Why economics is in such a mess

7 Jul, 2022 at 10:08 | Posted in Economics | 5 Comments

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Modern economics has become increasingly irrelevant to the understanding of the real world. In his seminal book Economics and Reality (1997), Tony Lawson traced this irrelevance to the failure of economists to match their deductive-axiomatic methods with their subject.

largepreviewThe critique is — sad to say — as relevant today as it was twenty-five years ago.

It is still a fact that within mainstream economics internal validity is almost everything and external validity next to nothing. Why anyone should be interested in that kinds of theories and models is beyond imagination. As long as mainstream economists do not come up with any export licenses for their theories and models to the real world in which we live, they really should not be surprised if people say that this is not science!

In pure mathematics and logic, we do not have to worry about external validity. But economics is not pure mathematics or logic. It’s about society. The real world.

Economics and Reality was a great inspiration to yours truly twenty-five years ago. It still is.

5 Comments

  1. Tony Lawson and Prof. Syll are devout believers in “Social Ontology”, a mysterious sub-cult of neo-Marxist Critical Realism.
    Ontologists are largely pre-occupied with criticising economics. They are particularly critical of the inductive empirical approach of applied economists. Confusingly, in their own weird private language, they refer to induction as “axiomatic deductivism”.
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    Instead of scientific inductive methods, ontologists advocate a flexible approach which they call “abduction” or “inference to the best alternative”.
    In the past there there were no tools for doing abduction. This is part of the explanation for the deficiency of socially useful product from ontologists.
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    But now at last there is a tool for doing ontological abduction. See:
    https://generatorfun.com/new-age-bullshit-generator

    Comment by Kingsley Lewis— 8 Jul, 2022 #

    • How was Hume wrong when he writes:
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      《we should conclude, for instance, as in the foregoing section, that, in all reasonings from experience, there is a step taken by the mind, which is not supported by any argument or process of the understanding》
      .
      (quoted in the Stanford Encyclopedia of Philosophy article on the Problem of Induction)?
      .
      In other words, what if Nature is irrational and induction is similarly irrational faith?

      Comment by rsm— 12 Jul, 2022 #

      • Many historical precedents suggest that war criminals don’t stop committing atrocities until they are forced out of power.
        – 1945. Hitler persisted until the Russian army was within a few hundred meters from his bunker.
        – 1975. The USA was expelled from Vietnam following the capture of Saigon by the Viet Cong and the hasty evacuation of the Saigon embassy.
        – It was the Tanzanian army which expelled Idi Amin from Uganda.
        – The Vietnamese army expelled the Khmer Rouge from Cambodia.
        – 1994. The Rwandan genocide was ended by the defeat of the forces of the interim government by the RPF (Rwandan Patriotic Front).

        Noriega
        Argentine Junta
        ISIS
        Kossovo
        Tigris
        Algeria
        Madagascar 1960

        1954 End of nearly 90 years of French colonial rule in Indochina by the decisive victory of the Viet Minh at Dien Bien Phu.

        Saddam Hussein never surrendered
        1980-88 Invasion of Iran claiming Khuzestan,
        1986-9 Anfal_campaign attempted genocide of Kurds and other minorities in N. Iraq
        1990-1 invasion of Kuwait followed by defeat of Iraq in Gulf War
        2003 Invasion and defeat of Iraq
        2006 trial and hanging

        Similarly Putin’s war and its horrors are likely to continue until there is a regime change in Russia.
        ——–
        Hitler Poland
        Myanmar Rihinga
        China Wega
        China Spratley
        Venezuela Maduro
        N Korea
        Kashmir
        Yemen
        Israel

        Libya
        ———————————————————–

        problem
        an unwelcome or harmful matter needing to be dealt with and overcome.
        a thing that is difficult to achieve.

        @rsm
        You have shamelessly truncated the quote and completely distorted Hume’s argument.
        .
        Hume considered that philosophical debates (such as Prof. Syll’s numerous posts) about the justifications for induction, or lack thereof, are irrelevant to scientists.
        Hume believed that:
        “there is no danger, that these reasonings [from experience, ie induction], on which almost all knowledge depends, will ever be affected by such a discovery [from abstract reasoning ].”
        .
        The Stanford article interprets Hume thus:
        “the problem of induction is somehow restricted to a skeptical context”
        “Hume’s purpose is clearly not to argue that we should not make inductive inferences in everyday life, and indeed his whole method and system of describing the mind in naturalistic terms depends on inductive inferences through and through. The problem of induction then must be seen as a problem that arises only at the level of philosophical reflection.”
        .
        In Hume’s own words:
        “Nature will always maintain her rights, and prevail in the end over any abstract reasoning whatsoever. Though we should conclude, for instance, as in the foregoing section, that, in all reasonings from experience, there is a step taken by the mind, which is not supported by any argument or process of the understanding; there is no danger, that these reasonings, on which almost all knowledge depends, will ever be affected by such a discovery.”
        https://plato.stanford.edu/entries/induction-problem/

        Comment by Kingsley Lewis— 13 Jul, 2022 #

    • @rsm
      You have shamelessly truncated whet Hume wrote and completely distorted his argument.
      .
      Hume argued that philosophical debates (such as Prof. Syll’s numerous posts) about the justifications for induction, or lack thereof, are irrelevant to scientists.
      Hume believed that “there is no danger, that these reasonings [from experience, ie induction], on which almost all knowledge depends, will ever be affected by such a discovery [from abstract reasoning ].”
      .
      The Stanford article interprets Hume thus:
      “the problem of induction is somehow restricted to a skeptical context”
      “Hume’s purpose is clearly not to argue that we should not make inductive inferences in everyday life, and indeed his whole method and system of describing the mind in naturalistic terms depends on inductive inferences through and through. The problem of induction then must be seen as a problem that arises only at the level of philosophical reflection.”
      .
      In Hume’s words:
      “Nature will always maintain her rights, and prevail in the end over any abstract reasoning whatsoever. Though we should conclude, for instance, as in the foregoing section, that, in all reasonings from experience, there is a step taken by the mind, which is not supported by any argument or process of the understanding; there is no danger, that these reasonings, on which almost all knowledge depends, will ever be affected by such a discovery.”
      https://plato.stanford.edu/entries/induction-problem/

      Comment by Kingsley Lewis— 13 Jul, 2022 #

      • Kingsley,
        .
        Am I not free to use induction as it suits me, when setting up a shelter in the rainforest for example, but also ignore it and try a different untested setup, which may teach me something new?
        .
        In other words, might I stay dry despite ignoring induction?
        .
        Are you spinning Hume’s full quote to support your particular viewpoint? Can I read the full quote as saying “there is no danger that [inductive] reasonings will be affected by [the irrationality of Nature]”, because human reasoning has irrational faith in induction?
        .
        To put it another way, did Gandhi rid India of British rule by using nonviolence, because faith in the inductive reasoning you supplied is itself irrational?

        Comment by rsm— 13 Jul, 2022 #


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