PKT message, 'Debunking Economics'

Steve:

The following comments relate to the Chs. 1-5 (pp. 1 - 56) of your Draft.

1. "Many Economists are simply unaware that the foundations of Economics have even been disputed, let alone that these critiques have motivated prominent Economists to profoundly change their views, and to consequently themselves become, to some extent, critics of Economics orthodoxy. Names such as Irving Fisher, John Hicks, Paul Samuelson, Robert Solow, Alan Kirman and Joseph Stiglitz are famous within Economics because they helped construct modern Economic Theory. Yet to varying degrees, these and other prominent Economists distanced themselves from conventional Economics, after being convinced that the theory harboured fundamental flaws." (p. 1)

In this respect, Leonard Silk suggested that "The attack on - or defense of - contemporary economics must begin with Paul Samuelson [who] has become the leading practitioner of what may be called bourgeois economics," [The Economists, Basic Books, 1976, pp. 3-4].

"I have very few words that I have written - and I have written too many - that I have to eat," Samuelson advised Silk (pp. 19-20).

To the best of my knowledge, Samuelson has yet "to eat" - explicitly as distinct from implicitly - any part of his 'Foundations of Economic Analysis', which spawned the mainstream version of neo-classical economics.

2. "This book can be thought of as a critical report card on economics at the turn of the Millennium. Economic Theory, as we know it at the beginning of the Third Millennium was born 130 years earlier in the work of Jevons, Walras, Menger and (somewhat later) Marshall. I have a reasonably high regard for these founders of what has become mainstream Economics. They were pioneers in a new way of thinking, and yet, in contrast to their modern disciples, they were often aware of possible limitations of the Theory they were trying to construct. They expected their heirs to establish the true boundaries of Economic analysis, and to transform it from the elegant but hobbled child to which they gave birth into a vibrant and flexible adult." (p. 6)

For Schumpeter, these were pre-eminent among those who advanced [?] would-be economic science beyond the "half-way house" to which it had been brought by John Stuart Mill by mid-19th century. In a recent message on the PKT Forum, I noted that Mill's "half-way" house conclusions in Value Theory reduced to the proposition that ALL economic values are relative to time, place, and circumstance.

In his essay on 'The Methodology of Positive Economics', Milton Friedman wrote on related issues as follows:

"Any assertion that economic phenomena are varied and complex denies the tentative state of knowledge that alone makes scientific activity meaningful [???]; it is in a class with John Stuart Mill's justly ridiculed statement that "happily, there is nothing in the laws of value which remains [1848] for the present or any future writer to clear up; the theory of the subject is complete."" ('Essays In Positive Economics', Chicago University Press, 1974, p. 34)

Of course, the joke is on Friedman IF Davidson is correct that there are NO constants in economic affairs.

As for the neo-classical writers who, in Friedman's estimation, "proved" Mill wrong in this respect, you go on to identify Jeremy Bentham as the source of their inspiration:

3. "The true father of the proposition that people are motivated solely by self-interest is Adam Smith, as is often believed, but his contemporary Jeremy Bentham. With his philosophy of Utilitarianism, Bentham explained human behaviour as the product of innate drives to seek pleasure and avoid pain....

"The interests of the community are simply the sum of the interests of the individuals who comprise it, and BENTHAM PERCEIVED NO DIFFICULTY IN PERFORMING THIS SUMMATION." (p. 9)

Later, there are multiple references in Chs. 3 to Bentham's ideas and their critical importance for the advent of the neo-classical ideas which 'Debunking Economics' aims to debunk. (pp. 11, 21, 22, 23, 25, 26, 27, 33)

In view of Bentham's standing in 19th century European intellectual circles, it is understandable that his ideas on human nature may have been partly responsible for the advent of the post-Mill neo-classical interest in the subjective aspects of economic behavior.

In and of itself, however, further evidence must be adduced before Bentham's name is associated with the defining characteristic of neo-classical-mainstream economics, namely, its choice of MATHEMATICS as preferred 'language' of theoretical economics.

As it happens, Bentham spoke out on that very subject matter in no uncertain terms as follows:

"I have by me a large quarto of mathematics written by a mathematician and politician of deserved eminence, in which the utility of numbers, as a security for good judicature, is assumed. The conclusion of mathematicians, though always mathematically just, are not unfrequently physically false: that is, they would be true if things were not as they are. Some necessary element is omitted to be taken into account: and thus the only effect of the operation is to mislead." ('The Philosophy of Economic Science', in 'Jeremy Bentham's Economic Writings, Critical Edition Based on His Printed Works and Unprinted Manuscripts', ed. by W. Stark, Published for the Royal Economic Society by George Allen and Unwin Ltd., London, 1952, Vol. I, p. 119.)

I have some further comments, but will leave it at that for the time being.

Gunnar Tomasson