Blog-Reference and Blog-Reference on Aug 19
The representative economist has no idea of what science is all about. First of all, science does NOT ‘predict the future’ simply because, as a genuine scientist said: “The future is unpredictable.” (Feynman, 1992)
What is called prediction in science is categorically different from the commonsensical meaning of ‘predicting the future’. The sole criterion of science is true/false and not predicting the next crash or any other extraordinary event. This is the occupation of prophets, fear mongers, astrologers, psychics, poultry entrails readers, sensationalists, half-witted journalists, etcetera. In marked contrast, science is about invariants or eternal laws.
So, scientists do not predict when the next apple will fall from the tree. What they indeed predict is position and velocity at any point in time once the apple has started to fall. The commonsenser’s view of reality is entirely DIFFERENT from the scientist’s view. The commonsenser’s view is practical, trivial, and false but utterly convincing for other commonsensers. This is why false world views/theories that have no immediate grave negative practical consequences can survive for an indefinite time.
Each falling apple is an unique historical event. There are arbitrary many proximate causes for an apple to fall: a hailstorm, playing children, an exploding meteorite, material fatigue, an earthquake, and so on. In almost all cases the singular event is uncertain and unpredictable. That is so OBVIOUS that no physicist ever lost many words about the historicity and uncertainty of falling apples. Not more can be reiterated about uncertainty than five words: “We simply do not know.” (Keynes)
A SCIENTIFIC prediction is a conditional proposition which presupposes: (i) the exact knowledge of initial conditions, (ii) the knowledge of one or more universal laws, (iii) the absence of disturbances. (Popper, 1994)
Where do we get the universal laws from? They follow from a mental construct called theory. A theory in turn must satisfy TWO criteria: material consistency and formal consistency (Klant, 1994). The former is established by observation/testing the latter by the axiomatic-deductive method, which in turn only works when the axioms/premises are true or as Aristotle said: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.”*
Now it is pretty obvious that the behavioral premises/axioms of economics (agents individually optimize subject to constraints; agents have full relevant knowledge etcetera) are NOT certain, true, and primary. And this means that the whole analytical superstructure of orthodox economics is false, even if each intermediate logical step is correct.
Neither Friedman nor Samuelson nor the rest of the scientifically incompetent orthodox and heterodox crowd got this elementary methodological point. And this is why Walrasianism, Keynesianism, Marxianism, and Austrianism are provable false. The common underlying error of these approaches consists of the naive commonsensical belief that economics is a social science. This quite naturally leads to the acceptance of silly assumptions about human nature/behavior/action as premises/axioms.
* For more details see exhibit on Wikimedia
Related 'Economics is NOT a social science' and 'How to get rid of an obsolete theory' and 'ICYMI Prediction/Forecasting' and 'True macrofoundations: the reset of economics'
You quote Hume: “... but when the road ends at a coal-pit, he [the traveler] doesn’t need much judgment to know that he has gone wrong, and perhaps to find out what has led him astray.” And conclude: “Syll, et al, choose to debate the size, scope, and shape of the coal pit.”
This, though, misses the crucial point: “There is no evidence to suggest that economists abandon degenerating programs in the absence of a progressive alternative.” (Weintraub, 1985, p. 148)
Economists know quite well that they are in the coal pit. The point is that they have no clue how to get out. So Orthodoxy and Heterodoxy entertain the public with the grand coal-pit-wrestling-in-the-dark sitcom.
What is needed is the “progressive alternative”, i.e. a new paradigm. Indeed, the failure of traditional Heterodoxy consists in endlessly debating the “size, scope, and shape of the coal pit” or, as Feyerabend put it: “... we may say that the ... omnipresence of a certain point of view is not a sign of excellence or an indication that the truth or part of the truth has at last been found. It is, rather, the indication of a failure of reason to find suitable alternatives which might be used to transcend an accidental intermediate stage of our knowledge. (2004, p. 72)
The real task, then, is to define the new foundations of a materially and formally consistent economic paradigm. This, obviously, is beyond the means of the adherents of both Orthodoxy and traditional Heterodoxy.* These folks will end their wasted scientific lives in the coal pit.
Feyerabend, P. K. (2004). Problems of Empiricism. Cambridge: Cambridge University Press.
Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL
* See ‘From Orthodoxy to Heterodoxy to Sysdoxy’and ‘How to get rid of an obsolete theory’ and cross references Paradigm shift and 'Prediction does not work? Try retrodiction first' and 'What is dead certain in an uncertain world: economists’ abysmal incompetence'