Whither Economics - and Economists?

["Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>]

In postings to PKT during the past two years, I have repeatedly cited Keynes' 1922 definition of 'The Theory of Economics' as "an apparatus of the mind, a technique of thinking" which, while it does not relate directly to real-world economic issues and problems, yet, "helps its possessor to arrive at correct conclusions" with respect thereto.

 

This concept of 'The Theory of Economics', I have also noted, is one with "the method a priori" which John Stuart Mill ascribed to all classical authors of first rank - indeed, on one occasion I suggested that Keynes had simply re-worded Mill's comments on the subject matter in his essay on outstanding methodological issues in political economy.

 

The Classical-Mill-Keynes viewpoint has just as often been challenged by other PKTers.

 

This morning, I came across the following passage in an essay by physicist H. P. Robertson entitled "Geometry as a Branch of Physics" written in 1949 in honor of Albert Einstein.  The passage summarizes with perfect precision my understanding of (a) how "axioms" relate to "theory"; (b) what Mill meant by "the method a priori" ; and (c) why Schumpeter insisted that "economics is a branch of logic" - a view which Samuelson professed not to understand in a paper on his centenary:

 

"First, then, we consider geometry as a deductive science, a branch of mathematics in which a body of theories is built up by logical processes from a postulated set of axioms (not "self-evident truths"). In logical position geometry differs not in kind from any other mathematical discipline - say the theory of numbers or the calculus of variations. As mathematics, it is not the science of measurement, despite the implications of its name - even though it did, in keeping with the name, originate in the codification of rules for land surveying. The principal criterion of its validity as a mathematical discipline is whether the axioms as written down are self-consistent, and the sole criterion of the truth of a theorem involving its concepts is whether the theorem can be deduced from the axioms. This truth is clearly relative to the axioms; the theorem that the sum of the three interior angles of a triangle is equal to two right angles, true in Euclidean geometry, is false in any of the geometries obtained on replacing the parallel postulate by one of its contraries. In the present sense it suffices for us that geometry is a body of theorems, involving among others the concepts of point, angle and a unique numerical relation called distance between pairs of points, deduced from a set of self-consistent axioms."

 

Let me add this.

 

The Classical-Mill-Keynes-Schumpeter view of 'The Theory of Economics' represents the consensus of the very best minds that have been applied to the subject matter during the past 250 years.

 

Now, with the world economy having been brought to the brink of disaster by the Credit-Bubble "keynesianism" of second-rate minds, the economics profession is on trial as never before.

 

As I see it, the alternative paths open to the profession are reflected in the widely divergent comments by two of the 20th century's brightest minds at century's dawn - Bertrand Russell and Max Planck, both of whom took a year of economics.

 

Russell gave it up because, in his judgement, it was child's play - read: the economics of second-rate minds.

 

Planck gave it up because, in his judgement, it was too difficult - read: the economics of first-class minds.

 

In brief, it is time for professional economists to stand up and be counted.

 

Gunnar