In the last few weeks I have read Dava Salyor's Gallileo biography, reread two great science classics, Gamov's Birth and Death of the Sun (orginally published in 1939), David Bohm's great Quantum Mechanics textbook (1954) and took a look at my son's current cell biology textbook.
I must say, if one criteria for science is a field that produces a continuous (but dialetic) accretion of knowledge throught theoretical development and empirical testing, the track record of economics is pretty pathetic compared to physics and biology. For example, comparing my son's cell biology textbook to the one that I used 30 years ago, there is an order of magnitude advance in the detail, comprehensiveness, theoretical foundation and empirical evidence of the knowledge presented. And this is an undergraduate class! Can anything like this be said of undergraduate textbooks in economics. Both Gallileo and Gamov have some very unflattering things to say about the "philosophers" of there time, as did Marx. I think the economics of the last 50 years is a lot closer to this kind of philosophy than to anything that looks like science. -----Original Message----- From: ravi [mailto:[EMAIL PROTECTED]] Sent: Monday, November 26, 2001 1:17 PM To: Pen-L Mailing List Subject: [PEN-L:19959] If Economics isn't Science, What is it? recently someone forwarded a bit to the list about the Nobel prize in economics and whether it was meaningful, etc. reading through klemke, hollinger, rudge: introductory readings on the philosophy of science, i came across a piece that might be of interest. i have reproduced sections from the piece below. my apologies if this is old or uninteresting stuff: If Economics isn't Science, What is it? -Alexander Rosenberg In a number of papers, and in "Microeconomic Laws", I argued that economic theory is a conceptually coherent body of causal general claims that stand a chance of being laws. My arguments elicited no great sigh of relief among economists, for they are not anxious about the scientific respectability of their discipline. But others eager to adopt or adapt microeconomic theory to their own uses have appealed to these and other arguments which attempt to defend economic theory from a litany of charges that are as old as the theory itself. Among these charges, the perennial ones were those that denied to economic theory the status of a contingent empirical discipline because it failed to meet one or another fashionable positivist of Popperian criterion of scientific respectability. With the waning of positivism these charges have seemed less and less serious to philosophers, although they have retained their force for the few economists still distracted by methodology. But among philosophers charges that economics does not measure up to standards for being a science have run afoul of the general consensus that we have no notion of science good enough to measure candidates against. This makes it difficult to raise the question of whether economics is a science, and tends to leave economists, and their erstwhile apologists like me, satisfied with the conclusion that since there is nothing logically or conceptually incoherent about economics, it must be a respectable empirical theory of human behavior and/or its aggregate consequences. The trouble with this attitude is that it is unwarrantably complacent. It is all well and good to say that economics is conceptually coherent, and that there are no uncontroversial standards against which economics may be found wanting, but this attitude will not make the serious anomalies and puzzles about economic theory go away. These puzzles surround its thoroughgoing predictive weakness. the ability to predict and control may be neither necessary nor sufficient criteria for cognitively respectable scientific theories. But the fact is that microeconomic theory has made no advances in the management of economic processes since its current formalism was first elaborated in the nineteenth century. And this surely undermines a complacent conviction that the credentials of economics as a science are entirely in order. For a long time after 1945 it might confidently have been said that Keynesian macroeconomics was a theory moving in the right direction: although a macro theory, it would ultimately provide the sort of explanatory and predictive satisfaction characteristic of science. But the simultaneous inflation and unemployment levels of the last decade and the economy's imperviousness to fiscal policy have eroded the layman's and the economist's confidence in the theory. Moreover the profession's reaction to the failures of Keynesian theory is even more disquieting to those who view economic theory as unimpeachably a scientific enterprise. For a large part of the response to its failures has been a return the microeconomic theories which it was sometimes claimed to supersede. The diagnosis offered for the failure of the Keynesian theory has been that it does not accord individual agents the kind of rationality in the use of information and the satisfaction of preferences that neoclassical microeconomic theory accords them. The alternative offered to Keynesian theory in the light of this result is nothing more nor less than a return to the status quo ante, to the neoclassical theory of Walrus, Marshall and the early Hicks, that Keynesianism had preempted. This cycle brings economic theory right back to where it was before 1937, and it should seriously undermine the confidence of anyone's beliefs that economics is an empirical science, with aims and standards roughly identical to other empirical sciences. For the twentieth-century history of economic theory certainly does not appear to be that of an empirical science. Of course, eighty years is not a long time in the life of a science, or even a theory, so the fact that economics has not substantially changed, either in its form or in its degree of confirmation, since Walras, or arguably since Adam Smith, is no reason to deny its scientific respectability. But it is reason to ask why economics has not moved away from the theoretical strategies that have characterized it at least since 1874, in spite of their practical inapplicability to crucial matters like the business cycle, economic development, or stagflation. On some views of proper scientific method, of course, economists have been doing just what they should be doing. Since the 19th century they have been pursuing a single research strategy, acting in accordance with a ubiquitous and powerful paradigm. For, economists have been steadily elaborating a theory whose form is identical to that of the great theoretical breakthroughs in science since the 16th century. Accordingly it may be argued that it would be irrational for economists to surrender this strategy short of a conclusive demonstration that it is inappropriate to the explanation of economic activity. The strategy is that of viewing the behavior economists seek to explain as reflecting forces which always move toward stable equilibria that maximize or minimize some theoretically crucial variable. In the case of microeconomics, this crucial variable is utility (or its latter-day surrogates), and the equilibrium is given by a level of price in all markets that maximizes this variable. This strategy is most impressively exemplified in Newtonian mechanics and in the Darwinian theory of natural selection. It is no surprise that a strategy which serves so well in these two signal accomplishments of science should have as strong a grip in other domains to which it seems applicable. Moreover, the constraints on theoretical and empirical developments that this strategy imposes can explain many of the greatest successes of Newtonian and Darwinian science, and much of the puzzling character of developments in economic theory. I call this strategy the extremal strategy, because it is especially apparent in Newtonian mechanics when that theory is expressed in so-called extremal principles, according to which a system's behavior always minimizes or maximizes variables reflecting the mechanically possible states of the system. In the theory of natural selection this strategy assumes that the environment acts so as to maximize fitness. This strategy is crucial to the success of these theories because of the way it directs and shapes the research motivated by them. <...> These theories are all committed to explain everything in their domains because of their extremal character. <...> An extremal theory cannot be treated as only a partial account of the behavior of objects in its domain, or as enumerating just some of the many determinants of its subject's states; for any behavior that actually fails to maximize or minimize the value of the privileged variable simply refutes the theory tout court. In fact, the pervasive character of extremal theories insulates them from falsification to a degree absent from non-extremal theories. <...> The axioms of theories like Newton's, or Darwin's, or Walras' do not embody even implicit ceteris paribus clauses. With these theories the choice is always between rejecting the auxiliary hypotheses - the description of test conditions - or reject the theory altogether. <..> Extremal theories are an important methodological strategy because they are so well insulated from falsification. This has enabled them to function at the core of research programs, turning what otherwise might be anomalies and counter-instances into new predictions and new opportunities for extending their domains and deepening their precision. Accordingly, it may be argued, economists' attachment to their extremal theory represents not complacency, but a well-grounded methodological conservatism. <...> But this conservative rationale for the attachment of economists to extremal theories is vitiated by a crucial disanology between microeconomics and mechanics or evolution. Economists would indeed be well advised not to surrender their extremal research program, if only they could boast even a small part of the startling success that other extremal research programs have achieved. But two hundred years of work in the same direction have produced nothing comparable to the physicists' discovery of new planets, or of new technologies by which to control the mechanical phenomena that Newton's laws systemized. <...> There has been no signal success of economic theory akin to these advances of extremal theory. <...> There is, of course, a vast literature on why economics has so little in the way of predictive content, and on how a theory so dependent on idealizations and factually false assumptions as microeconomics can nevertheless constitute a respectable scientific enterprise. This literature goes back to John Stuart Mill and forward to, for example, Hal Varian. The only two things clear about this literature are that economists have found it almost universally satisfying and legitimating, and non-economists have consistently been left unsatisfied, insisting that methodological excuses are no substitute for attempting to do what economics has hitherto not done: improve its predictive content. Having shaken free from the complacent attitude toward economic theory evinced in Microeconomic Laws, I have come to think that the failure of economics is not methodological, or conceptual, but very broadly empirical. Despite its conceptual integrity, microeconomics, together with all the sciences of human action and its aggregation, rests on a false but central conviction that vitiates its axioms and so bedevils the theorems deduced from them. Economic theory assumes that the categories of preference and expectation are the classes in which economic causes are to be systematized, and that the events to be explained are properly classified as actions like buying, selling, and the movements of markets, industries, and economies that these actions aggregate to. The theory has made this assumption, because of course it is an assumption we all make about human behavior; our behavior constitutes action and is caused by the joint operation of our desires and beliefs. <...> The real trouble with economics, the real source of its failure to find improvable laws of economic behavior, is something that has only become clear in philosophy's recent attempts to understand and improve the foundations of another science in trouble: psychology, and particularly behavioral and cognitive psychology. Philosophers have shown that the terms in which ordinary thought and the behavioral sciences describe the causes and effects of human action do not describe "natural kinds", they do not divide nature at the joints. They do not label categories of states that share the same manageably small set of causes and effects, and so cannot be brought together in causal generalizations that improve on our ordinary level of prediction and control of human actions, let alone attain the sort of continuing improvement characteristic of science. <..> This work has been devoted to understanding "intentional" terms like "belief", desire", "action", and their vast hoard of cognates. <...> The trouble with beliefs and desires is that when people have them the propositions they "contain" need not be true or false and the objects they are directed at need not exist or even be possible objects. So we can't decide whether a person is in a given mental state by determining either the truth or falsity of any statement open to our confirmation, or the existence or attainment of any object or end of human action. <section on problems of behaviorism and identity theory> <...> Applying the new orthodoxy in the philosophy of psychology, it becomes clear that economics' predictive weakness hinges on the intentional typology of the phenomena it explains and the causes it identifies. Its failure to uncover laws of human behavior is due to its wrongly assuming that these laws will trade in desires, beliefs, or their cognates. <...> Thus the failure of economics is traced not to a conceptual mistake, or to the inappropriateness of extremal theories and their elegant mathematical apparatus to human action, but to a false assumption economists share with all other social scientists, indeed with everyone who has ever explained their own or others' behavior by appeal to the operation of desires and beliefs. <...> A better comparison for economic theory than Mendelian genetics is phlogiston theory, whose failure is traceable to its incommensurability with the oxygen theory that superseded it. Phlogiston theory is a scientific dead end, because there is no such thing as phlogiston, because the notion of phlogiston does not divide nature at any joint. Phlogiston is not a natural kind. This is an empirical fact about nature, and the claim that intentional notions are not natural kinds is equally a contingent claim. Thus, economics and phlogiston theory are not methodologically defective. They are simply false. <...> Bringing what little utility there is in economic theory into harmony with my diagnosis of its ills is a task for which there are many solutions. The first thing to note is this: although the laws of supply and demand and other market-level general statements are deduced from claims about the intentional determinants of individual actions, they are logically separable from such claims, and, more important, they can be shown to follow from assumptions which are the direct denial of these general claims about rational action. From the assumption that individuals behave in purely habitual ways, always purchasing the same or the most nearly similar bundle of commodities available, no matter what the price, the law of downward sloping demand follows, as it does from the assumption that their purchases are all impulsively random. The same can be shown for the choices of entrepreneurs. So surrendering the extremal intentional approach to human behavior does not logically or even theoretically oblige us to surrender these "laws". <...> Now the fact that we can usefully employ false or vacuous general statements, up to certain limits, is no mystery in the philosophy of science at all. The clearest instance of such restrictedly useful though false or vacuous general statements is Euclidean geometry. <...> Of course, economic theory has attained nothing like the success of Euclidean geometry. But the apparent applicability of some of its claims is to be explained by appeal to the same factors which explain why we can employ, e.g., the Pythagorean theorem, even though there are no Euclidean triangles and no Euclidean straight lines. We can employ the laws of supply and demand, even though human beings are not economically rational agents; that is, we can employ these "laws" even though individuals do not make choices reflecting any empirical regularity governing their expectations and their intentions. We can employ them all right, but the laws of supply and demand cannot be applied with the usefulness and exactitude of the Pythagorean theorem, just because the kind terms of economic theory are different from the real kinds in which human behavior is correctly classified. And this difference is comparatively much greater than the difference between the kind terms of applied geometry and those of physics. There are no Euclidean triangles, but we know why, and we can calculate the amount of the divergence between any physical triangle and the Euclidean claims about it, because we have a physical theory to make these corrections, the very one which showed Euclidean geometry to be factually false. We can make no such improvements in the application of the laws of supply and demand; we can never do any better than apply them retrospectively or generically; we cannot specify their parameters, or their exceptions, because the axiomatic system in which they figure diverges from the facts very greatly, and because we have no associated theory that enables us to measure this divergence and make appropriate corrections for it. <...> Euclidean geometry was once styled the science of space, but calling it a science did not make it one, and we have come to view advances in the axiomatization and extension of geometry as events not in science, but in mathematics. Economics is often defined as the science of the distribution of scarce resources, but calling it a science does not make it one. <...> Much of the mystery surrounding the actual development of economic theory - its shifts in formalism, its insulation from empirical assessment, its interest in proving purely formal, abstract possibilities, its unchanged character over a period of centuries, the controversies about its cognitive status - can be comprehended and properly appreciated if we give up the notion that economics any longer has the aims or makes the claims of an empirical science of human behavior. Rather we should view it as a branch of mathematics, one devoted to examining the formal properties of a set of assumptions about the transitivity of abstract relations: axioms that implicitly define a technical notion of "rationality", just as geometry examines the formal properties of abstract points and lines. This abstract term "rationality" may have far more potential interpretations than economists themselves realize, but rather less bearing on human behavior and its consequences than we have unreasonably demanded economists to reveal. <...> We should neither attach much confidence to predictions made on its basis nor condemn it severely when these predictions fail. For it can no more be relied on or faulted than Euclidean geometry should be in the context of astrophysics. Admittedly this attitude leaves a vacuum in the foundations of public policy. For without economics we lose even the illusion that we understand the probable, or potential, long-term or merely possible consequences of choices that policy makers are forced to make. Of course, the caution that loss of illusions may foster is certain to be salubrious. On the other hand the vacuum may attract a really useful foundation for decisions about the economy and its improvement.
