Re: heterodoxers are crackpots AND logic

[Ted Winslow <egwinslow@xxxxxxxxxx>]

I’ve previously provided a detailed elaboration of the way in which the
ontological idea of “internal relations” in the specialized form of the
idea that human nature is the outcome of circumstances plays an
essential role in Marshall’s method, in particular in his conception of
caeteris paribus, a role that prevents the kind of interdependence -
"internal relations" - to which I’m pointing being represented as “the
role of exogenous factors in a logical model.”

As I also attempted to show, Marshall himself pointed to the
implications of this for knowledge of the future, i.e. Marshall
anticipated Keynes’s idea of “uncertainty.” In fact, Marshall also
anticipated Keynes’s idea that individuals may, for psychological
reasons, “fear the future too much” and be paralyzed by such fear.

Here is that argument again.

[If Paul or his fan "Brett" can _show_ that this _argument_ is mistaken
and that Paul's ideas about deductive reasoning from fixed axioms and
agents as everywhere and always "sensible" can incorporate the
ontological idea of "internal relations" and its implications for
"method" in general, for the use of "deduction" in particular, and for
interpreting Marshall and Keynes, they should do so.]

The ontological idea of "organic unity" that underpins the claim that
"man himself is in a great measure a creature of circumstances and
changes with them" is both one of the main sources of true uncertainty
and one of the main reasons economics must be part of a "more general
social science".

The connection of the claim to true uncertainty was pointed to by
Marshall himself.

To begin with, here is another passage, very similar to the portmanteau
quotation used by Keynes [in the passage I quoted earlier], in which
Marshall explicitly identifies the "subject-matter" of economics with
"human nature" so that the "pliability of human nature" means that
economics is a science whose "subject-matter ... passes through
different stages of development".

"For the sake of simplicity of argument, Ricardo and his followers often
spoke as though they regarded man as a constant quantity, and they never
gave themselves enough trouble to study his variations.  The people whom
they knew most intimately were city men; and they sometimes expressed
themselves so carelessly as almost to imply that other Englishmen were
very much like those whom they knew in the city. ...  As the [19th]
century wore on ... people were getting clearer ideas as to the nature
of organic growth. They were learning that if the subject-matter of a
science passes through different stages of development, the laws which
apply to one stage will seldom apply without modification to others; the
laws of the science must have a development corresponding to that of the
things of which they treat. The influence of this new notion gradually
spread to the sciences which relate to man; and showed itself in the
works of Goethe, Hegel, Comte and others.  ...  Economics has shared in
the general movement; and is getting to pay every year a greater
attention to the pliability of human nature, and to the way in which the
character of man affects and is affected by the prevalent methods of the
production, distribution and consumption of wealth."  (Marshall,
Principles, Variorum ed., Vol. 1, pp. 762-764)

This repeats the claim made at the beginning of the Principles that "the
influence of circumstances in fashioning character is generally
recognized as the dominant fact in social science."  (Vol. 1, p. 48)
(This "fact" is, of course, rather far from being "generally recognized"
in contemporary economics.) Marshall, like Marx, points to "the
prevalent methods of the production, distribution and consumption of
wealth" as the most important of these circumstances (see also Vol.1,
pp. 1-2).

This assumed "pliability of human nature" plays a key role in Marshall's
idea of "normal".

"The course of action which may be expected under certain conditions
from the members of an industrial group is the normal action of the
members of that group relatively to those conditions."

Because of "the influence of circumstances in fashioning character",
normal action is not fixed; it varies with the changes in character
produced by changing circumstances.  For instance:

"the normal condition of many of the very poorest inhabitants of a large
town is to be devoid of enterprise, and unwilling to avail themselves of
the opportunities that may offer for a healthier and less squalid life
elsewhere; they have not the strength, physical, mental and moral,
required for working their way out of their miserable surroundings.  The
existence of a considerable supply of labour ready to make match-boxes
at a very low rate is normal in the same way that a contortion of the
limbs is a normal result of taking strychnine.  It is one result, a
deplorable result, of those tendencies the laws of which we have to
study.  This illustrates one peculiarity which economics shares with a
few other sciences, the nature of the material of which can be modified
by human effort.  Science may suggest a moral or practical precept to
modify that nature and thus modify the action of laws of nature." (Vol.
1, pp. 35-6)

Another instance of Marshall’s use of the idea of “the influence of
circumstances in fashioning character” brings out even more clearly the
similarity between Marshall’s approach to  economics and Marx’s
resulting from the shared foundational premise that social relations are
"internal relations."  In the essay "The Future of the Working Classes"
(Marshall, Memorials of Alfred Marshall, pp. 101-18) and elsewhere,
Marshall implicitly adopts Marx's application of the ontological idea
of “internal relations” to the treatment of labour in capitalism as
"alienated labour." In the essay, he points to

"that darker scene which the lot of unskilled labour presents.  Let us
look at those vast masses of men who, after long hours of hard and
unintellectual toil, are wont to return to their narrow homes with
bodies exhausted and with minds dull and sluggish.  That men do
habitually sustain hard corporeal work for eight, ten or twelve hours a
day, is a fact so familiar to us that we scarcely realize the extent to
which it governs the moral and mental history of the world; we scarcely
realize how subtle, all-pervading and powerful may be the effect of the
work of man's body in dwarfing the growth of the man." (Memorials, pp.
105-6)

The assumed pliability of human nature also has implications for our
ability to make rational long-run forecasts.  Marshall connects "normal
action" to the long run in a way that makes the long run very difficult
to predict.  The problem is that current "normal action" will only be
continued into the long run if the "conditions" on which it depends
persist.

"Normal economic action is that which may be expected in the long run
under certain conditions (provided those conditions are persistent) from
the members of an industrial group." (Vol. 1, p. 34}

"Again when 'normal' prices are contrasted with temporary or market
prices, the term refers to the dominance in the long run of certain
tendencies under given conditions.  But this raises some difficult
questions which may be postponed." (Vol. 1, p. 36)

As in Keynes, however, the "given conditions" are very unlikely to
remain unchanged in the "long run". It is this that "raises some
difficult questions".

"It is true however that the condition that time must be allowed for
causes to produce their effects is a source of great difficulty in
economics.  For meanwhile the material on which they work, and perhaps
even the causes themselves, may have changed; and the tendencies which
are being described will not have a sufficiently 'long run' in which to
work themselves out fully." (Vol. 1, p. 36)

In the following claim, Marshall himself implicitly accepts that this
might create true uncertainty about future consequences.

"Greater risks are taken where no attempt is made to forecast the
future, while considering methods of action or inaction that will
largely affect the future, than by straining inadequate eyes in reading
such faint indications of the future as may be discerned by them."
(Industry and Trade, p. 506)

[This claim is repeated in the passage from The Balance of Payments of
the US I recently quoted:

"No one can be certain of anything in this age of flux and change.
Decaying standards of life at a time when our command over the
production of material satisfactions is the greatest ever, and a
diminishing scope for individual decision and choice at a time when more
than before we should be able to afford these satisfactions, are
sufficient to indicate an underlying contradiction in every department
of our economy.  No plans will work for certain in such an epoch.  But
if they palpably fail, then, of course, we and everyone else will try
something different.
	"Meanwhile for us the best policy is to act on the optimistic
hypothesis until it has been proved wrong.  We shall do well not to fear
the future too much.  Preserving all due caution in our own activities,
the job for us is to get through the next five years in conditions which
are favourable and not unfavourable to the restoration of our full
productive efficiency and strength of purpose, of our prestige with
others and of our confidence in ourselves.  We shall run more risk of
jeopardising the future if we are influenced by indefinite fears based
on trying to look ahead further than any one can." (XXVII, pp. 445-6)]

Again, the general point on which this depends is that: "though economic
analysis and general reasoning are of wide application, yet every age
and every country has its own problems; and every change in social
conditions is likely to require a new development of economic
doctrines." (Vol. 1, p. 37)

In an earlier post I pointed to another of Keynes's teachers, Whitehead,
making exactly the same point respecting the implications of the
ontological idea of "organic unity" - of "internal relations" - for
economics and for economic and business "forecasting".

As does Marshall, Whitehead criticizes classical political economy for
treating human nature as fixed (an assumption which, given the fact of
organic unity, implicitly treats the "conditions" governing the
formation of character - of "human nature" - as themselves fixed).

"The conclusion to be drawn from this survey is a momentous one.  Our
sociological theories, our political philosophy, our practical maxims of
business, our political economy, and our doctrines of education, are
derived from an unbroken tradition of great thinkers and of practical
examples, from the age of Plato in the fifth century before Christ to
the end of the last century.  The whole of this tradition is warped by
the vicious assumption that each generation will substantially live amid
the conditions governing the lives of its fathers and will transmit
those conditions to mould with equal force the lives of its children.
We are living in the first period of human history for which this
assumption is false." (Adventures of Ideas, p. 117)

"Consider our main conclusions that our traditional doctrines of
sociology, of political philosophy, of the practical conduct of large
business, and of political economy are largely warped and vitiated by
the implicit assumption of a stable unchanging social system.  With this
assumption it is comparatively safe to base reasoning upon a simplified
edition of human nature.  For well-known stimuli working under well
known conditions produce well-known reactions.  It is safe then to
assume that human nature, for the purpose in hand, is adequately
described in terms of some of the major reactions to some of the major
stimuli." (Adventures of Ideas, p. 120)

"In the present age, the element of novelty which life affords is too
prominent to be omitted from our calculations.  A deeper knowledge of
the varieties of human nature is required to determine the reaction, in
its character and its strength, to those elements of novelty which each
decade of years introduces into social life.  The possibility of this
deeper knowledge constitutes the Foresight under discussion."
(Adventures of Ideas, p. 120)

It is this need to take account of the fact of "organic unity" that
makes economics "one component of a more general social science".

"The general topic to be understood is the entire internal functioning
of human society, including its technologies, the biological and
physical laws on which these technologies depend, and including the
sociological reactions of humans depending on fundamental psychological
principles.  In fact, the general topic is sociology in the broadest
sense of the term, including its auxiliary sciences.  Such a width of
understanding is, of course, beyond the grasp of any single human.  But
no part of it is entirely foreign to the provision of foresight in
business." (Adventures of Ideas, p. 113)

Ted