.
People would of course laugh at the proposal, but why? Well, obviously it is fantasy but what are the markers that it is a fantasy? I suspect there would be two key issues:
(1) The objects nominated are not real.
(2) There can be no science or theory to indicate a cause and effect relation of the non-real to the real.
These objections are not only empirically based, they are ontologically based, specifically as ontological empiricism (what objects are real from experience) and ontological realism (at least a part of reality is ontologically independent of human minds and their ideas).
For a prescription or action to have any possibility of working a required effect, the objects and/or processes must be real and and thus at least potentially able to generate a real world cause and effect result. I doubt few persons would cavil at the naming of “cause and effect” in general as an empirically observable and pragmatically employable process. This is even though a philosophical investigation of cause and effect raises questions about our logical induction(s) seeking to establish cause and effect in general and in particular cases. (See David Hume.)
So why is there this skepticism about the need for ensuring ontological empiricism and ontological realism in economic theory? I would say it is because the topic is relatively new and very difficult. There is a general difficulty because economics involves objects (and processes) which have or appear to have qualitative differences: I mean real objects, formal objects and conjectural objects. For economics involves all three kinds of objects (using this taxonomy). This brings us on to systems theory. In economics we are dealing with the interactions of real systems, formal systems and conjectural systems. This arena requires a general theory and (eventually) suggested empirical investigations. I suspect information theory will be found to be the required link between the three systems. This is not at all to suggest that there would a scientistic solution which would take economics entirely out of the moral philosophy realm. Human beings are, among many other things, beings who ineluctably exist in a socially (and/or metaphysically) constructed “moral dimension”.
Good try, but what this shows to me is just how far apart we still are.
At your proposal, objection 1 is for me that the method is not possible because the objects are not YET or not NOW real. Objection 2 for me would deny only what is not POSSIBLE. What we see may be steam engines but we may also see diesel engines as theoretically possible.
So why the skepticism about ontology? Ignoring Bacon’s “taking things to bits to see how they work”, David Hume muddied the scientific waters by arguing against induction, whereas Tony Lawson (following Roy Bhaskar) more or less went back to Bacon by drawing attention to C S Peirce’s logic of retroduction: i.e going back from an empirical field to a more abstract level of knowledge, the possible applications of which include those we are interested in. Library scientist S R Ranganathan started with everything possibly empirical (i.e. visible or not) and retroduced to the invisible context of space-time. At that level, ontology is not difficult: it amounts to the simplest possible choice of conventions that enable us to account for the observed curvature of space time (Cartesian coordinates and the square law divergence of light). Hence a Big Bang, and our needing to account for and identify the evolution of genera as well as genetic variation within species. That sounds difficult until you know what you are looking for, but it is no more difficult to see than an arabic number counting in fours instead of tens. Fuzzy induction comes into measuring parts of whole numbers, and since there are more atoms than humans, social and economic adaptation varies with geographic resources.
On the need for a general theory of real, formal and conjectural objects in economics, I object only to your conjectural ones, which can be empirically defined by retroduction, not induction. Again, the systematic relationship is more easily seen in a paradigmatic example, Algol-68 as a programming language. This meets Hume’s objection to our knowing as against conjecturing reality by accepting that computer data STANDS FOR rather than IS reality, for its reality is the computer, and the formal programs it contains to realise Hume’s conjectures. Moral logic too is real and built in, the point of information science being to realise effects reliably by error correction (i.e. control using negative and ultimately PID feedback).
I agree with Lawson as far as he contends here. However, I wonder if ontology argument really helped clarifying continually reproducing structure which is the economy. Did it help someone (including Lawson) to develop process analysis of the economy?
Lawson’s critical realism became popular since many years ago. It was a seminal contribution in the sense it produced many methodology books and articles. But how about constructing or rebuilding economics? After more than 20 years, ontology produced little in economics. Ontology argument is more obstructive than promoting economics that can replace mainstream economics. Lawson’s intention to oust mainstream economics and reconstruct economics is actually working in the opposite direction. This is the current actual situation. We should observe this situation and discuss the future of new economics.
Our theory Microfoundations of Evolutionary Economics (read Preface and Marc Lavoie’s book review) is not a complete theory in the sense it still lacks many fields or subjects to clarify. But this is inevitable for a burgeoning theory. Yet it is based on process analysis and accounts how the modern industrial economy continually works and reproduces itself everyday. It can be a good example. With this hint in mind, I hope young economists will develop new theories in various subjects and fields.
Why do so many people still continue to argue methodology instead of paying efforts for constructing new theories? Methodology must not be a hindrance of new constructive efforts.
Yoshinori, please get it into your head that the economy is people continually eating and reproducing themselves, not paid economic theorists finding new words to keep obscuring the obvious. The ontology of Lawson’s economics is simply people earning a living. The alleged justification of mainstream’s economising with the truth is simply Hume’s untrue epistemology.
“Nor is it history or any other thing.”
GFW Hegel said philsophy is its history, Historians feel the same about economics. , it is in a constant state of becoming. So we discount the discussion in this blog by not taking part in it, but registering the transformations as they unexpectedly occur and how they are reacted to.
Historians have an advantage in this. When they encounter complex subjects when looking at the evolution of economics, they do not tr to learn the complexities, but ask experts in the field., says in the application of mathematics to economics, about what is being done, and I don’t mean economists who use maths, but mathematicians, who see how their subject is using maths, and what they think about the applications. I once met a mathematicians from the univ. of alabama, who taught math to engineers; he dold me engineers did not understand mathematics. Maybe a mathematician who say they same about economists, any examples, you mathematicians?
As a non academic from the real world i have a particular respect for those contributing on the above and in particular to Dave Taylor July 24,2020 at 4pm. Because from my perspective he and Lawson relate to the real world, of real people in a way that makes s to us non academic people.Ted
What I hope people here understand is that when we have a failed theory and praxis, which is what conventional economics is, it is not easy to say “hey presto!” and come with up with new, valid, comprehensive, convincing and applicable theory. There will be years, decades or more of wandering in the intellectual wilderness. One can read the notebooks of the philosophers and political economists (where they are still extant) and see what I mean. The seemingly endless theses, anti-theses, premises, objections, counter-arguments and so forth they go through in attempting to forge a new theory or philosophy, usually take decades to work through. This is before the finished product is submitted to the tender mercies of the public, critics and rivals.
I am still working on my short essay reply about the necessity for an “empirical ontology”, as I term it, to re-found economics, or rather political economy, properly. I am wondering if it is worth it as there is so much confusion and disagreement in the heterodox school as represented by RWER comments and even the articles. The founding principles of a new political economy are yet to be discovered or developed. I am concerned when people discount the issue of developing an empirical ontology (an ontology of empirically detectable objects, processes and systems) for the foundations of political economy. How else are you going to found the subject? If one discounts empiricism, including empirical taxonomies and empirical ontologies, then one is left with axiomatization, the axiomatic approach. I mean the erecting of theories from axioms and then the derivation of specific theorems.
Axioms may approximate the real in some cases when simple idealizing assumptions can be validly made for certain applications. This worked reasonably well with Euclidean geometry in dealing with local conditions where the real geometry of space approximated the Euclidean idealizations and an axiomatic, theorem-derivation approach. The case with political economy is far, far removed from this kind of simplism which is acceptable in some other disciplines. What I fear is that rejecting the scientifically descriptive empirical ontologies approach is really a declaration for the prescriptive axiomatic approach. This is PRECISELY the mistake conventional (classical and neoclassical) economics makes. This is a recipe for FAILING to shake free from the current failed paradigm.
The mania for mathematization and doing that inside an axiomatic, theorem-deriving framework is precisely the problem. Hard mathematization is really for the hard sciences working within the scientific dimensions of the SI (international system of units). And it is for their applied disciplines (like medicine and engineering) but ONLY where the variables are quantities in the scientific dimensions. Outside of that, even the applied disciplines of the hard sciences do not work with fully objective quantification methods. Look at the work of mental health professionals for example.
There are many, many problems we do not solve by maths, If you have a child with serious behavioral and adjustment problems, how do you solve that by maths alone? That proposition would be absurd. If you have an extensive, complex, socioeconomic or political economy system with serious behavioral problems and an inability to adjust to real world limits and to other requirements including those for justice and equity, how do you solve it with axioms, theorems and mathematization alone, especially any mathematization in the numeraire (money) which measures no real scientific dimensions at all and no moral “dimensions” either except for the dogmatic ideological moral dimensions of capitalist apologism? Again, the proposition is absurd. In political economy maths may be incidentally utilized in dealing with some aspects which can be quantified in real scientific dimensions. That’s the extent of it. Accounting economics uses mere arithmetic. Financial economics uses advanced maths (used by the “quants”) but it is employed in the social-fictive dimension of “value” measured in the floating numeraire. Nothing is solid there. All turns to the vaporous absurdity of financial speculation.
Personally, I am not close to a finished theory. That is hardly to be wondered at as I am an amateur autodidact working in obscurity outside academia. Also, a position of priority monist relational system theory (an entire philosophy and complex systems philsophy in itself) needs to be adopted to understand my call, any call, to found the non-moral-philosophy component of an empirical ontology for political economy. These are among the reasons why I am now hesitating to offer further thoughts.
When people offer metaphysical explanations, of which they seem certain, for physics and ethics, I hold they are advancing these explanations from a position of dogma. When they say “Well, what is your explanation for life, the universe and everything?” I say the following. “I don’t know AND you don’t know either! But I can refute some specific this-world claims inherent in your positions and do so with empirical evidence.”
We are really in the same boat with political economy. I don’t know and none of you know what is the comprehensive solution for our current theory and praxis political economy and real world dilemma. But we do know some stuff which has been refuted and some paths which are or will be dead ends. It’s a “forward-in-time” tree-search navigation problem. The emergent-evolutionay maze of it is a tree-search exploration problem with unknowns in the system, unknowns in our neurological, physical and social systems and limited “look-ahead” calculative or heuristic capabilities on our part even with computers and AI assisting us. There are no discoverable formulas to solve the entire “wicked problem” of political economy. However, we do know enough to know that continuing certain approaches, like endless economic growth and endless growth in elite individual fortunes will end in disaster. We have the empirical trend data for natural systems and for our social systems which unequivocally demonstrate our approach to a disastrous asymptotes where system break down and destabise: tipping points in standard parlance. We debate while Rome (the world system) burns. While wrestling with theory we cannot forget political praxis, even revolutionary political praxis. Matters have come to this pass.
We can fret over ontologies, maths that are easily thwarted/supplanted by power and continue to ignore the looming deadline for species and ecological disaster, or we can recognize that the problem isn’t economics or money itself AT ALL, but rather the MONETARY PARADIGM.
Then we can recognize that every historical paradigm change was accompanied by a new tool and/or insight and that the tipping/pivotal point of retail sale is just such an insight and a particularly powerful point to implement a price and monetary policy that with a few additional policies and regulations will enable us to resolve all of the above problems….instead of “straining at a gnat while swallowing a camel” for another 5000 years…..or at least another 50 until the resource wars and social chaos brought on by climate change puts most of us out of our misery.
Ikonoclast, your first para here – about the time taken to sort out discoveries – is spot on. When you go on to say “The founding principles of a new political economy are yet to be discovered”, you are wrong. I’ve been pointing them out to you, and the fact that it has taken me seventy years to sort out what had already been developing for seventy years from the insights of Frege and Russell and G K Chesterton and Jung and Whitehead and Shannon and Piaget and Chomsky and Schumacher. You have apparently not been listening. You are still assuming axioms are the starting point of DEDUCTIVE formal theorem proving, whereas what Bhaskar and Lawson were trying to tell you is the axioms should be the conclusions of RETRODUCTIVE empirical analysis: the very “empirical ontology” you say we haven’t found. You still say “It’s a “forward-in-time” tree-search navigation problem”. I am asking you, “Forward from when?” From what humans do now, or from pre-Reformation localised economies adapted to cold winters and muddy roads, or from the start of the universe in a Big Bang? Have you not heard the story of the airmen who couldn’t find their destination because they had flown past it?
Committing to the Big Bang as a Creation story or an Axiomatic Starting Point is consistent with believing the historic evidence for Christ rising from the dead, but also with the more recent scientific evidence for the curvature of light. We have to teach the next generation something, and what you object to as “dogma” is what we teach them. If they can find good reason to advance rather than just dismiss that, bully for them, but that too will need testing.
So I agree I am not offering you a comprehensive solution to our current economic problems, any more that offering you an automatic telephone exchange would enable you to predict what people are going to say to each other. Think about what information is. Don’t give up.
Iconoclast is completely right on this point. I am not against his attempt in proposing or developing empirical ontology. It may contribute to readjust the confused situation around the current state of ontology arguments. But, let me explain why I was not very much impressed by critical realism and its ontology arguments. It may have been powerful in criticizing mainstream economics. But it had helped non-mainstream economists very little to re-construct economics and advance their theories.
In my case of the new theory of international values, the first idea was got in early 1980’s. I wrote my first paper in 1985 (in Japanese). The second paper was written in 2007 (both in Japanese and English). It took seven years more before it took a more complete form (A book in Japanese in 2014). The result was published as “The New Theory of International Values: An Overview” as Chapter 1 of a book Shiozawa, Oka, and Tabuchi (eds.) A New Construction of Ricardian Theory of International Values / Analytical and Historical Approach, Springer, Singapore, 2017. But even at that time, the definition of key concept regular value (system of wage rates for each of all countries and prices of commodities) was imperfect, because it depended on the world production frontier. A new definition was obtained just around this time and a new definition was first announced in my paper with Fujimoto “The Nature of International Competition among Firms” (Chapter 2) in Fujimoto and Ikuine (eds.) Industrial Competitiveness and Design Evolution, Springer, Tokyo, 2018. Although it took me many years, this theory of international values occupies only a small part (i.e. Section 2.6) in our new book Microfoundations of Evolutionary Economics, Springer, Tokyo, 2019. Marc Laovie does not even mention this part.
International trade theory is of primary importance in the age of global economy. It affords a basis of international political economic arguments. What is most remarkable in this subject is that mainstream economics (microeconomics, HOS, or New and New new trade theory) has no theory which can be comparable with the new theory of international trade. Most of them assume a predetermined specialization pattern of trade, and even predetermined price system in the case of input trade. Therefore, mainstream economics is now clearly in a defensive situation. It pretends they have theories but they are all piecemeal ones and cannot provide how the global economy is now reorganized or organizing. As an example, it cannot explain the emergence of global value chains (GVCs), because this is a network of productions linked with input trade. This is the reason why GVCs are mainly studied by sociologists like Gary Gereffi, geographers and historians but not by international economists. So, in the subject international trade, heterodox economics is now in an offensive mode.
In my experience, critical realism gave me few hints. Main idea came when I knew the existence of two price systems or traditions: One was the stream from law of demand and supply to general equilibrium theory of Arrow and Debreu type. The other was the stream from Ricardo’s cost-of-production theory of value to Sraffa’s system of objective prices. The latter stream was defeated by the former in the late 19th century because it could not provide a good theory of international values. So, I thought in early 1980’s, if we succeed in constructing a good theory of international trade in the tradition of Ricardo’s cost-of-production theory of value, we can regain our strength. However, this research program was not an easy path.
In my case, the most difficult point was to understand the mathematical structure concerning international values for a world economy which contains M countries and N commodities where input goods are freely traded and firms face choice of production techniques. But there were a few precedent researches (except those of McKenzie and Jones around 1960). So my research was continuous “wandering in the intellectual wilderness.” Both economic and mathematical insight was necessary to arrive at a tentative success around 2007.
I am asking therefore whether critical realism is contributing to let advance theory building for these continuous years and decades. I read so many economists who simply argue that we have to abandon mathematics. In order to understand deeper structure what is happening in the economy, mathematics is often necessary but Lawson’s students easily claim that mathematics is the cause of the trouble of economics. Such a contention often gives very bad effects for rebuilding economics. There are many, many problems we do not solve by maths. (Iconoclast) I know it, perhaps better than Iconoclast who seems to have not worked on mathematics. But in some important points of theory construction, mathematics gives us a unique way out from intellectual confusions.
Those are all fair comments including the final one.
“Iconoclast who seems to have not worked on mathematics. But in some important points of theory construction, mathematics gives us a unique way out from intellectual confusions.”
I agree. I have not worked on advanced mathematics nor even on any university level mathematics except long ago with mathematics concerned with university first year physics, chemistry and cellular biology, with passes. Some of the (no doubt many) gaping holes in my understanding are probability and statistics, advanced set theory, advanced matrix theory, combinatorics, geometry beyond the euclidean and topology. Even significant calculus and polynomials would be beyond me now unless I did a long refresher course. So, of course, guilty as charged.
That does not mean I am instantly impressed by mathematics outside pure mathematics and the hard sciences. It also does not mean I am impressed by applied mathematics in applied disciplines not using the scientific dimensions of the SI. In summary, I am not impressed by applied mathematics which does not aid in useful predictions of real outcomes and real systems: real systems being those which obey the discovered Laws of the hard sciences.
In this, I take the English language advice, via reading them, of certain expert philosophers and mathematicians who themselves caution against the over-mathematization or mathematico-deductivism of classical and neoclassical economics.This is just as I take the advice of expert climate scientists even though I am not an expert in atmospheric physics.
I would wish I suppose that attention be given to philosophy, logic and the philosophy of mathematics before turning to mathematics itself to find that “unique way out from intellectual confusions”.
And a key point about theory construction is to answer the question: is it based on empirical observations and hypothesis testing or is it based axiomatic theory?
Dear Iconoclast,
would you like to send me an e-mail to y@shiozawa.net. I will send you in return a PDF of our book. You must check yourself if it is axiomatic theory or not. It looks like hypothetico-reductive method but I have chosen each of 18 postulates I use in Chapter 2 with care. The proposition of each postulate has empirically confirmable form although I have not tested each of them personally. Although many of them can be tested by ourselves in our everyday experience, most of them have a history of empirical arguments and checking evidence.
It may be a good idea to set up a table that indicates which postulates has such and such empirical evidence. If possible, I will try to do it in our next book.
Thank you, but let me consider that offer for a little while. I am not sure if I have the time to read your work. I am also not sure I have the expertise to understand and critique it. Indeed, I AM sure that I do NOT have the mathematical abilities to critique it.
In academic terms, I am not a person you need to convince. I am a completely obscure autodidact and amateur philosopher not in any academic mainstream or stream at all. I have no power or influence, social or academic, of any kind. I hope I have not given any other impression.
However, as C.S. Peirce wrote:
“The best that can be done is to supply a hypothesis, not devoid of all likelihood, in the general line of growth of scientific ideas, and capable of being verified or refuted by future observers.” – C. S. Peirce.
You are working in that space. The table of postulates and empirical justifications sounds like a good idea and would indicate areas for empirical testing.
In my amateur philosophical monograph, I write:
“Hofstadter expressed the dilemma of modern ontology as follows. “The problem is to state a provisional conception of reality which is as far as possible continuous with the goal of traditional metaphysics and which nevertheless is of empirical import.” With the benefit of accumulated scientific knowledge acting as philosophical hindsight, we can see now that we need to develop an empirical ontology so it is, as far as possible, contiguous with hard science. A philosophical method must be developed which generates inductions from hard science, carries them back into metaphysics and thence helps to connect metaphysics to physics. The basic building blocks of this connection will be matter, energy and information; their transfers between systems and their transformations in systems.
First however, a resolution must be found for the difficulties involved in examining the interactions of real systems and formal systems. The seeming ontological dilemmas presented by real system / formal system interactions become manifest in science and the humanities at the boundaries where investigations cross from the hard sciences (physics, chemistry, biology) into the social sciences. An analysis of what happens at system boundaries, including discipline boundaries (disciplines are systems), will be of vital importance to the investigations of this work. It is at the boundaries of systems that mass, energy and information (especially important to this investigation) are transferred.”
Thank you, but let me consider that offer for a little while. I am not sure if I have the time to read your work. I am also not sure I have the expertise to understand and critique it. Indeed, I AM sure that I do NOT have the mathematical abilities to critique it.
In academic terms, I am not a person you need to convince. I am a completely obscure autodidact and amateur philosopher not in any academic mainstream or stream at all. I have no power or influence, social or academic, of any kind. I hope I have not given any other impression.
However, as C.S. Peirce wrote:
“The best that can be done is to supply a hypothesis, not devoid of all likelihood, in the general line of growth of scientific ideas, and capable of being verified or refuted by future observers.” – C. S. Peirce.
You are working in that space. The table of postulates and empirical justifications sounds like a good idea and would indicate areas for empirical testing.
It is all right. I will wait you until you will have finished your “short essay reply about the necessity for an ’empirical ontology’ ” and you will have time to read my chapters.
When you feel like that, please give me an e-mail.
When I wrote that “Iconoclast who seems to have not worked on mathematics”, I did not mean that you have not learned mathematics in university courses. Those mathematics are seldom useful for investigating economics. I thought you had no experience to have used mathematics to solve some logical problems that arise in investigations and to have felt powerlessness of mathematics. Even with the most advanced mathematics, we often feel we are not powerful enough to solve a simple problem.
In particular, calculus is not a convenient mathematics to apply in many problems in real world. Neoclassical economics was in a sense trapped In this mathematics, but this is not the point I want to emphasize here. In many occasions, we need new mathematics. But this is not an easy work. That is why we often substitute by more ambiguous vague observations and considerations. But it is not an ideal solution. The second best is to search ready-made mathematics that can be used for the investigation. In my case of the new theory of international values, the necessary theory was that of system of linear inequalities in a high-dimensional real space. It was already developed as theory of convex polytopes and I was lucky. But, until I found this fact, I wandered about through many different mathematics like topology (fixed point theorem), linear programming, theory of matroids, combinatrics, finite mathematics, integer programming, even geometry of lattice points before arriving to the right theory.
I was lucky because I could find a ready-made theory, but it also happens there is no such theories. This is the reason why many people crowd to new mathematics when one such new field is discovered. Some problems are solved in this way, but many others end by disillusion. This kind of disillusions were repeated by new mathematics often named 4 Cs:
Cybernetics, Catastrophe theory, Chaos theory and finally Complexity.
I am proposing an economics of complexity but it is quite different from many complexity economics (e.g. that of Brian W. Arthur). Latter is more prone to non-linear dynamics, but mine is on the strand of Herbert A. Simon who emphasized the importance of bounded rationality. In my opinion, this is the core to understand and re-formulate human economic (thus intentional) behaviors. Even in this consideration, mathematics of computing complexity was very useful for me. It gives me a powerful tool to point the impossibility of optimizations in many practical problems (ubiquity of intractable problems). This point forms the main content of Chapter 1 of our book. You can understand the basic points if you read Marc Lavoie’s splendid book review.
I’ve come back to this now I’m a bit more with it. For me, the bit on mathematics starting with this summarises the issue:
“In my case of the new theory of international values, the necessary theory was that of system of linear inequalities in a high-dimensional real space.”
On the one hand the problem is not to formalise a theory of international capitalist values, it is to see what is internationally important (the impending climate catastrophe and the social injustice blocking reaction to it), and theorising that in language which can be understood by the likes of Ted, Boris and Trump. That involves being able to see what economics is, and why capitalism is not economics.
Reading on, thinking of reconstructing the economy rather than academic economics, the answer to the problem created by the internationalising of capitalist finance and hence trade is to limit the damage by localising it, as proposed notably by Chesterton and Schumacher but as I see it radically, by credit cards turning us into our own bankers.
Yoshinori says “[Critical Realism] may have been powerful in criticizing mainstream economics. But it had helped non-mainstream economists very little to re-construct economics and advance their theories”.
Well, it helped me to have a word for “retroduction”, even if it hasn’t helped them to see past Yoshonori’s mainstream understanding of what economics is.
I’m not going to waste any more time on Yoshinori’s diversions because I’m becoming too ill. Going back to Ikonoclast’s using SI units as his defining identity for science, let me yet again insist that what made Shannon’s communication theory a new fundamental science was his defining information in terms of the logarithmic units of bits. The academic physicists behind the SI units have still not recognised this, and that Shannon’s ‘entropy’ is a measure not of forces causing change but of errors which need changing. Nor did Tony Lawson, which is perhaps why his initiative has been less fruitful that it deserved to be.
davetaylor1,
You might recall a post where I said the SI units as a developed, defined and re-defined system were a meta-discovery: a discovery about our empirical discoveries to date to do with “scientific dimensions”. Within that contention of mine, it is certainly implicit that a new discovery could validate the inclusion of an eighth scientific dimension. I am not qualified to assess Shannon’s ‘entropy’, nor to assess the work of the academic physicists behind the SI. But I accept in principle that a new scientific dimension, or more than one, could still await validated discovery and inclusion in the SI.
Of course, “scientific dimensions” are not to be confused with classical 3D space plus time dimensions which ontology itself was modified by the theory of relativity. At the level we are talking at here, it becomes difficult philosophically and even scientifically to be absolutely certain about how truly objective even current scientific (SI) ontology is, although it is apparently and testably the most objective ontology we have discovered/developed thus far. Even an empirical ontology seems to be a kind of complex amalgam of discovery and development.
Footnotes:
(Thermodynamic) Entropy
Common symbols: S
SI unit joules per kelvin (J⋅K−1) or (J/K)
In SI base units kg⋅m2⋅s−2⋅K−1
My questions are: What are the units of Shannon’s ‘entropy’? is it proposed that the “bit” itself is a “scientific dimension” meant in the sense that it is a fundamental dimension of reality? Information can be defined as a pattern which influences the formation of other patterns. This seems quite basic but is it fundamental? The questions are beyond me at the moment and may well continue to be.
Thanks for your questions, Ike. Language is a fundamental dimension of our reality, whereas meaning is subjective. Shannon distinguished genuine information from “old news”, which he called “redundant” information, leaving his definition as as something like Bateman’s “a difference which makes a difference”. In terms of patterned (modulated) signals that means the differences we can detect and therefore react to.
‘Entropy’ is a measure of detectable differences which have (physically) or can become permanent (uncorrected errors). The units of the measure are thus bits.
An additional comment on my post on July 25, 2020 at 5:03 am.
I explained long about the new theory of international values in the post above, but I have not explained how the new theory can be used in interpreting actual economy. Only one exception was the possibility that the new theory can give a theoretical framework for analysing the emergence, the growth and the future of Global Value Chains. Readers must be frustrated with it.
Please read my post on August 15, 2020 at 5:10 pm added as a comment to Erik Reinert’s article (a digest from his paper in RWER #92) Paul Samuelson and the Cold War rebirth of David Ricardo. I explained there in seven pillars how the new theory of international values gives a deeper understanding on various points that Reinert argued in in his overly policy-oriented paper. It is my opinion that policy recommendation must be supported by solid and deep understanding on the process aimed at by the policy.
The economy is complex, but not always the case. There are vast forms of rocks in the mountains, but natural scientists seldom say it is “complex”, because the natural scientists believe that they have satisfactorily grasp the regularities of rocks. Although they may be not sure the situations of every rock, i.e. the complexity, for the time being, they believe they can get to know them well — as long as they want to, and have research resources to do so. The prevalence of complexity reflects economists’ basic ignorance of the economy, so the term is actually somewhat superficial. When we, Algorithmically, know the economy and the society fundamentally, we will lose the interest to allege the complexity, instead, we will be surprised that someone articulates the economy is “not complex”.