Re: heterodoxers are crackpots AND logic

[Ted Winslow <egwinslow@xxxxxxxxxx>]

Paul Davidson wrote:

> I'm sorry -- but the onus is on those who argue that deductive logic
> has no role in discussing real world economics. I think I have already
> demonstrated that can use deductive logic and deal with uncertainty
> despite  your statement that
>
> > "the work of Sheila Dow, she rejects what she refers to as "classical"
> > logic, which requires certainty, dualism, closed systems, etc. " I
>
> Is Keynes's (and my) work on liquidity and uncertainty and its
> implications for employment, etc. irrelevant  or even worse -- for you
> state :
>
> "She [Shiela Dow] even claims that Keynes rejected such logic." So is
> Keynes's GT something Keynes would have rejected since it is based on
> axioms and deductive logic.  If you don't think so just read the
> passage on page 16 of the GT :
>
> "Obviously, however, if the classical theory is only applicable to the
> case of full employment, it is fallacious to apply it to the problems
> of involuntary unemployment-if there is such a thing (and who will deny
> it). The classical theorists resemble Euclidean geometers in a
> non-Euclidean world who, discovering that in experience straight lines
> apparently parallel often meet, rebuke the lines for not keeping
> straight-as the only remedy for the unfortunate collisions which are
> occurring. YET, IN TRUTH, THERE IS NO REMEDY EXCEPT TO THROW OVER THE
> AXIOM OF PARALLELS AND TO WORK OUT  A NON-EUCLIDEAN GEOMETRY. SOMETHING
> SIMILAR IS REQUIRED TODAY IN ECONOMICS."
>
> > "In that case, one would use logic that
> > has some basis in the nature of the world.
>
>
> I think it is clear from this passage and what follows that Keynes was
> not only using deductive logic to attack the classical system for
> having "postulates ...[that] are applicable to a special case and not
> the general case" [ GT, p. 3] but also to present a deductive logical
> system that could explain involuntary unemployment as the outcome of
> the actions of self-interest individuals in a market, money-using
> entrepreneurial economy.
>
> I do not think you have proved the case otherwise by citing Sheila Dow
> or using the sound bite "different horses for different courses".  What
> evidence do you have to indicate that Keynes's GT does not provide the
> basis for developing logically the conditions in which involuntary
> unemployment occurs.

There an overwhelming amount of evidence to which I've previously
pointed that you are misinterpreting the role Keynes claims deductive
reasoning from fixed axioms can and should play in social theory.

I've just pointed to another piece of such evidence.  The "unstable
psychological conditions" that produce the tendency for the US to become
"a high-living, high-cost country" can't be handled by your conception
of reasoning from fixed axioms.  They involve the idea of human nature
changing with changes in circumstances.

It's this that is the basis of Keynes's objection to the deductive
method of Ricardo.  It's also, as I've pointed out many times, one of
the essential points of continuity between Keynes and Marshall

In his biographical essay on Marshall, Keynes points out (see
particularly X, pp. 185-7 and 196-7) that Marshall was aware of this
ontologically based difference "between the objects and methods of the
mathematical sciences and those of the social sciences" (p. 197).  It
was the source, he claims, of "the profundity of his [Marshall's]
insight into the true character of his subject in its highest and most
useful developments" (X, p. 188)

"Marshall ... arrived very early at the point of view that the bare
bones of economic theory are not worth much in themselves and do not
carry one far in the direction of useful, practical conclusions.  The
whole point lies in applying them to the interpretation of current
economic life.  This requires a profound knowledge of the actual facts
of industry and trade.  But these and the relation of individual men to
them are constantly and rapidly changing.  Some extracts from his
Inaugural Lecture at Cambridge will indicate his position:

"The change that has been made in the point of view of Economics by the
present generation is due to the discovery that man himself is in a
great measure a creature of circumstances and changes with them.  The
chief fault in English economists at the beginning of the century was
not that they ignored history and statistics, but that they regarded man
as so to speak a constant quantity, and gave themselves little trouble
to study his variations.  They therefore attributed to the forces of
supply and demand a much more mechanical and regular action than they
actually have.  Their most vital fault was that they did not see how
liable to change are the habits and institutions of industry.  But the
Socialists were men who had felt intensely, and who knew something about
the hidden springs of human action of which the economists took no
account.  Buried among their wild rhapsodies there were shrewd
observations and pregnant suggestions from which philosophers and
economists had much to learn.  Among the bad results of the narrowness
of the work of English economists early in the century, perhaps the most
unfortunate was the opportunity which it gave to sciolists to quote and
misapply economic dogmas.  Ricardo and his chief followers did not make
clear to others, it was not even quite clear to themselves, that what
they were building up was not universal truth, but machinery of
universal application in the discovery of a certain class of truths.
While attributing high and transcendent universality to the central
scheme of economic reasoning, I do not assign any universality to
economic dogmas.  It is not a body of concrete truth, but an engine for
the discovery of concrete truth." (Collected Writings, vol. X, p. 196)

In making this interpretive point re Marshall, Keynes explicitly
contrasts Marshall's approach with the approach you're now insisting
should be attributed to Keynes - the approach Keynes here associates
with physics.

"Professor Planck, of Berlin, the famous originator of the Quantum
Theory, once remarked to me that in early life he had thought of
studying economics, but had found it too difficult!  Professor Planck
could easily master the whole corpus of mathematical economics in a few
days.  He did not mean that! But the amalgam of logic and intuition and
the wide knowledge of the facts, most of which are not precise, which is
required for economic interpretation in its highest form is, quite
truly, overwhelmingly difficult for those whose gift mainly consists in
the power to imagine and pursue to their furthest points the
implications and prior conditions of comparatively simple facts which
are known with a high degree of precision." (p. 186)

Here's some more evidence.  The passage from the GT you quote in support
of your own view can be made consistent with the rest of the textual
evidence as follows.

Keynes is making a psychological point about individuals who give undue
weight to deductive reasoning from fixed axioms.  They are immune to a
reductio ad absurdum argument.  The consequence is that when shown that
the conclusions produced by their "logic" are absurd they "rebuke the
lines for not keeping straight-as the only remedy for the unfortunate
collisions which are occurring."

 Keynes's pointed to Hayek and Robbins as "Bedlamite economists" of this
kind, describing Hayek's Prices and Production as "an extraordinary
example of how, starting with a mistake, a remorseless logician can end
up in Bedlam."  (XII, p. 252)

The use of non-Euclidean geometry to illustrate the point is an implicit
reference not, as Jamie Galbraith argues, to Einstein, but to
Whitehead.  Keynes attended Whitehead's lectures on non-Euclidean
geometry in 1904.

“In the Easter term he [Keynes] went three times a week to A.N.
Whitehead’s lectures on ‘Non Euclidian Geometry’.  He was the only
member of the audience.  According to his father, Maynard said ‘the
lectures are interesting, but they will pay little if at all for the
Tripos’.  Later Whitehead would mention Maynard and Bertrand Russell as
being among his best pupils.” Moggridge, Maynard Keynes: An Economist’s
Biography, Routledge, 1992 p. 72

In his lectures, Whitehead used the development of non-Euclidean
geometry to illustrate the limitations of deductive reasoning from fixed
axioms.

There is, in fact, a set of extant lecture notes (on deposit in the
archives of the Johns Hopkins University Library} that make not only
this clear, but show also (as do published writings to which I've
previously pointed) that Whitehead made this the basis of a critique of
the way deductive reasoning was employed in classical economics, a
critique identical to Marshall's.  The lecture notes were made by James
Tobin in Whitehead's 1937 Harvard philosophy course.  They have
Whitehead repeating the argument re deductive reasoning found in his
published writing, an argument I've repeated many times on this list.

Notice that what is being criticized is not deductive reasoning per se
but a certain kind of dogmatic reliance on it.  Formal logic has to be
subsumed within what Keynes, following Ramsey, called "human logic."

"Dangers of exclusive trust in one attitude of mind - clear-headed,
muddle[-headed], plain man just a few examples of many innumerable
attitudes of mind. - emotional man has slant on universe that confined
brothers don't.  Even lunatic mind - Blake, poet had individual slant on
universe.  But some men are so individual as to fasten on passing fact &
overemphasize it.  Religious man - varies from atavistic horror to
idealistic hero.  Final conclusion is that every attitude reveals
something from consciousness.  There is not _the_ attitude.  Unemotional
plain man misses excitement of universe.  Phil. has task of surveying
map of human attitudes, survey their abstractions & find any general
principles which reign thru entire gamut of human experience.  Finite
human intellect can only get modified metaphysical generality.  Here
comes the intelligent view of history of thought.  Geometry seems to
have started with Egyptians - everybody had presupposed spatial
relations.  As soon as attention is drawn to it, it seemed to be always
there.  More accurate examination of what is already there is
knowledge.  Then Egyptians & Greeks generalized - there are spatial
relations which control whole world.  2500 years needed to show Euclid
only a special case.  A good general average to explain most details,
but not a necessity of of universe, limits to applicability.  That is
true in regard to all generalizations.  Those limits are hidden, but not
necessarily hidden.  There are always people who say there are things we
can never know - they said it about geometry.  But flashes of
intellectual insight took us away from human geometry.  About 1750 plain
man could point to universal dominance of Euclidean geometry, merely
worrying whether 1 axiom was independently true or whether could be
proved from others.  But a Jesuit ______ found alternative geometries in
presupposing axioms not true.  But dominance of plain man made that
result foolish - there could be nothing besides Euclidean geometry,
therefore it proved that axioms could not be false.  Thus he just missed
immortality.  Later thinkers rediscovered what he had almost conceived.
How necessary to human progress an intellectual discipline seeking
broadest generality is!  That is business & interest of philosophy -
seeing speciality of current beliefs & attitudes & conceiving
alternatives.  E.g. How necessary are the laws of nature, how dominant?
Sociological 19th century liberalism seemed to be habit of civilized
man - England.  Now?  Task of philosophy to survey universe, nature
dominant characteristics of order, the variety of dominant values, & to
endeavor to get hold of such large principles that seem to underlie
universal experience.  Danger of specialism, studying just one type of
order, seeing just one type of experience which is only path occurring
to one's consciousness.  Civilization advances by advance of
specialism.  That advance is checked if people studying a specialism
aren't aware that it is a specialism.  That is function of philosophy.
Enlargement of specialisms when necessary is important.” (Lecture 5
2/18/37 pp. 25-6)

"Misuse of elaborate edifices based on narrow premises & data has misled
mankind very much.  Use of that is scientific method - only way we can
advance, we can't know everything at once.  It is dogmatic use of data &
premises which is misuse.  Full consideration of data requires knowledge
of rest of world - omission can be fatal.  Part of phil. is development
of arguments based on selected data.  When you are reducing dialectic to
a minimum & trying to survey experience which enters conscious human
exp., that is another part of phil.  Hence in these lectures, the side
of deduction subordinated to aim of adequacy to the data." (Lecture 31
4/27/37 p. 227}

"Inconsistencies in great philosophers as well as their systems are
evidence of their genius.  Method of mankind is to make-up limited
systems to advance on certain evidence.  Large system which seems to
conciliate various branches.  Then a Liebniz makes a pretty good system,
reasonably accurately stated premises.  Advantages of a system are that
it has certain power of internal development - logical deduction from
it, by which you gain truths unexplained in the premises.  When you read
the premises you do not see the details which are going to be evolved by
reason from them.  Usually, an additional premise is introduced at each
detail - but that is irrelevant.  Method is astounding way of developing
human insight into details gotten from premises.  That is great
discovery 2500 yrs. old. - When it bacame major factor in human
consciousness.  That dialectical extension via reasoning does 2 things
esp. in loarge-scale phil. system - 1) enlarges human consciousness 2)
shows up the system.  You trespass into reasons not explicitly in
consciousness in formulation of system, and something larger is
required.  That is a truth over dogmas of all religions - each excludes
too much of another.  That is evil of every system.  Economics -  the
economic man conception thru magnificent light on 18th & 19th &
liberalism which got muddled up with it & laissez faire.  Until people
began to write treatises too large in psych analysis to keep ec man,
Playful man, all other men, had to come in.  But Adam Smith was one of
greatest contributions." (Lecture 32 4/29/37 pp. 235-7)

Ted