On 9 Dec 98 at 19:51, Ken Hanly wrote: > James Michael Craven wrote: > > > > > > Comment: What exactly is "empirical" about neoclassical economics? > > > RESPONSE: While I agree with much in the material you enclosed, at the > level of particular issues rightwing think-tanks such as the Fraser > Institute in Canada do quite a bit of empirical research. Research funded > by and serving the interest of large corporations, including it would > seem the publicly owned Sask. Power that belongs to the institute! For > example there is a whole book on rent control that uses a lot of data > from Sweden and the US to show it doesn't work and allegedly verifies > what neo-classical theory would predict. I wrote a paper on the Ethics of > Rent Control and found the data in the book quite useful. The institute > has done a lot of empirical work on the health care system in Canada. > Much of it, for example data about waiting lists, is useful and shows > real problems in the system even if the interpretation of the data is > slanted. > As I recall, Milton Friedman in a famous paper, whose title > escapes me( Economics as a Positive Science?), justified the unrealistic > concepts embedded in theoretical models of neo-classical economics in > terms of their predictive value. They are justified by the fact that the > empirical facts conform to what the models predict. > (Me, not Uncle Miltie) All you need is the proper selection of facts > and proper interpretation. Data that do not confirm the model are > ignored or re-interpreted to show they really do not disconfirm it. > Consider telephone deregulation. Theory would say that regulation > would result in greater competition and this in turn to lower rates. Wow. > It does for long distance. Theory confirmed. We need more deregulation. > Ignore the fact that local rates skyrocket as compared to before > deregulation. Ignore the fact that jobs may be lost. Oh but it produces > new jobs. Right. Good paying union jobs are replaced by poor > telephone marketers trying to get you to join AT and T or Sprint, or > whomever. As good neo-classical researchers they should ask us how much > we would pay for to be rid of these annoyances but of course these things > will not be part of any analysis. THey might generate incorrect data that > disconfirm the hypotheses. > Economics seems to be the only science in which deductive > hypotheses can be disconfirmed over and over again with no discernible > effect. The disconfirmed system is still used. Could it be because the > theory is of great service ideologically and practically in advancing > capitalist interests? > Cheers, Ken Hanly Ken, One of the several problems associated with Friedman's caricature of the the "positivist" notion of prediction being the sole and necessary test of validity (presumably also confirming adequacy of core assumptions of the syllogism or hypothesis) is how to operationalize and confirm the confirming prediction. For example, neoclassicals predict that "deregulation" increases degree of competition which in turn supposedly closes the gap between existing conditions of "inefficiency" and conditions of efficiency (technological, economic, production, exchange, consumer and overall allocative) is operationalizing the concept of "deregulation" (de jure versus de facto), operationalizing and measuring "degree of competition" and assessing exting process and conditions in light of presumed ooutcomes under conditions of "efficiency" . For example, under the schemes proposed by most of the neoclassicals, under de jure "deregulation" are all sorts of pro-capital de-facto subsidies, socialized costs and risks that would be called highly regulatory if applied to labor. In other words, underneath the de jure "deregulation" are highly developed and extensive applied forms of de fact regulation. Then measuring de facto versus de jure degreees of competition. For example we have seen time after time that nominal de-regulation may lead to nominal or de jure competition but it is usually increased competition in certain market niches or segments while overall economic concentration (larger and larger shares industry revenues or profits accruing to fewer and fewer core or industry leaders) increases--e.g. airlines. This is one of the arguments for the Wheat Board that with de-regulation and Darwin day the small farmers would soon be extinct. Time horizons also need to be specified--unspecified in the static world of neoclassical economics. Then there is the contrived statistics and sources and methods problem so common among the neoclassicals. First what is the ideologically desireable conclusion--A=C, next given only the ideologically permissible/acceptable variables---A,B,C,--what assumptions do I need to "deductively" arrive at my conclusion--A=B, B=C; next what data soruces and methods do I need should I even deign to "support" my assumptions; and finally, what sources and methods to I need to select and mine to show that my predicted result did come about and/or is coming about. The literature is full of it. Jim Craven James Craven Dept. of Economics,Clark College 1800 E. 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