Ditch physics envy!

20 April, 2017 at 19:31 | Posted in Economics | 9 Comments

physics_envy_poster-r91c03c52279340a8b709c2a9f850372f_wad_210In the 1870s, a handful of aspiring economists hoped to make economics a science as reputable as physics. Awed by Newton’s insights on the physical laws of motion – laws that so elegantly describe the trajectory of falling apples and orbiting moons – they sought to create an economic theory that matched his legacy. And so pioneering economists such as William Stanley Jevons and Léon Walras drew their diagrams in clear imitation of Newton’s style and, inspired by the way that gravity pulls a falling object to rest, wrote enthusiastically of the role played by market forces and mechanisms in pulling an economy into equilibrium.

People and money are not so obedient as gravity, as it turns out, so no such laws exist.

Their mechanical metaphor sounds authoritative, but it was ill-chosen from the start – a fact that has been widely acknowledged since the astonishing fragility and contagion of global financial markets was exposed by the 2008 crash.

The most pernicious legacy of this fake physics has been to entice generations of economists into a misguided search for economic laws of motion that dictate the path of development. People and money are not as obedient as gravity, so no such laws exist. Yet their false discoveries have been used to justify growth-first policymaking.

Kate Raworth



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  1. Brilliant!

  2. The most brilliant of these pioneers in social justice was Henry George whose 1879 book ”Progress and Poverty” sold at least 3 million, but we have rather forgotten about him today. George is not mathematical but the logic shines forth as a more adaptable alternative way of analysis.

  3. Ditch scientific incompetence!
    Comment on Lars Syll on ‘Ditch physics envy!’
    It was one of Mirowksi’s worst idiocies to introduce in his More Heat Than Light the term ‘physics envy’ in analogy to Freud’s ‘penis envy’. To psychologize derails every discussion because the focus turns from ‘Is the other guy’s argument true or false?’ to ‘What are the other guy’s real motives?’.
    Schumpeter has settled this issue once and for all: “Remember: occasionally, it may be an interesting question to ask why a man says what he says; but whatever the answer, it does not tell us anything about whether what he says is true or false.”
    Science is about true/false and NOTHING else. Kate Raworth, though, has never heard anything of Schumpeter, methodology, and the rules of scientific discourse: “… a critical discussion is well-conducted if it is entirely devoted to one aim: to find a flaw in the claim that a certain theory presents a solution to a certain problem.” (Popper)
    Kate Raworth recounts the history of economic thought: “In the 1870s, a handful of aspiring economists hoped to make economics a science as reputable as physics.”
    It was NOT AT ALL a problem of reputation. Economists realized that ― after Newton ― their confused psychological and philosophical blather was no longer taken seriously: “The backward state of the Moral Sciences can only be remedied by applying to them the methods of Physical Science, duly extended and generalized.” (Mill). And: “Like most of his fellow moral philosophers, Hume thought it was worth a try to make all sciences as rigorous as Newtonian physics.” (Redman)
    Being scientifically incompetent, economists engaged in what Feynman called cargo cult science, that is, they imitated without deeper understanding. What hit their eyes was the most outstanding feature of the Scientific Revolution, i.e. the discovery of physical laws.
    Economists’ tried to apply the concept of law to sociology or psychology or something in-between called Human Nature.
    “The fundamental problem, therefore, of the social science, is to find the laws according to which any state of society produces the state which succeeds it and takes it place.” (Mill)
    “Intrinsically, it is not a question of the higher or lower degree of development of the social antagonisms that result from the natural laws of capitalist production. It is a question of these laws themselves, of these tendencies working with iron necessity towards inevitable results.” (Marx)
    “That Political Economy informs us of the laws which regulate the production, distribution, and consumption of wealth. … This definition is free from the fault which we pointed out in the former one. It distinctly takes notice that Political Economy is a science and not an art; that it is conversant with laws of nature, not with maxims of conduct, and teaches us how things take place of themselves, not in what manner it is advisable for us to shape them, in order to attain some particular end.” (Mill)
    “The foundation of political economy and, in general, of every social science, is evidently psychology. A day will come when we shall be able to deduce the laws of social science from the principles of psychology …” (Pareto)
    “From the above considerations the following seems to come out as the correct and complete definition of Political Economy: ― ‘The science which treats of the production and distribution of wealth, so far as they depend upon the laws of human nature.’ Or thus ― ‘The science relating to the moral or psychological laws of the production and distribution of wealth’.” (Mill)
    That there is NO such thing as a behavioral/social/historical law has been known to scientists (in contradistinction to economists) in ALL ages: “The bifurcation of motion into two fundamentally different types, one for natural motions of non-living objects and another for acts of human volition … is obviously related to the issue of free will, and demonstrates the strong tendency of scientists in all ages to exempt human behavior from the natural laws of physics, and to regard motions resulting from human actions as original, in the sense that they need not be attributed to other motions.” (Brown)
    The scientific incompetence of economists consisted in the fact that they defined economics as as social science instead of a system science and that they did not realize their fundamental methodological blunder until this day. Standard economics is built upon microfoundations = BEHAVIORAL axioms.
    There are NO laws of human behavior/nature/action, neither psychological nor social nor historical, but there are SYSTEMIC laws of the monetary economy, e.g. the Profit Law.
    To argue with ‘physics envy’ is entirely beside the point. The problem of economists is NOT envy but stupidity.
    What Kate Raworth has figured out is: “People and money are not so obedient as gravity, as it turns out, so no such laws exist.” True, there are NO behavioral laws. This has been known in ALL ages. But there are SYSTEMIC laws. Unfortunately, the folk psychologist and hobby economist Kate Raworth has not figured them out.
    The conclusions from the manifest failure of Orthodoxy AND Heterodoxy are: (i) to ban psychology, sociology and all Human-Nature blather from economics, (ii) to retire the whole bunch of incompetent scientists, and (iii), to focus on the question how the market system works.
    Egmont Kakarot-Handtke

  4. Philip Mirowski also pointed this out sometime ago.

  5. Good article, but tying economics with the laws of nature would also be a mistake. Society does not follow Darwinian Laws, which the author fails to note also had a big impact on the philosophical foundations of classical Anglo-Saxon economics that emerged during its Victorian Era formative stages. Doing so would simply replace one artificial framework with another. The natural place of economics is in the humanities, and the right approach is ground up study without any preconceptions about governing laws.

  6. Economies are artifacts, not natural things. People design the rules of the game and participate the game. Economics is about what are the good strategies to play the game by following the rules to have better economic results.
    Physics-based economics is trying to mechanize the game without human involved. Time-series macro real data are replaced by closed-form demand/supply approximate functions. This kind of economics changes the rules and the game becomes more virtual than reality.

  7. Physics deals with physical systems. Physical systems are closed systems – that is they deal with essentially the conversion and distribution of a given level of energy into its various forms. Physics does not attend to the notion of the creation of energy – this notion is anathema to the law of conservation of energy. Analogously, this is the realm of neoclassical economics – neoclassical economics deals not with the creation of output and employment – it deals with a closed system. This is why neoclassical economists have “physics envy”.
    If it is macroeconomics that is under consideration, there is one immutable law:
    the level of aggregate output and employment is a function of the level of aggregate spending.

    This is the foundation stone of Keynesian economics and why Keynesian economics brought a revolution – a consideration that has escaped the likes of Laidler and Blaug.
    The other side of Freud’s notion of “penis envy” was “castration anxiety”. Not only do neoclassical economists suffer from “physics/penis envy”, they also suffer from “castration envy”. They fear loss of primacy. Keynesian was and is a threat to their ascendancy in the realm of macroeconomics.

    • Silly me – I should have said “castration anxiety” in the last sentence.

      • More silly me – I mean in the last paragraph.

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