Home > Uncategorized > Deductivism — the original sin in mainstream economics

Deductivism — the original sin in mainstream economics

from Lars Syll

Mathematics, especially through the work of David Hilbert, became increasingly conceived as a practice concerned with formulating systems comprising sets of axioms and their deductive consequences, with these systems in effect taking on a life of their own …

Confusion of sign and object is original sin coeval with the word.The emergence of the axiomatic method removed at a stroke various hitherto insurmountable constraints facing those who would mathematise the discipline of economics … In particular it was no longer regarded as necessary, or even relevant, to economic model construction to consider the nature of social reality …

The result was that in due course deductivism in economics, through morphing into mathematical deductivism on the back of developments within the discipline of mathematics, came to acquire a new lease of life, with practitioners (once more) potentially oblivious to any inconsistency between the ontological presuppositions of adopting a mathematical modelling emphasis and the nature of social reality.

Tony Lawson

To be ‘analytical’ and ‘logical’ is something most people find recommendable. These words have a positive connotation. Scientists think deeper than most other people because they use ‘logical’ and ‘analytical’ methods. In dictionaries, logic is often defined as “reasoning conducted or assessed according to strict principles of validity” and ‘analysis’ as having to do with “breaking something down.”

anBut that’s not the whole picture. As used in science, analysis usually means something more specific. It means to separate a problem into its constituent elements so to reduce complex — and often complicated — wholes into smaller (simpler) and more manageable parts. You take the whole and break it down (decompose) into its separate parts. Looking at the parts separately one at a time you are supposed to gain a better understanding of how these parts operate and work. Built on that more or less ‘atomistic’ knowledge you are then supposed to be able to predict and explain the behaviour of the complex and complicated whole.

In economics, that means you take the economic system and divide it into its separate parts, analyse these parts one at a time, and then after analysing the parts separately, you put the pieces together.

The ‘analytical’ approach is typically used in economic modelling, where you start with a simple model with few isolated and idealized variables. By ‘successive approximations,’ you then add more and more variables and finally get a ‘true’ model of the whole.

This may sound like a convincing and good scientific approach.

But there is a snag!

The procedure only really works when you have a machine-like whole/system/economy where the parts appear in fixed and stable configurations. And if there is anything we know about reality, it is that it is not a machine! The world we live in is not a ‘closed’ system. On the contrary. It is an essentially ‘open’ system. Things are uncertain, relational, interdependent, complex, and ever-changing.

Without assuming that the underlying structure of the economy that you try to analyze remains stable/invariant/constant, there is no chance the equations of the model remain constant. That’s the very rationale why economists use (often only implicitly) the assumption of ceteris paribus. But — nota bene — this can only be a hypothesis. You have to argue the case. If you cannot supply any sustainable justifications or warrants for the adequacy of making that assumption, then the whole analytical economic project becomes pointless non-informative nonsense. Not only have we to assume that we can shield off variables from each other analytically (external closure). We also have to assume that each and every variable themselves are amenable to be understood as stable and regularity producing machines (internal closure). Which, of course, we know is as a rule not possible. Some things, relations, and structures are not analytically graspable. Trying to analyse parenthood, marriage, employment, etc, piece by piece doesn’t make sense. To be a chieftain, a capital-owner, or a slave is not an individual property of an individual. It can come about only when individuals are integral parts of certain social structures and positions. Social relations and contexts cannot be reduced to individual phenomena. A cheque presupposes a banking system and being a tribe-member presupposes a tribe.  Not taking account of this in their ‘analytical’ approach, economic ‘analysis’ becomes uninformative nonsense.

Using ‘logical’ and ‘analytical’ methods in social sciences means that economists succumb to the fallacy of composition — the belief that the whole is nothing but the sum of its parts.  In society and in the economy this is arguably not the case. An adequate analysis of society and economy a fortiori cannot proceed by just adding up the acts and decisions of individuals. The whole is more than a sum of parts.

Mainstream economics is built on using the ‘analytical’ method. The models built with this method presuppose that social reality is ‘closed.’ Since social reality is known to be fundamentally ‘open,’ it is difficult to see how models of that kind can explain anything about what happens in such a universe. Postulating closed conditions to make models operational and then impute these closed conditions to society’s real structure is an unwarranted procedure that does not take necessary ontological considerations seriously.

In face of the kind of methodological individualism and rational choice theory that dominate mainstream economics we have to admit that even if knowing the aspirations and intentions of individuals are necessary prerequisites for giving explanations of social events, they are far from sufficient. Even the most elementary ‘rational’ actions in society presuppose the existence of social forms that it is not possible to reduce to the intentions of individuals. Here, the ‘analytical’ method fails again.

The overarching flaw with the ‘analytical’ economic approach using methodological individualism and rational choice theory is basically that they reduce social explanations to purportedly individual characteristics. But many of the characteristics and actions of the individual originate in and are made possible only through society and its relations. Society is not a Wittgensteinian ‘Tractatus-world’ characterized by atomistic states of affairs. Society is not reducible to individuals, since the social characteristics, forces, and actions of the individual are determined by pre-existing social structures and positions. Even though society is not a volitional individual, and the individual is not an entity given outside of society, the individual (actor) and the society (structure) have to be kept analytically distinct. They are tied together through the individual’s reproduction and transformation of already given social structures.

Since at least the marginal revolution in economics in the 1870s it has been an essential feature of economics to ‘analytically’ treat individuals as essentially independent and separate entities of action and decision. But, really, in such a complex, organic and evolutionary system as an economy, that kind of independence is a deeply unrealistic assumption to make. To simply assume that there is strict independence between the variables we try to analyze doesn’t help us the least if that hypothesis turns out to be unwarranted.

To be able to apply the ‘analytical’ approach, economists have to basically assume that the universe consists of ‘atoms’ that exercise their own separate and invariable effects in such a way that the whole consist of nothing but an addition of these separate atoms and their changes. These simplistic assumptions of isolation, atomicity, and additivity are, however, at odds with reality. In real-world settings, we know that the ever-changing contexts make it futile to search for knowledge by making such reductionist assumptions. Real-world individuals are not reducible to contentless atoms and so not susceptible to atomistic analysis. The world is not reducible to a set of atomistic ‘individuals’ and ‘states.’ How variable X works and influence real-world economies in situation A cannot simply be assumed to be understood or explained by looking at how X works in situation B. Knowledge of X probably does not tell us much if we do not take into consideration how it depends on Y and Z. It can never be legitimate just to assume that the world is ‘atomistic.’ Assuming real-world additivity cannot be the right thing to do if the things we have around us rather than being ‘atoms’ are ‘organic’ entities.

If we want to develop new and better economics we have to give up on the single-minded insistence on using a deductivist straitjacket methodology and the ‘analytical’ method. To focus scientific endeavours on proving things in models is a gross misapprehension of the purpose of economic theory. Deductivist models and ‘analytical’ methods disconnected from reality are not relevant to predict, explain or understand real-world economies

To have ‘consistent’ models and ‘valid’ evidence is not enough. What economics needs are real-world relevant models and sound evidence. Aiming only for ‘consistency’ and ‘validity’ is setting the economics aspirations level too low for developing a realist and relevant science.

Economics is not mathematics or logic. It’s about society. The real world.

Models may help us think through problems. But we should never forget that the formalism we use in our models is not self-evidently transportable to a largely unknown and uncertain reality. The tragedy with mainstream economic theory is that it thinks that the logic and mathematics used are sufficient for dealing with our real-world problems. They are not! Model deductions based on questionable assumptions can never be anything but pure exercises in hypothetical reasoning.

The world in which we live is inherently uncertain and quantifiable probabilities are the exception rather than the rule. To every statement about it is attached a ‘weight of argument’ that makes it impossible to reduce our beliefs and expectations to a one-dimensional stochastic probability distribution. If “God does not play dice” as Einstein maintained, I would add “nor do people.” The world as we know it has limited scope for certainty and perfect knowledge. Its intrinsic and almost unlimited complexity and the interrelatedness of its organic parts prevent the possibility of treating it as constituted by ‘legal atoms’ with discretely distinct, separable and stable causal relations. Our knowledge accordingly has to be of a rather fallible kind.

If the real world is fuzzy, vague and indeterminate, then why should our models build upon a desire to describe it as precise and predictable? Even if there always has to be a trade-off between theory-internal validity and external validity, we have to ask ourselves if our models are relevant.

‘Human logic’ has to supplant the classical — formal — logic of deductivism if we want to have anything of interest to say of the real world we inhabit. Logic is a marvellous tool in mathematics and axiomatic-deductivist systems, but a poor guide for action in real-world systems, in which concepts and entities are without clear boundaries and continually interact and overlap. In this world, I would say we are better served with a methodology that takes into account that the more we know, the more we know we do not know.

Mathematics and logic cannot establish the truth value of facts. Never has. Never will.

  1. Ikonoclast
    July 12, 2021 at 12:46 am

    1. Systems.

    What we are talking about, of course, is complex, interrelated systems of sub-systems, sub-systems of sub-systems and so on, down to iteration n where n is a large number. There is an old joke about the mythemic turtle which supposedly held up the world. When asked what the turtle stood on, the myth-maker replied. “It’s turtles all the way down.”

    In like manner, the objective reality, known as the cosmos to cosmological science is best modeled by humans as “Systems all the way down”. And all the way up, as humans exist at a meso level roughly mid-way in logarithmic distance from the smallest known phenomenon and the largest. Note, I say objective reality is “best modeled as”. I do NOT say reality IS systems. To say that would be to commit the essentialist fallacy as outlined (and proscribed as it were) in Lars Syll’s previous post.

    Systems are open and interrelated as Lars points out. We need to look at the thermodynamic definitions of systems (which definitions are meaningfully backed up by a lot of empirical evidence). There are;

    (a) Open systems;
    (b) Closed systems, and
    (c) Isolated systems (this last is theoretical).

    In brief, in thermodynamics;

    (1) An open system permits the transfer of matter and energy in and out of the system.
    (2) A closed systems permits the transfer of energy in and out of the system but not energy.
    (3) An isolated system permits neither the transfer of energy or matter in and out of the system.

    Strictly speaking, the only known likely isolated system is the entire cosmos itself. Gravitational waves can transmit energy (according to most scientists) through the cosmos so, this being true, no system in the cosmos is isolated; again strictly speaking.

    Certainly, the earth is an open system. Mass and energy can come in and go out. Certainly, everything on and in the earth is an open system. This includes humans and their economies. Modelling the economy as a closed system, even just in some senses, in an absurdity. It has led to the madness of capitalism’s essentially endless growth theory.

    2. Prescription and Description.

    The real problem with conventional economics to my mind is that it confuses prescription and description. It prescribes rules (like the rules for property, the rules for money-finance and the rules for markets and trade) and then claims to deduce “laws” from these rules. Of course, the word “laws” is ambiguous. It can mean mere human laws (generated by legislation, regulation, custom) or it can mean fundamental laws of objective reality as discovered thus far by hard science to high degrees of reliability (usually sigma-5) but not absolute certainty. Human laws we should term rules. Fundamental laws we should term Laws (capitalized to indicate their much more fundamental and objective nature and that they cannot be changed by humans).

    We need to remember that rules are axioms for formal systems. These axioms produce theorem-type outcomes. A theorem is a non-self-evident statement that has been proven to be true, on the basis of working from generally accepted statements such as axioms. It is a theorem of the rules of chess that a piece in the middle of the board, all other things being equal, “commands” (can move to next move) more squares than a piece on the side of the board. This is only a theorem, not a Law. We could change the rules of chess and create “wrap-around chess” where the edge of the board does not limit progress. A piece encountering the edge could wrap around to the newly available contiguous square, as if the board was a sphere not a flat plane. We could also make wrap-around chess by expressly and psychically making the “board” a physical sphere. In the first case, we more change the rules of chess, in the second case we more change the parameters of chess, though this is blurry logically speaking and parameters are rather just a sub-set of rules. Changing rules or parameters (both “things” under human control when constructing a formal system) changes the game. The game has not Laws (capitalized to indicate fundamental Laws unchangeable by humans) but rules.

    In the same manner, formal economics has rules not Laws. However, we have to add a caveat to that because there is both a formal economy and a real economy. There are also real people who can variously, according to their power of action in society and in the real world, make rules, take rules and break rules. The formal economy is, as expressed above, generated by legislation, regulation and custom according to how people make rules, bend rules, manipulate rules, break rules and so on.

    Ontologically speaking, economic activity, like all human combined social and natural activity, involves the confluence and collision of human rules with natural fundamental Laws. Human rules may be operational or non-operational in the collision with natural fundamental Laws. In a time sense they also be operational for a while but tending to an asymptotein the long term where they become non-operational.

    Let me explain these two assertions. An example of a human rule which is operational by humans is the death penalty for a capital crime. Whether it is a wise or just rule is another and ethical issue. It is possible for human(s) to kill other humans. Now, forgive the following reasoning to extremes (a kind of reductio ad absurdum) but it does validly demonstrate my point. Ethical concerns about execution of innocents for capital crime could be attempted to be met by creating another rule. Persons proved posthumously to have been executed unjustly must be resurrected by (again) humans. This is a clear and absurd example of a non-operational rule. Humans can clearly make non-operational rules (non-operational in the real world) which go beyond merely unenforceable rules.

    Humans can also make rules which are operational for a while, maybe even for a long time, but eventually approach an asymptote where they become non-operational. A clear example is the formal rule set (in capitalism) for endless “wealth” growth where wealth is represented by the numéraire which must be backed by real good and services for exchange or else the numéraire becomes meaningless, worthless and non-functional. Open-ended and essentially endless real growth is predicated by the endless creation of (formal) debt which “must” be re-payed according to the rules of the system. But we know endless growth is impossible in a finite system. The earth though an open system is still a finite system.

    In terms of ontology, I argue that economics first must be system based, real system based. Then it must confront the issue of the interaction of (humanly created) formal systems as rules systems (and their supporting formal systems, algorithms and calculations as equivalnces, inequivlances and identities). From that point it must confront the collision of these formal economics prescriptions with ethics (not covered in this post) and with real systems including human beings as real systems: a person’s physiology and somatic neurology, are both real systems. I argue for an ontology of the formal and the real and for understanding how the formal and the real interact. To sum up here, the (human) formal and the objective real interact by human agency, by real humans making, taking and breaking rules.

    To put it simply, don’t make human rules which are unethical and/or which attempt to or will immediately or eventually break real fundamental natural Laws. Using the ontological approach I recommend, we can demystify ideological prescriptions like those for capitalist property ownership and its potentially endless acquisition by some lucky, clever, adroit, manipulative or cruel people (any combination thereof). All the prescriptions of conventional economics are just rules, prescriptions by fallible humans acting as rule makers and rule enforcers, directly or by proxies. There is nothing mystical or preordained or even “natural” about the rules of capitalism. We made them up. Now they are destroying us and the biosphere. We need to change the rules. The real system is telling us that. It’s as simple and as complex as that: complex because as Asad Zaman says it is very hard to change minds ideologically indoctrinated and implicitly believing rules and their theorems are objectively real and believing so in an unexamined fashion for all of adult life to date.

    • macademicb
      July 19, 2021 at 7:14 pm

      An ontology for Economics ?
      Ikonoclast –
      Could I respectfully ask you to refer to my Comment, addressed to yourself and Lars Syll and located at the end of this series of blogs ( dated 16th. July ) ?
      This basically proposes that, in response to Lars Syll’s ‘original sin in mainstream economics’ blog and your reaction to it, an ecological analysis of the basic concepts of Economics, underpinned by a parallel, ecological analysis of Homo sapiens’ supposed ability to ‘conceptualise’ life ( that I plan to publish in early autumn ), might effectively constitute an ‘ontology for Economics’ and as such, might prove to be a more fruitful, analytical location, in which to find this ‘original sin’.
      I’d be extremely interested to hear your thoughts on the proposition.

  2. pfeffertag
    July 12, 2021 at 8:02 am

    “As used in science… You take the whole and break it down (decompose) into its separate parts. Looking at the parts separately one at a time you are supposed to gain a better understanding of how these parts operate and work.”

    Is that really science usage? Is there any evidence? I don’t think science ever “breaks down the whole” or that science ever “looks at the parts separately.” These claims just look to me like anti-science rhetoric.

    In economics such things may or may not be used (economics has been stagnant for 50 years so one can probably find evidence for any claim) but they aren’t used in science.

    “economists succumb to … the belief that the whole is nothing but the sum of its parts.”
    Maybe some economists do. But scientists don’t. As far as I know, “nothing but the sum of” applies nowhere to science. If there are cases where it does, I’d be pleased to know of them.

    If I am right then inasmuch as the rest of the post follows from these introductory claims it will be incorrect.

  3. July 12, 2021 at 2:59 pm

    Both Lars and Ikonoclast rabbit on at length about models and rule apparently without seeing that in one short sentence Quine had already said more than they have. A Word is a symbolic model of a reality and languages are man-made systems in which the evolving rules of logic model the Law that one must define words before using them. I tell again the story of the Algol68-R memory system, pre-defined so that if any part was recalled before data had been stored in it one retrieved the word FOOL!

    Pfeffertag seems to have forgotten how Francis Bacon started modern science with a problem of unemployment, and how his doctor discovered circulation of the blood by taking bodies to bits. What most people unwittingly take for science is David Hume’s half-baked model of Newton’s taking space to bits (to model observed motion), and I don’t suppose Pfeffertag is aware of the continuing mathematical controversy over this basis of “the calculus” as the sum of its parts. Probably, like most people, he doesn’t count as science Faraday’s study of electricity and magnetism that can’t be seen, and Shannon’s study of computations and communications that go wrong: starting from their accidental modelling by visible circuits on the one hand and by telephone circuits performing logic on the other. What does he think a computer program is but an attempt to translate a paper model of a whole into a working model, using parts representing pre-defined arrangements of electric switching circuits?

  4. July 13, 2021 at 1:24 am

    What we are talking about is a dead horse. Stop flogging it and go and do something useful.

  5. Sebastian
    July 13, 2021 at 10:24 am

    »If we want to develop new and better economics we have to give up on the single-minded insistence on using a deductivist straitjacket methodology and the ‘analytical’ method. […]
    Models may help us think through problems. But we should never forget that the formalism we use in our models is not self-evidently transportable to a largely unknown and uncertain reality. The tragedy with mainstream economic theory is that it thinks that the logic and mathematics used are sufficient for dealing with our real-world problems.«

    Dear Lars! I have great sympathy for what you write. However, it seems very important to me to keep in mind that there is also a heterodox modelling culture in economics that has deductivist traits. Lawson criticises this very clearly e.g. with respect to Post-Keynesianism (2018, Beyond Deductivism). In any case, it seems to me that with respect to Lawson’s critique of deductivism, a critical and serious engagement with this (deductivist) heterodox modelling culture (post-Keynesianism, complexity economics, evolutionary economics, etc.) is missing. Closely related to this is the question of the status of non-formal approaches in economics, which do exist, but which, in my opinion, also suffer a shadow existence in the scene of plural economics.

    • July 13, 2021 at 2:16 pm

      I can’t but agree, Sebastian. There are many heterodox economists that share the deductivist inclination of the mainstream and who are not particularly happy with Lawson’s critique of it. There are among Post-Keynesian economists — of whom I am most familiar with in the heterodox ‘family’ — not so few that are convinced that using the mathematical-deductivist methodology is the best way forward for building a better, more realist and relevant economic theory. I do not share that view.

  6. Ikonoclast
    July 14, 2021 at 4:54 am

    Well, here we have all ended in bitter division. The theorists here also post their theories from positions of assumed authority and never deign to reply. There is only power and we who write here have none. CasP (Capital as Power) is right. And our exploiters laugh at us for the weak, disunited fools we are.

    • Meta Capitalism
      July 14, 2021 at 7:49 am

      And our exploiters laugh at us for the weak, disunited fools we are. ~ Ikon

      Bitter division? Assumed positions? Our exploiters laugh at us! I needed a good laugh today. Thanks Ikon, for hyperbolicly providing one -:)

      • Ikonoclast
        July 14, 2021 at 10:15 am

        Glad to be of amusement, m8. :) There are few amusing things about mankind’s current predicament. But sadly I am going to have to deprive you of further amusement. Signing off.

      • Meta Capitalism
        July 14, 2021 at 12:06 pm

        The true fool reduced human pomposity back to human humility. When one sixteenth-century jester saw a prissy French ambassador kiss the pope’s feet, he exclaimed: “Merciful heavens! If a representative of the King of France kisses his Holiness’s foot, what part of the pope will a fellow like me have to kiss?” ( https://a.co/ikjy4LU )

        There are few amusing things about mankind’s current predicament. ~ Ikon

        The world seems to be going crazy and nations are in crisis, and America may not be a democracy much longer. But that is no reason not to have a good laugh now and then and learn to take onself less seriously. Inequality’s the matter! Global warming’s the matter! Rising autocracy’s the matter! But I have an appointment with a guiness and will leave the perpendiculars to Ikon perpendiculars rather roar like an allegory on the banks of the Nile (https://a.co/jka4BCB).

        Ok, I cheated. My half-wit (https://a.co/73bTe9n) attempt is meant to make the point that if we take ourselves less seriously and learn to laugh out ourselves we gain a degree on insight that angst hides from our eyes.

        Ikon, I was laughing at myself as much as I was laughing at you. It is a terrible burden to see things others don’t but doubly so if we take ourselves to seriously. You are preaching to a rather small choir (this blog and a few regular commentors). We are all on the same boat and equally helpless to ultimately stop it from sliding over the waterfall. So might as well catch some butterflys along the way and enjoy a few pints.
        .
        Whatever your favorite brew, change the recipie as needed:

        When we are tempted to magnify our self-importance, if we stop to contemplate the infinity of the greatness and grandeur of our Makers, our own self-glorification becomes sublimely ridiculous, even verging on the humorous. One of the functions of humor is to help all of us take ourselves less seriously. Humor is the divine antidote for exaltation of ego. ( https://a.co/eMP4GIY )
        .
        When we are tempted to magnify our self-importance, if we stop to contemplate the infinity of the greatness and grandeur of our Makers, our own self-glorification becomes sublimely ridiculous, even verging on the humorous. One of the functions of humor is to help all of us take ourselves less seriously. Humor is the divine antidote for exaltation of ego. ( https://a.co/eMP4GIY )

      • Meta Capitalism
        July 14, 2021 at 12:14 pm

        The true fool reduced human pomposity back to human humility. When one sixteenth-century jester saw a prissy French ambassador kiss the pope’s feet, he exclaimed: “Merciful heavens! If a representative of the King of France kisses his Holiness’s foot, what part of the pope will a fellow like me have to kiss?” ( https://a.co/ikjy4LU )
        .
        There are few amusing things about mankind’s current predicament. ~ Ikon

        .
        The world seems to be going crazy and nations are in crisis, and America may not be a democracy much longer. But that is no reason not to have a good laugh now and then and learn to take onself less seriously. Inequality’s the matter! Global warming’s the matter! Rising autocracy’s the matter! But I have an appointment with a guiness and will leave the perpendiculars to Ikon rather roar like an allegory on the banks of the Nile (https://a.co/jka4BCB).
        .
        Ok, I cheated. My half-wit (https://a.co/73bTe9n) attempt is meant to make the point that if we take ourselves less seriously and learn to laugh out ourselves we gain a degree on insight that angst hides from our eyes.
        .
        Ikon, I was laughing at myself as much as I was laughing at you. It is a terrible burden to see things others don’t but doubly so if we take ourselves to seriously. You are preaching to a rather small choir (this blog and a few regular commentors).
        .
        We are all on the same boat and equally helpless to ultimately stop it from sliding over the waterfall. So might as well catch some butterflys along the way and enjoy a few pints.
        .
        Whatever your favorite brew, change the recipie as needed:
        .

        When we are tempted to magnify our self-importance, if we stop to contemplate the infinity of the greatness and grandeur of our Makers, our own self-glorification becomes sublimely ridiculous, even verging on the humorous. One of the functions of humor is to help all of us take ourselves less seriously. Humor is the divine antidote for exaltation of ego. ( https://a.co/eMP4GIY )
        .
        Humor should function as an automatic safety valve to prevent the building up of excessive pressures due to the monotony of sustained and serious self-contemplation in association with the intense struggle for developmental progress and noble achievement. Humor also functions to lessen the shock of the unexpected impact of fact or of truth, rigid unyielding fact and flexible ever-living truth. The mortal personality, never sure as to which will next be encountered, through humor swiftly grasps—sees the point and achieves insight—the unexpected nature of the situation be it fact or be it truth. ( https://a.co/8bSYZZi )

      • Meta Capitalism
        July 14, 2021 at 11:42 pm

        The last quote should have been:

        Humor should function as an automatic safety valve to prevent the building up of excessive pressures due to the monotony of sustained and serious self-contemplation in association with the intense struggle for developmental progress and noble achievement. Humor also functions to lessen the shock of the unexpected impact of fact or of truth, rigid unyielding fact and flexible ever-living truth. The mortal personality, never sure as to which will next be encountered, through humor swiftly grasps—sees the point and achieves insight—the unexpected nature of the situation be it fact or be it truth. ( https://a.co/8bSYZZi )

      • July 24, 2021 at 7:31 am

        “Humor should function as an automatic safety valve …”.

        Which is why you should be reading G K Chesterton, a pressure cooker whose safety valve is indeed humour.

      • Meta Capitalism
        July 24, 2021 at 9:40 am

        Thanks Dave. Will read some Chesterton.

  7. Ken Zimmerman
    July 14, 2021 at 8:51 am

    Considering the two  stock  images  of science can help us deal with these images.  One  derives  from  a  common-sense  view:  scientific  knowledge  is  true  knowledge  of how  the  world  is.  On  this  view,  science  is  not  just  robust;  it  is  as  solid  as  a  rock,  given  by  the world  itself.  Importantly,  it  is  absolutely  other  to  its  producers  and  users. We  humans  do  not have  any  choice  in  the  matter:  the  acceleration  due  to  gravity  just  is  32  feet per  second squared.  The  other  stock  image  of  science  is  the  inverse  of  this.  This  is  the  idea  of  science  as a  ‘mere  social  construction’—something  put  together  by  human  beings  to  suit  their  interests or  to  fit  in  with  their  social  structure  or  whatever.  Here  science  appears,  not  as  rock-solid,  but as  extremely  soggy,  as  if  any  form  of  knowledge  can  be  projected  onto  an  indifferent  and unresisting  world.  As  Barry  Barnes  (1994)  remarks,  the  world  doesn’t  care  what  we  say  about it, so  we  can  say  whatever  we  like. On this  view, the  otherness  of  science  vanishes. All of  the responsibility  for  specific  knowledge  claims  rests  on  its  human  producers,  and  none  on  the world  itself.

    The  tension  set  up  by  these  two  mirror-images  of  science  creates  the  need  for  a  concept  like robustness.  It  is  very  difficult  to  put  all  the  weight  on  the  world  in  accounting  for  scientific beliefs.  Empirical  studies  seem  to  point  relentlessly  to  the  conclusion  that  science  really  is  a social  construction.  The  only  question  that  is  left  is  whether  it’s  merely  a  social construction (Pickering  1990).  And  I  take  it  that  speaking  of  robustness  is,  then,  a  way  of  trying  to articulate  a  sense  in  which  the  ‘mere’  disappears,  of  trying  to  get  at  the  idea  that  the  world really  can  take  some  of  the  credit  for  scientific  beliefs,  even  while  acknowledging  that  they are  socially  constructed.

    This moves us to focus on the practices of scientists. On their performances.  If  there  is  a  certain  nonhuman  toughness  about  scientific  knowledge,  it is  grounded  in  performative  (not cognitive)  relations  with  the  material world. Just  how  do  scientists  intersect  with  the  material  world?  Very  often  not  directly  with  their objects  of  study;  much  more  often  with  machines, instruments, algorithms, and models that  generate  data  for downstream  processing.  So  what  do  these  interactions look like?   Pickering argues that it takes  the  form  of  a  dance  of  agency  between  the  human  and the  nonhuman. In  their  research, scientists  seem  to  oscillate  between  bursts  of  what Ludwik Fleck  (1979)  called  phases  of  activity  and  passivity. In  the  active  phase, scientists  are  genuine agents,  setting  up  their  apparatus  this  way  or  that.  In  the  passive  phase,  they  stand  back  and see  what  happens.  And  we  can  symmetrize  the  picture  by  saying  that  in  the  phase  of  human passivity  nature  is  itself  active,  a  genuine  agent,  doing  whatever  it  will,  quite  independently  of human  goals  and  desires.  And  then  the  human  agents  resume  the  active  role,  reconfiguring their  apparatus  in  the  light of  what they  have  just  found  out  about  how  it  performs.  And  then they  stand  back  again  and  nature  resumes  the  active  role, and  so  on, back  and  forth—this  is what  Pickering calls  the  dance  of  agency.  Over  the  course  of  many  iterations  of  this  back  and  forth  process,  material  form  and  the material  performance emerge. No economists of which I am aware have either the patience or integrity for this science.

    For example, corporations may not care about what we say about them but they directly and indirectly effect the lives of multimillions of people on earth along with most other institutions created by humans. In this way they are as solid and ‘real’ as the moon or the atom. All emerging from the same empirical process. The same dance.

  8. Gerald Holtham
    July 14, 2021 at 11:03 am

    The biggest problem, it seems to me, is not the tools that economists use but the failure to start from real, concrete questions and issues in the real world. Someone builds a model of a real situation. It may be useful or not but if it is ingenious it gets published. People then play tunes on the model; they seek to “generalise” it in various ways. We embark on a process of theoretical development for its own sake, increasingly divorced from the original problem and all too often from any real application at all. The usual destination is then sterility.
    I have seen mathematical queuing theory fruitfully applied in the study of development aid and mathematical game theory successfully applied in auction design. The secret of success was that the axioms of the model were ad hoc – designed for a real, specific situation that was successfully analysed.
    An example of the opposite process is Dornbusch’s application of rational expectations theory to exchange rates. It was a neat, ingenious model and helped to create a fashion that made it obligatory to specify rational . i.e. model-consistent, expectations in every application. Few seemed to notice that the Dornbusch model implied exchange rates would move in a saw-tooth pattern of sudden abrupt moves and gradual reversions while in fact exchange rates tend to follow a more symmetrical cyclical pattern of ups and downs. The reason is Dornbusch assumed similar agents with similar information sets. In practice we have diverse agents with diverse information sets generating endogenous as well as exogenous uncertainty. By ignoring reality and concentrating on development of “the theory” macroeconomcs went mad and led to the sterility that pfeffertag notes.
    Deductive logic is a necessary part of the tool kit and so is mathematical modelling but you have to tailor your starting assumptions to a specific situation and keep your eye on the real world. You also have to accept empirical refutation when it smacks you in the face.
    .

    • Meta Capitalism
      July 14, 2021 at 11:43 pm

      That Gerald is a keeper.

  9. Ken Zimmerman
    July 15, 2021 at 4:18 am

    Deductivism is definitely not the original sin in mainstream economics. That sin is having no clue as to how to be a scientist or how to do science. And having no curiosity about what science is.

    As to present societies, history shows societies crumble continually but others arise to replace those that are or will soon crumble. Many humans die but thus far the species has survived.

    • July 15, 2021 at 8:39 am

      Yes Ken, for a genuine scientist is honest and economists are not. That is the problem of communication which Shannon’s mathematical information science so fruitfully resolved, part of its solution being to show one cannot say more about reality than the carrying capacity of the symbols available. “One cannot fit a quart into a pint pot”, indeed, but Fullbrook’s book on Value concludes that if one measures a quart pot with a pint pot one can share it equally. Polyani realised that the economist’s Land and Labour are fictitious commodities, but even more so is Money. That anyway is what my “Complex Truth and Honest Money” is all about, showing how far you can get starting with the little that was true initially and is still true now.

      • Ken Zimmerman
        July 16, 2021 at 12:11 pm

        Dave, if you mean by honest that the social scientist accepts that they are not completely in charge of setting up the research situation, identifying the research results, or writing up the research results then I agree. All research is a partnership, a dialog between scientist/historian, and the agents they study. And to be successful the researcher can never be wholly in charge of the process. Otherwise the research fails.

      • July 16, 2021 at 9:14 pm

        Ken, your characterisation of honesty is not what is normally meant by the term, i.e. not what I meant. The problem Shannon addressed was that war-time communications were deliberately encoded to hide their meaning, or to deliberately mislead. I had in mind a non-genuine psychologist, Burt, who was found to have cooked the evidence to justify his conclusions. Mainstream economists are likewise dishonest, pretending their aim is social welfare knowing full well it is to enrich the rich. Your answer here suggests I have just found not another scientist but an anthropological polemicist trying to take his reader’s eye off serious argument.

        As I wrote earlier, Ken, it seems to me you are in the wrong blog.

      • Ken Zimmerman
        July 17, 2021 at 2:01 am

        Dave, to be honest I believe you’re on the wrong blog. In my view, research success is based on listening to and working to understand the research subject. Pretending to do that literally sabotages the research. How much more hostile to telling the story of the research subject can a researcher be? Many economists are clearly hostile researchers. Research is not then about methods, algorithms, models, or ontology but rather communication and learning in the most basic sense.

      • July 17, 2021 at 2:46 pm

        Ken, you say “research success is based on listening to and working to understand the research subject”.

        So why are you not doing that?

        Concluding the introduction to his ground-breaking book “Cybernetics”, Norbert Wiener says “We do not even have the choice of suppressing these new technical developments. They belong to the age, and the most any of us can do by suppression is to put the development of the subject into the hands of the most irresponsible and most venal of our engineers [i.e. society’s financiers]. The best we can do is to see that a large public understands the trend and the bearing of the present work, and to confine our personal efforts to those fields, such as physiology and psychology, most remote from war and exploitation efforts. As we have seen, there are those who hope that the good of a better understanding of man and society which is offered by this new field of work may anticipate and outweigh the incidental contribution we are making to the concentration of power (which as always concentrated, by its very conditions of existence, in the hands of the most unscrupulous). I write in 1947 [having ruled out morality and interpreted Shannon in terms of his aside about entropic energy rather than his aims of error avoidance and correction: i.e. moral understanding and reliable computing], and I am compelled to say it is a very slight hope”.

        So I mention Shannon and you change the subject? Huh!

      • Ken Zimmerman
        July 18, 2021 at 8:04 am

        Dave this seems more like advertising or maybe propaganda than communcation and learning.

  10. Hepion
    July 15, 2021 at 8:03 am

    Problem is not that economics use deduction – problem is that it uses unsound or unrealistic deduction. And not by a chance! It’s not that they are incompetent; faulty reasoning is used for political purposes. I don’t know any other branch of science that have been as badly corrupted by politics as economics. Its all about reverse robin hoodism, taking from the poor and giving to the rich. Basically, its the politics of far-right.

  11. macademicb
    July 16, 2021 at 10:49 am

    Lars Syll :

    With regard to your endeavours to identify ‘the original sin in mainstream economics’ and also, viz. your quoting Quine’s mention of ‘the word‘ ; may I refer you to the ‘ ecological analysis of Economics’ basic concepts’, presented in my first book : ‘Ecology into Economics won’t go’ ; or, ‘Life is not a concept ‘ ( Green Books, Devon; (1990, re-printed 1998) ; to be re-published, late 2021). Specifically, chapters : ‘Cohesion – the essence of ecological existence’ (p.10-13) ; ‘The Fall, Original Sin …’ and ‘The attempt to enumerate existence (p.41, 42) ; ‘No ecologically meaningful basis for ownership’ (p.47-66) ; ‘Intuitive and conceptualised demand (p. 119-126) and ‘Our assumption of separability’ (p.161-163) ; etc..

    In the intervening thirty-one years since publication, this embryonic, ecological analysis of Economics’ conceptual framework, contained within ‘Ecology into Economics won’t go’ ; or, ‘Life is not a concept ‘, has evolved into a thesis entitled ‘ The ecology of Economics … ‘, such that it might now be considered to constitute an ontological analysis of Economics.

    Fortunately, this long-term substantiation of thought and development of analysis has only served to reinforce the conviction, that Economics’ ‘original sin’ is located in the very manner in which we ‘see’ and attempt to ‘conceptualise’ the world ; rather than subsequently, in how we process what is already, ostensibly ‘conceptualised’.

    Ikonoclast :

    In discussing ‘open’, ‘closed’ and theoretically ‘isolated’ systems, above, you rightly say that, thanks to the occurrence of ‘gravitational waves’, ‘no system in the cosmos is ‘isolated’. You subsequently say : “ Certainly, the earth is an open system. Mass and energy can come in and go out. Certainly, everything on and in the earth is an open system. This includes humans and their economies. Modelling the economy as a closed system, even just in some senses, is an absurdity. It has lead to the madness of capitalism’s essentially endless growth theory ”
    .
    This series of statements totally concurs with the revelations afforded by ‘the ecological analysis of Economics basic concepts’, now presented in the thesis : ‘The ecology of Economics … ‘, which recognises that the attemptedly ‘conceptualised’ “modelling of the economy as a closed system” assumes the ‘separability’ of what is ultimately, an ecologically cohesive, sustainable Earth and cosmos. Herein lies the ‘absurdity’ you observe, of Homo sapiens’ / Homo economicus’ attemptedly ‘conceptualised’ project ; not to mention its ‘unsustainability’.

    The same, basic ‘absurdity’, or ecological ‘impossibility’ underpins the difference that you recognise, between attemptedly ‘conceptualised’, human, formal ‘rules’ ( for example and in particular, the ‘rules’ of property ), as opposed to real Laws ( i.e. ecology’s / Nature’s Laws ).

    You later assert : “ In terms of ontology, … economics must be … real system based. Then it must confront the issue of the interaction of (humanly created), formal systems, as ‘rules’ systems … . From that point it must confront the collision of these formal, economics’ prescriptions, with … real systems, including human beings as real systems : a person’s physiology and somatic neurology, are both real systems. I argue for an ontology of the formal and the real and for … how the formal and the real interact “.

    Again, this series of statements fundamentally and accurately concurs with the analytical journey, undertaken in the thesis.

    You recommend, not to : “make human ‘rules’, which … attempt to … break real, fundamental, natural Laws. Using the ontological approach I recommend, we can demystify ideological prescriptions, like those for capitalist property ownership and its potentially endless acquisition ……. ”.

    Hosanna !! to all that ; and I can confirm that the thesis does indeed achieve the demystification of ideological prescriptions ( in particular, that of property ownership ), that you seek.

    Finally, you note that : “We make up” ( i.e. we attemptedly ‘conceptualise’ ) “the ‘rules’ of capitalism. Now they are destroying us and the biosphere” ; and then you advocate that : “We need to change the ‘rules’. The real system is telling us that”.

    In response, I can say that the advocacy coming out of ‘the ecological analysis of Economics’ basic concepts’ and presented in ‘The ecology of Economics … ‘, is that we begin a process of leaving these ‘rules’ ( attemptedly ‘conceptualised’, economic imperatives ) behind and instead, become an intuitively-informed, residually ‘conceptualising’ manifestation of the real world’s Laws of sustainability, that emanate from ecology’s cohesion, of which we are part.

    Looking forward to further exchanges later in the year, when, all being well, ‘The Ecology of Economics … ’ is published.

    A basic website, proto-entitled ‘Ecohesion- a forum for the ecological analysis of Economics’ will shortly be available.

  12. Craig
    July 18, 2021 at 7:27 am

    The whole problem on this blog is its obsessive fixation on economic theory….when the real problem is the monopolistic monetary and financial paradigm that alternately gooses and strangles the economy. Change that from Debt Only to Direct and Reciprocal Monetary Gifting and as I have pointed out a hundred times here the economy’s deepest and most thorny problems will resolve, and we will also be able to make giant strides toward surviving climate change to boot. Carry on.

    • Ken Zimmerman
      July 18, 2021 at 9:05 am

      Craig, it’s more than obsessive. I’d call it tunnel vision.

      • Craig
        July 19, 2021 at 6:35 am

        Yes, but tunnel vision can be a virtue called focus if its onto correct analysis, or a vice if its just obsessive dedication to a palliative or wrong pursuit.

      • Ken Zimmerman
        July 19, 2021 at 7:08 am

        Tunnel vision is never a vitue. You’re trapped in a tunnel with no way out except digging an escape.

      • Craig
        July 20, 2021 at 9:48 pm

        That would be true if all I did was critique everyone else here. In fact I affirm and applaud all of the critiques of neo-classical economics that Keen, Hudson Lars etc. have posted about….ad nauseum. My only critique is their failure to exit their own tunnel vision, namely mere piecemeal theoretics and begin to analyze on the level of the paradigm/entire pattern.

        Switching mindsets is elusive and difficult, I understand, but eventually you have to do so, like now where survival is at stake and REQUIRES what paradigm changes bring to us, that is BOTH conceptual AND temporal universe change. Perceiving and understanding the historical signatures of imminent and accomplished paradigm changes which I have often listed here can assist in that effort.

        I will say that I’m surprised that brilliant guys like Keen have not consciously recognized the new paradigm concept. He talks about how neo-classical economists ignore or refuse to acknowledge money, and says (direct quote) “Because if they did recognize the relevance of the money system they would be forced to acknowledge that it de-stabilizes the economy.” Keen also says we need a new paradigm, he just doesn’t know the specific new concept and its aligned policies that will accomplish it.

      • Ken Zimmerman
        July 21, 2021 at 10:07 am

        All very good, Craig. But it’s not one version of economics or another to which I object and recommend be terminated. It is all the work of economists who do not or will not examine economic arrangements in their historical, cultural,, and physical contexts toward which I make these recommendations. Outside these contexts economic arrangements make no sense no matter the theories, techniques, or algorithms aimed at them. Anymore than planets, stars, or starfish make sense without chemistry, physics, and the other foci of ‘scientists. ‘

      • Craig
        July 22, 2021 at 1:47 am

        Agreed. The integrative mental process and ethic is always the strongest.

  13. Gerald Holtham
    July 23, 2021 at 4:14 pm

    When analysing or dealing with an actual situation or problem any competent economist or analyst tries to take account of all the important factors bearing on it and does not suppose that a simple model is sufficient – just as no engineer can build a bridge knowing only Newton’s laws. She has to know about stresses and strains in materials used for construction and take account of other factors whose effects are hard to quantify. That does not mean the abstractions of Newton’s equations are not useful in forming an understanding of the overall picture. This discussion has not always distinguished the role of the theorist from the role of the practitioner. Theory rapidly becomes sterile if divorced from practice but it necessarily involves some abstraction from concrete circumstances. Ken Zimmerman’s position seems to be that theory is impossible or is always useless when applied to social phenomena. That strikes me as defeatist.
    People have remarked that economics is heavily infected by ideology and often used to serve political purposes. That is undeniable. To go from there to assert that all mainstream economists are dishonest and consciously serving the rich, as Dave Taylor does, is to resort to infantile slander. Not everyone we disagree with is a crook, although the totalitarian mindset does see things that way.

    • Craig
      July 23, 2021 at 6:29 pm

      Theory is useful, but it is at least one epistemological and temporally effecting level below paradigmatic analysis. You want to dabble…theorize. You want to change an entire pattern for the better…correctly perceive actually new paradigms that actually resolve the present paradigm’s problems.

    • July 24, 2021 at 6:49 am

      I accept Gerald’s rebuke that what I said above was not literally true, but it was not intended to be, and nor I hope is what Gerald says of me. Mine was a challenge which G K Chesterton justified by likening it to a nagging wife, of whom he ruefully said “Love is not blind: that’s the last thing it is”. Why mainstream economists tend to be is more diplomatically dealt with in Thomas D Harris’s book of Freudian psycho-analysis, “I’m Okay, You’re Okay”, which lays the blame on father figures rather than husbands.

    • Ken Zimmerman
      July 25, 2021 at 7:48 am

      Gerald, et al, sort of near to the situation.

      As to the role of Anthropology in scientific research, I quote Gillian Tett from her new book, ‘Anthro-Vision:  A New Way  to  See  in  Business  and  Life.’ Tett (PhD anthropology Cambridge University) is chair of the editorial board and editor-at-large for The Financial Times. “…[T]he ideas emanating from  a discipline  that  many  people  think  (wrongly)  studies  only  the “exotic”  are  vital  for  the  modern  world.  The  reason  is  that anthropology  is  an  intellectual  framework  that  enables  you  to  see around  corners,  spot  what  is  hidden  in  plain  sight,  and  gain empathy  for  others  and  fresh  insight  on  problems.  This framework is needed more than ever now as  we  grapple  with climate  change,  pandemics,  racism,  social  media  run  amok, artificial  intelligence,  financial  turmoil,  and  political  conflict.  I know this  from  my  own  career:  As  this  book  explains,  since  I left Tajikistan,  I  have  worked  as  a  journalist  and  used  my anthropology  training  to  foresee  and  understand  the  2008 financial  crisis,  the  rise  of  Donald  Trump,  the  2020  pandemic, the  surge  in  sustainable  investing,  and  the  digital  economy.  But this book  also  explains  how  anthropology  is  (and  has  been) valuable  for  business  executives,  investors,  policymakers, economists,  techies,  financiers,  doctors,  lawyers,  and  accountants (yes,  really).  These ideas are  as  useful  in  making  sense  of  an Amazon  warehouse  as  in  an  Amazon  jungle. (https://www.sapiens.org/wpcontent/uploads/2021/07/02_Tett-bookcover.jpeg) Avid  Reader  Press,  an  Imprint  of  Simon  & Schuster

      Why?  Many  of  the  tools  we  have  been  using  to  navigate  the  world  are simply  not  working  well.  In  recent  years,  we  have  seen  economic forecasts  misfire,  political  polls  turn  out  to  be  wrong,  financial  models fail,  tech  innovations  turn  dangerous,  and  consumer  surveys  mislead. These  problems  have  not  arisen  because  those  tools  are  wrong  or useless.  They  are  not.  The  problem  is  such  tools  are  incomplete;  they  are used  without  an  awareness  of  culture  and  context,  created  with  a  sense of  tunnel  vision,  and  built  assuming  that  the  world  can  be  neatly bounded  or  captured  by  a  single  set  of  parameters.  This  might  work well  when  the  world  is  so  stable  that  the  past  is  a  good  guide  to  the future.  But  it  does  not  when  we  live  in  a  world  of  flux,  or  what  Western military  experts  describe  as  “ VUCA (https://usawc.libanswers.com/faq/84869),”  short  for  ‘volatility, uncertainty,  complexity,  and  ambiguity.’  Nor  when  we  face  ‘black swans’  (to  cite Nassim  Nicholas Taleb (https://www.penguinrandomhouse.com/books/176226/the-blackswan-second-edition-by-nassim-nicholas-taleb/)), ‘radical  uncertainty’ (as  the  economists Mervyn  King  and  John  Kay (https://wwnorton.com/books/9781324004776) say),  and  an “uncharted”  future  (to  quote Margaret  Heernan (https://www.simonandschuster.co.uk/books/Uncharted/MargaretHeernan/9781471179822)).”

      As to theory it helps to see it for what it is. In the words of American physicist Richard Feynman, a guess. Feynman had a firm faith that these guesses can be vouched but never ultimately confirmed through collection of relevant data. I emphasize the word ‘relevant.’ A judgment each scientist must make based on their situatedness both within the community of scientists and within a larger culture and society. Confirming a theory boils down to comfort. Does the theory give the scientist a sense of ease, of effortlessness in moving about the region of concern the theory attempts to describe? A theory may also inspire a scientist, give some clues toward the vouching mentioned by Feynman (and others), or just provide a sense of accomplishment for a time for the scientist. But it remains always a guess. Are we suggesting we treat it as something else?

  14. Gerald Holtham
    July 23, 2021 at 4:44 pm

    Macademict is clearly a follower of Marshall McLuan in that he identifies the medium with the message. In doing so he adds to general confusion. Ownership may not be an ecological concept but it is a ubiquitous feature of human society. Enumeration is also a ubiquitous feature of economic activity in human society. It is not unreasonable for someone studying human society as it exists to incorporate those phenomena fundamentally. It would have been misleading to do otherwise. It is social organisation that is deficient, not the analyses of how it works. To reveal that its current working is unsustainable required the insights of physical sciences. No school of economics could have known it. Neither Marx ,Marshall or Keynes knew about the greenhouse effect of CO2 emissions. Now we know, thanks to the physicists and meterologists, there is no excuse for not taking full account of the consequences. Economic analysis that fails to do so is culpable.
    Industrialists did not worry about threats of which they were ignorant and they acted accordingly. We do not blame historians for that. They study what happened, not what didn’t.

    • July 24, 2021 at 7:19 am

      Again, I appreciate Gerald’s introducing a fruitful line of inquiry, but it is he who is adding to the general confusion, because McLuhan was not identifying the medium with the message: t more pointing out that the medium we see was itself a message, much as we might say “actions speak louder than words”. The “ubiquitous feature of human society” is its need to POSSESS, which Gerald is confusing with what he can see: legal ownership “operationalised” by its insistence on documentation. What we should blame industrialists for (this including bankers) is not seeing (or anticipating and taking advantage of) the consequences of that.

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