Re: Support the French Petition on Economics Teaching

["Gunnar Tomasson" <tomasson@xxxxxxxx>]

Julio:

These are good questions.

On the basis of my own quarter-century research in theoretical physics,
theoretical economics, and epistemology of science in general and economics
in particular, I would answer them as follows.

(1) Isn't the "mismatch" between conceptual structures and "reality" a
feature common to all theories about "reality"?  If the answer is "yes,"
should we dispense of theory altogether?

There are two distinct kinds of "mismatch" at issue.

One.  There is the "mismatch" common to all 'scientific theories' of which
Stephen Hawking wrote: "A scientific theory...is just a model of the
universe, or a restricted part of it, and a set of rules that relate
quantities in the model to observations that we make.  It exists only in our
minds and does not have any other reality (whatever that might mean)" (A
Brief History of Time, Bantam Books, 1988, p. 9)

Two.  Then there is the "mismatch" between predictions generated by our
models or 'scientific theories' and actual observations.

It is "mismatch" of the latter kind which exposes neoclassical economics as
pseudo-science.

(2) If the answer to the first part of (1) is "no," which is the theoretical
alternative to "neoclassical economics" that avoids such "mismatch"?

The fact that, after some 130 years, neoclassical theorists have yet to
produce a single scientific theory whose predictions accord with actual
observations is presumptive proof that the attempt itself is futile.

What, then, is the alternative?  Should we conclude that there is no such
thing as economic 'science'?

Absolutely not!

I agree with Schumpeter who concluded that, in due course, we would
recognize that economics is a branch of logic.  In contrast, in a memorial
article on Schumpeter, Paul A. Samuelson expressed his surprise at this
view.

At issue is the very concept of economics itself - is it, as the
neoclassicals would seem to believe, properly defined as whatever they have
seen fit to practice for the past 130 years or so?

In 1922, Keynes gave the following definition of economics - a definition
which implies a resounding NO answer to this proposition:

"The Theory of Economics does NOT furnish a body of settled conclusions
immediately applicable to a policy. [Hence, not 'immediately applicable' to
'predictions' about real-world outcomes - insert GT.]  It is a method rather
than a doctrine, an apparatus of the mind, a technique of thinking, which
helps its possessor to draw correct conclusions."

Quesnay's 'Tableau Economique' and Say's 'Law' exemplify such "method" or
"apparatus of the mind, a technique of thinking" that have NO direct bearing
on our ability to 'predict' empirical outcomes as distinct from helping "to
draw correct conclusions" with respect thereto.

The succession of real-world "surprises" that continues to bedevil
economists and economic policy makers - the rise and fall of the Asian Tiger
Economies and Russia and, most recently, the 'surprising' performance of the
Euro - is presumptive evidence that their mental apparatus is essentially
disfunctional.

(3) If there's a specific answer to (2), why don't you advocate such
alternative directly?

In the context of the essentially Schumpeterian-Keynesian definition of
'economics', which I posted on the PKT list yesterday (see below), I am
persuaded that a forthcoming book by fellow Gang8 member Chris Meakin on the
Creditary View of Money will sketch the foundations of the monetary
economics of the 21st century:

**********
Economics concerns the framework of society within which individuals endowed
with property rights in their person interact for mutual benefit in the
transformation of natural resources into goods and services and the rules
whereby they so interact.

The 'Monetary System' comprises the most important set of such rules.

In this respect, Economic Science concerns the purely technical aspects of
Money and their translation into a Monetary System that is essentially
neutral with respect to the self-interests of individuals and social groups.

Therefore, the 'Apples' of Economic Science must never be mixed with the
'Oranges' of such self-interests - for then Economic Science is a misnomer
and its practitioners intellectual whores.

**********

In this respect, Charles Goodhart once commented that modern monetary theory
is "less satisfactory" than the version thereof on which Keynes and
Robertson were working through the early 1930s.

In my view, the Creditary Approach to Monetary Theory may be regarded as an
(updated) end product of the Keynes-Robertson research agenda.

Gunnar Tomasson



----- Original Message -----
From: <JulioHuato@xxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Thursday, September 28, 2000 7:52 PM
Subject: Re: Support the French Petition on Economics Teaching


> I'm a student of economics, have read the petition, and would like to ask
> those who sign it or endorse it some good-faith questions:
>
> (1) Isn't the "mismatch" between conceptual structures and "reality" a
> feature common to all theories about "reality"?  If the answer is "yes,"
> should we dispense of theory altogether?
>
> (2) If the answer to the first part of (1) is "no," which is the
theoretical
> alternative to "neoclassical economics" that avoids such "mismatch"?
>
> (3) If there's a specific answer to (2), why don't you advocate such
> alternative directly?
>
>