PKT message, Re. Statistical Method and Economics

Re. the following:

> > This passage from Einstein sets out a conception of physics that
> > Marshall
> > and Keynes, in the many passages I've quoted (including the one above),
> > explicitly reject as a conception appropriate for a "moral science" like
> > economics.
> >
> > It assumes there are "universal elementary laws from which the cosmos
> > can be
> > built up by pure deduction." Marshall and Keynes explicitly reject this
> > assumption as a basis for economics on the ground that, unlike physics,
> > the
> > material of economics is not constant and homogeneous.

Of course, there is no one-to-one correspondence between the "internal relations" of ACTUAL physical reality and those of IDEALIZED economic systems - and, having made no claim to that effect, I resent such asinine view being ascribed to me for it misconstrues - and trivializes - the point I have made several times in this forum.

Namely, that an "apparatus of the MIND" - to be logically coherent - must represent an AXIOMATIC structure of some sort.

Only then can such "apparatus" possess "organic unity" and "internal relations" - attributes which are absent from any logically incoherent would-be "apparatus of the mind".

Here is John Stuart Mill on related issues:

"In the definition which we have attempted to frame of the science of Political Economy, we have characterized it as essentially an abstract science, and its method as the method a priori. Such is undoubtedly its character as it has been understood and taught by all its most distinguished teachers. It reasons, and, as we contend, must necessarily reason, from assumptions, not from facts. It is built upon hypotheses, strictly analogous to those which, under the name of definitions, are the foundations of the other abstract sciences. Geometry presupposes an arbitrary definition of a line, "that which has length but not breadth." Just in the same manner does Political Economy presuppose an arbitrary definition of man, as a being who invariably does that by which he may obtain the greatest amount of necessaries, conveniences, and luxuries, with the smallest quantity of labour and physical self-denial with which they can be obtained in the existing state of knowledge. It is true that this definition of man is not formally prefixed to any work on Political Economy, as the definition of a line is prefixed to Euclid's Elements; and in proportion as by being so prefixed it would be less in danger of being forgotten, we may see ground for regret that this is not done. It is proper that what we assume in every particular case, should once for all be brought before the mind in its full extent, by being somewhere formally stated as a general maxim. Now, no one who is conversant with systematic treatises on Political Economy will question that whenever a political economist has shown that, by acting in a particular manner, a labourer may obviously obtain higher wages, a capitalist larger profits, or a landlord higher rent, he concludes as a matter of course, that they will certainly act in that manner. Political Economy, therefore, reasons from assumed premises - from premises which might be totally without foundation in fact, and which are not pretended to be universally in accordance with it. The conclusions of Political Economy, consequently, like those of geometry, are only true, as the common phrase is, in the abstract; that is, they are only true under certain suppositions, in which none but general causes - causes common to the whole class of causes under consideration - are taken into account.

"This ought not to be denied by the political economist. If he deny it, then, and then only, he places himself in the wrong. The a priori method which is laid to his charge, as if his employment of it proved his whole science to be worthless, is, as we shall presently show, the only method by which truth can possibly be attained in any department of the social science. All that is requisite is, that he be on his guard not to ascribe to conclusions which are grounded upon an hypothesis a different kind of certainty from that which really belongs to them. They would be true without qualification, only in a case which is purely imaginary. In proportion as the actual facts recede from the hypothesis, he must allow a corresponding deviation from the strict letter of his conclusion; otherwise it will be true only of things such as he has arbitrarily supposed, not of such things as really exist. That which is true in the abstract, is always true in the concrete with proper allowances. When a certain cause really exists, and if left to itself would infallibly produce a certain effect, that same effect, modified by all the other concurrent causes, will correctly correspond to the result really produced." ('Essays on Some Unsettled Questions of Political Economy', Third Edition, Longman, Green, and Co, London 1877, pp. 143-145 - underlining added.)

I submit that there is not an iota of difference between Mill's concluding remarks and Keynes 1922 definition - in which, perhaps not so incidentally, Keynes repeats the one word in Mill's summary with which one can take exception, "correctly":

"The Theory of Economics does not furnish a body of settled conclusions immediately applicable to a policy. 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."

Gunnar

----- Original Message -----

From: "Ted Winslow" <egwinslow@xxxxxxxxxx>

To: <pkt@xxxxxxxxxxxxxxxx>

Sent: Sunday, September 08, 2002 6:55 PM

Subject: Re: Statistical Method And Economics [Was: Re: Piorot on Madrick

>
> Gunnar Tomasson wrote:
>
> > Whitehead's concept of "organic unity" would seem to be descriptive of
> > physical reality whose "internal relations" are of the kind implied by
> > Einstein's following statement:
> >
> > "The supreme task of the physicist is to arrive at those universal
> > elementary laws from which the cosmos can be built up by pure
> > deduction."
>
> We've been through this (more than once) before. Here's my answer from
> last time. Einstein's statement is inconsistent with Whitehead's idea
> of "organic unity" for the reasons spelled out by Whitehead in the
> passages I've repeatedly pointed to, most recently in the passages from
> Tobin's notes.
>
>
> >> Nor do I recall any statement by Keynes - and I doubt that any
> >> exists - to
> >> challenge the view on the relationship between the axioms of science
> >> and
> >> empirical reality or "experience" which Einstein summarized as follows:
> >>
> >> "The supreme task of the physicist is to arrive at those universal
> >> elementary
> >> laws from which the cosmos can be built up by pure deduction. There
> >> is no
> >> logical path to these laws; only intuition, resting on sympathetic
> >> understanding of experience, can reach them." ('Principles of
> >> Research', 1918
> >> - reprinted in Albert Einstein - Ideas and Opinions, Dell Publishing
> >> Company,
> >> Laurel Printing, 1976, p. 221)
> >
> > I must be misunderstanding you.
> >
> > This passage from Einstein sets out a conception of physics that
> > Marshall
> > and Keynes, in the many passages I've quoted (including the one above),
> > explicitly reject as a conception appropriate for a "moral science" like
> > economics.
> >
> > It assumes there are "universal elementary laws from which the cosmos
> > can be
> > built up by pure deduction." Marshall and Keynes explicitly reject this
> > assumption as a basis for economics on the ground that, unlike physics,
> > the
> > material of economics is not constant and homogeneous. Here are some
> > more
> > examples from the material I've previously quoted:
> >
> > "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." (Marshall,
> > Principles, Vol. 1, p. 760)
> >
> > "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)
> >
> > (This, by the way, is the aspect of Marshall picked out for emphasis by
> > Schumpeter to indicate (overoptimistically so far as economics itself is
> > concerned) why "his [Marshall's] teachings can never die", an aspect of
> > Marshall that Schumpeter explicitly contrasts with that aspect of Mill
> > with
> > which you seem to be claiming both Marshall and Keynes should be
> > identified.
> >
> > "Its [Marshall's Principles] will last for an indefinite time not only
> > because teaching of such breadth and force merges into the inheritance
> > of
> > subsequent generations, but also because there is about it a peculiar
> > quality which effectively resists decay. Reared in an atmosphere that
> > was
> > full of slogans of evolutionary progress, Marshall was one of the first
> > economists to realize that economics is an evolutionary science
> > (although
> > his critics not only overlooked this element of his thought but in some
> > instances actually indicted his economics on the ground that it
> > neglected
> > the evolutionary aspect), and in particular that human nature he
> > professed
> > to deal with is malleable and changing in function of changing
> > environments.
> > But again, this is not what matters to us just now. What does matter is
> > that he carried his 'evolution-mindedness' into his theoretical work.
> > There
> > was no air of finality about it. Unlike Mill, he would never have said
> > that
> > some problem or other was settled for all time to come and that there
> > was
> > nothing about it that called for further explanation either by himself
> > or
> > any other writer. On the contrary, he was fully aware that he was
> > building
> > an essentially temporary structure. He always pointed beyond himself
> > and
> > towards lands into which it was not given to himself to enter. New
> > problems, ideas, and methods that are enemies to the work of other men,
> > thus
> > came to his own as allies. Within the vast fortified camp that the
> > built,
> > there was room - in fact, there was accommodation prepared in advance -
> > for
> > them all." (Schumpeter, 'Alfred Marshall's Principles: A Semi-Centennial
> > Appraisal', American Economic Review 1942 pp. 100-1 as quoted in Peter
> > Groenewegen, A Soaring Eagle: Alfred Marshall, 1842-1924, pp. 434-5))
> >
> > "Unlike physics, ... such parts of the bare bones of economic theory as
> > are
> > expressible in mathematical form are extremely easy compared with the
> > economic interpretation of the complex and incompletely known facts of
> > experience, [Footnote: "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."] and lead one but a very little way towards establishing
> > useful results." (Keynes, X, p. 186)
> >
> > Like Schumpeter, Keynes contrasts Marshall's approach with that aspect
> > of
> > Mill with which you appear to claim both Marshall and Keynes should be
> > identified. He does this in the context of offering a psychological
> > explanation for Marshall's inability to make his actions fully conform
> > to
> > his beliefs about the ultimate nature of economics.
> >
> > "he [Marshall] was too little willing to cast his half-baked bread on
> > the
> > waters, to trust in the efficacy of the co-operation of many minds, and
> > to
> > let the big world draw from him what sustenance it could. Was he not
> > attempting, contrary to his own principles, to achieve an impossible
> > finality? An economic treatise may have great educational value.
> > Perhaps
> > we should have one treatise, as a pièce de résistance, for each
> > generation.
> > But in view of the transitory character of economic facts, and the
> > bareness
> > of economic principles in isolation, does not the progress and the daily
> > usefulness of economic science require that pioneers and innovators
> > should
> > eschew the treatise and prefer the pamphlet or the monograph? ... Did
> > not
> > Mill, in achieving by his peculiar gifts a successful treatise, do more
> > for
> > pedagogics than for science, and end by sitting like an Old Man of the
> > Sea
> > on the voyaging Sinbads of the next generation? Economists must leave to
> > Adam Smith alone the glory of the quarto, must pluck the day, fling
> > pamphlets into the wind, write always *sub specie temporis*, and achieve
> > immorality by accident, if at all.
> > "Moreover, did not Marshall, by keeping his wisdom at home until he
> > could produce it fully clothed, mistake, perhaps, the true nature of
> > his own
> > special gift? 'Economics', he said, in the passage quoted above, 'is
> > not a
> > body of concrete truth, but an engine for the discovery of concrete
> > truth.'
> > This engine, as we employ it to-day, is largely of Marshall's
> > creation. He
> > put it in the hands of his pupils long before he offered it to the
> > world.
> > The building of this engine was the essential achievement of Marshall's
> > peculiar genius. Yet he hankered greatly after the 'concrete truth'
> > which
> > he had disclaimed and for the discovery of which he was not specially
> > qualified." (X, pp. 198-9)
>
> Ted
>
>