Keynes on mathematical economics

20 August, 2012 at 15:21 | Posted in Economics, Theory of Science & Methodology | 7 Comments

But I am unfamiliar with the methods involved and it may be that my impression that nothing emerges at the end which has not been introduced expressly or tacitly at the beginning is quite wrong … It seems to me essential in an article of this sort to put in the fullest and most explicit manner at the beginning the assumptions which are made and the methods by which the price indexes are derived; and then to state at the end what substantially novel conclusions has been arrived at … I cannot persuade myself that this sort of treatment of economic theory has anything significant to contribute. I suspect it of being nothing better than a contraption proceeding from premises which are not stated with precision to conclusions which have no clear application … [This creates] a mass of symbolism which covers up all kinds of unstated special assumptions.

Keynes to Frisch 28 November 1935

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  1. This looks like the kind of statements that economists should carefully answer before engaging in models construction.
    But if you share Keynes’ view, you must have to ask why did maths and models take such a place in economics.
    My theory is that sophisticated models are taught at higher educational levels not because they deliver a better economic insight, but because they help filtering the more sophisticated students. And it does not stop at students. Sophisticated models are usually the reason why economists receive prizes, including Nobel ones.

    • I agree, but I also think that the dream of constructing a deductive economic science (puportedly) in line with the natural sciences plays a decisive role.

      • Right. See Robert Nadeau, “Neoclassical economic theory” (entry in The Encyclopedia of Earth) for the origins of neoclassicism in 19th c. physics and how these same assumptions pervade it down to the present, underneath the pseudo-scientific formalism.

        Nadeau et all show how neoclassicism was at attempt for formalize the “invisible hand” of Smith, which was based on the Deism of the 18th c. and found expression in Newton’s physics. The basic assumption is that there is a “natural order” in which equilibrium prevails unless disturbed, e.g., by government intervention. This is still the basic assumption. It is normative rather than scientific, and the claims of neoclassical economics to be scientific are based on a misunderstanding of physical models.

        Just as the “Nobel” in economics is bogus, so too is the economics. I am surprised that the committee and the world’s scientists and mathematicians permit this travesty without calling it out for what it is.

  2. For a good paper on John Maynard Keynes’s approach to mathematics in social science, read this article in Synthese by Dr. Michael Emmett Brady.

  3. Well, based on your recommendation a few weeks ago, I am reading Keynes’ “The General Theory etc.”. At chapter 10 right now. No real difficult maths so far. But I’m thinking the man was a terrible writer. Who puts five ideas in a sixty word sentence?

    • I agree, GT is not a pedagogical book.
      But don’t forget what Karl Marx wrote: “Es gibt keine Landstraße für die Wissenschaft, und nur diejenigen haben, Aussicht, ihre lichten Höhen zu erreichen, die die Mühe nicht scheuen, ihre steilen Pfade zu erklimmen.”

      • Thanks for the encouragement. Keynes is not as hard to translate as German. For me at least.

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