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sanity,
humanity and science
post-autistic economics review
Issue no. 28, 25 October
2004
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In
this issue:
- Symposium
on Reorienting Economics
This and the next four or five issues of
the PAER will be devoted in part to debate on and discussion of Tony Lawson’s
new book Reorienting Economics.
The intention is for his book to serve as a focal point for a general
discussion on the reform of economics.
- Geoffrey M. Hodgson
On
the Problem of Formalism in Economics
- Irene van Staveren
Feminism
and Realism - A Contested Relationship
- Bruce Caldwell
Some Comments on Lawson’s Reorienting
Economics: Same Facts, Different Conclusions
- Goodwin, Nelson, Ackerman and
Weisskopf
A Post-Autistic Introduction to Economic Behaviour
- Peter Söderbaum
Sweden Debates the Future of Economics’ “Nobel”
________________________________________________________________
Two
Announcements
There has been a PAE
reform of the economics curriculum at the Sorbonne (Paris I)
“At our university (the leading one for economics
in France) we have succeeded in cutting back the programs of micro, macro and
maths, something that would have been inconceivable a few years ago. This is in the aid of an approach
more open, more multidisciplinary.
The ‘orthodoxes’ have rather easily given way, having, despite
everything, interiorized the arguments advanced against them. In the colloquiums and in the press
they feel obliged to justify what they do, thereby admitting at least in part
the aptness of the ‘anti autistes’ criticisms.” Bernard
Guerrien
Invitation to join a heterodox economics e-mail list
Dear Colleague,
I run an e-mail list that distributes information that is of interest to
heterodox economists around the world. I try to restrict the e-mails to
one every 2-3 weeks. The e-mails generally take the form of a
description of a heterodox conference I have been to, brief comments on
various heterodox economic activity around the world, and perhaps a brief obituary
of a heterodox economist who has died. Then the rest of the e-mail
provides information that I think are of interest to heterodox economists on
newly published books, new journals, job announcements, call for papers of
conferences that are of interest to heterodox economists, seminars, and
distribution of information on heterodox journals, graduate programs, and
other things. Nearly all of the material I send out has been sent to me
by heterodox economists who want me to make it known to the economists on my
e-mail list. Thus, if you have any thing you want to send out that you
think is of interest to heterodox economists, please send it to me at leefs@umkc.edu and I'll send it out.
If you would like to be part of this e-mail list, please send me your e-mail
address. If you find the material I send not matching your interests,
you can just e-mail me and ask me to take your name off the list--and I will
immediately. If you have a questions please e-mail me.
Sincerely,
Professor Frederic S. Lee
University of Missouri-Kansas City, USA
leefs@umkc.edu
________________________________________________________________
Symposium on Reorienting
Economics
On the Problem of Formalism in Economics
Geoffrey M. Hodgson (University
of Hertfordshire, UK)
Modern
Economics is Sick
In his Reorienting Economics, Tony
Lawson cites this magnificently appropriate quotation by Mark Blaug (1997, p.
3):
Modern economics is sick. Economics has increasingly become an
intellectual game played for its own sake and not for its practical
consequences for understanding the economic world. Economists have converted
the subject into a sort of social mathematics in which analytical rigour is everything
and practical relevance is nothing.
I believe that on this issue, Lawson,
Blaug and I are in agreement: the victory of technique over substance is a
chronic problem within modern economics. Although the victory of formalism
can be dated to the 1950s (Blaug 1999, 2003), by the 1980s the problem had
become much more serious. Because mathematics has swamped the curricula in
leading universities and graduate schools, student economists are neither
encouraged nor equipped to analyze real world economies and institutions.
Arjo Klamer and David Colander (1990, p. 18) reported a survey which showed
that only 3 per cent of graduate students on top US economics programmes
perceived ‘having a thorough knowledge of the economy’ to be ‘very important’
for professional success, while 65 per cent thought that ‘being smart in the
sense of problem-solving’ is what matters, and 57 per cent believed that
‘excellence in mathematics’ was very important.
In 1988 the
American Economic Association set up a Commission on the state of graduate
education in economics in the US. In a crushing indictment, the Commission
expressed its fear that ‘graduate programs may be turning out a generation
with too many idiot savants skilled in technique but innocent of real
economic issues’ (Krueger et al, 1991, pp. 1044–5). Alan Blinder
(1990, p. 445), a member of the Commission, commented:
Both students and faculty find economics obsessed with technique over
substance . . . the many macro and micro theory exams the Commission examined
. . . tested mathematical puzzle-solving ability, not substantive knowledge
about economics . . . Only 14 percent of the students report that their core
courses put substantial emphasis on ‘applying economic theory to real-world
problems.’
Alarm bells concerning technique
displacing substance in economics have been sounding formany years (Ward,
1972). However, although mainstream economics has made some significant
theoretical advances in the 1990s, including an increasing adoption of
institutional and evolutionary themes, the situation concerning formalism has
not got any better.
Perhaps the
most serious emerging problem is that the graduate students of the 1980s and
1990s, who are skilled in technique but who have an impoverished
understanding of economic principles and their history, are now beginning to
achieve positions of seniority and influence in the university departments,
associations and journals of the economics profession. Their growing power
and influence will ensure that formalism further consolidates its
overwhelming hegemony, to the detriment of wider-ranging conceptual and
methodological enquiry. This problem is particularly serious in Britain and
America, where formalism has achieved its earliest and most complete victory.
But the process is delayed rather than absent elsewhere.
Both Blaug and
Lawson face the problem of formalism head-on. But, as I shall elaborate
below, their evaluations differ. Blaug complains that formalism has been
associated with a detachment of economics from substantial and practical
issues. Lawson’s (1997, 2003) attack is more extensive and radical. He
develops at length a methodological critique of what he calls ‘deductivism’
and identifies this as the root of the formalist malady. One of my main
purposes here is to examine some prominent aspects of Lawson’s critique of
formalism. I shall argue that his stance is too limiting, with the expected
outcome that mathematical and econometric tools will be illegitimate except
under ‘seemingly rare’ (Lawson, 2003, p. 21) conditions.
Tony Lawson’s Critique of Formalism
Lawson affirms
that the systems addressed by the social sciences are open, in that they are
subject to multiple extrinsic and intrinsic disturbances. This makes the task
of prediction either difficult or impossible. For Lawson (1997, p. 288),
‘event prediction is usually infeasible’ and ‘in any case not required for a
successful science of economics’.
Lawson (1997,
pp. 16-17) argues that ‘deductivism’ presumes ‘event regularities’ or
‘constant conjunctions of events or states of affairs’ with regularities of
the form ‘whenever event x then event y’. Philosophically, this is a rather
atypical definition of deductivism, because it refers to empirical
regularities concerning events rather than logical deductions concerning
propositions. He seems to suggest that logical or mathematical constructions,
if they are to be of relevance or use, must be some kind of map of reality at
the level of events. For example, Lawson (2003, p. 22) writes of the
importance of a ‘“fit” with reality’.
From this
stance, his critique of the use of formalism in economics readily follows.
Social reality is an open system, generally lacking in ‘constant conjunctions
of events’. By contrast, formal models cannot be open to an indefinite number
of additional relations or variables. In either a strict or a stochastic
sense, such formal models generate regularities in the form: if x then y.
Such event regularities are highly limited in the social realm. Accordingly,
there is a general mismatch between formal models and reality. If economics
is to progress, then formal modelling must be limited those cases where such regularities pertain, and
these appear to be rather rare.
In the absence
of formal models, what does the theorist do? Lawson realizes that no theory
(formal or discursive) can proceed without some degree of abstraction: it is
impossible to consider all elements and interactions at once. Indeed, he
develops his methodological notion of abstraction at length. But here he
faces a difficulty. If abstraction is necessary, and it involves the
limitation of the sphere of consideration and the exclusion of additional
relations or disturbing forces, then doesn’t this too imply the assumption of
a closed system? Stephen Nash (2004) has recently argued in the affirmative,
suggesting that Lawson too must assume conditions or forms of closure. To
some extent, however, Lawson (1997, p. 236) anticipates this objection. He
proposes a distinction between ‘abstraction’ and ‘isolation’ in the following
terms:
When we focus upon varying
productivity performances here, conditions of work there, rising or falling
unemployment rates, and so on, we do not suppose that these features we
choose to emphasise
exist in isolation, even as a temporary, heuristic, measure. To do so is to
assume a totally different world from the one in which we live, and one that
has no bearing upon it. … In short, there is literally a world of difference
between leaving something (temporarily) out of focus and treating it as though
it does not exist. The achieving of an abstraction and treating something as
though it existed in isolation are not the same thing at all.
He uses this distinction to protect his
argument against the objection that his method of abstraction also implies the
assumption of closure; he argues that abstraction does not imply closure but
isolation does. With some important nuances and qualifications, Lawson (1997,
pp. 131-3) associates the notion of isolation with the work of Uskali Mäki
(1992, 1994) and contrasts isolation with his own concept of abstraction.
However, I shall argue later below that the distinction is, at least in
prominent practical instances, difficult to sustain. Lawson takes a
relatively extreme position in his attitude to formalism in economics, even
among critics of mainstream economics, and even among the school of ‘critical
realists’ to which he belongs. For example, critical realists such as Paul
Downward (2000) have defended a more frequent use of some econometric
techniques. Lawson points to very few concrete instances where econometrics
has been appropriately deployed; Downward points to several. And the critical
realist Erik Olin Wright (1994, pp, 183-9) has strongly supported the use of
‘explicit abstract models, sometimes highly formalized as in game theory’ and
other ‘rational choice models’. Although of course an extreme position such
as Lawson’s is not necessarily inappropriate or wrong, it does invite
repeated criticism.
Perhaps a
consequence, in Lawson’s later writing, there has been a slight shift of tone
and emphasis, if not substance as well. For example, Lawson (1999, pp. 7-8)
proposes that from the fact that ‘the world is open and structured, it does
not follow’ that economists ‘ought thereby not to engage at all in formalistic
methods such as econometrics.’ He continues:
The possibility
of successes with the latter requires local closures. … Critical realism thus
cannot and does not rule out a priori their limited occurrence.
Rather, critical realism adopts an essentially ex posteriori orientation
… the opponent is the advocate of any form of a priori dogma.
With some amendments, Lawson (2003, pp.
xix, 27, 178-9) repeats a similar argument in several places in his latest
book. Again and again he insists that he is not against the use of
econometrics or models in principle, but that they are of highly limited use
given the closure conditions upon which they depend. He writes that ‘a
blanket rejection of econometrics, or indeed of any other method, is not a
stance that is, or could be, sponsored in critical realism.’ What is opposed
is not econometrics but ‘the reduction of economics to formalistic
analysis.’ But he then goes on to say that the ‘application of formalistic
methods requires certain (closure) conditions constituting special
configurations of social reality that (unsurprisingly from the perspective
sustained) have turned out to be rather rare.’ In a recent essay, Lawson
(2004) again repeats his insistence that he is not ‘anti-mathematics’. But
his expectation remains that the conditions for its effective and proper use
would be rare.
In these
passages at least two features are emphasized. The first is a strong, sincere
and repeated claim of anti-dogmatism concerning whether or not mathematics
can or should be used. But he lays down criteria for its use, including the
requirement of (approximated) local closure. As a result of these criteria,
the specific measure of his own anti-dogmatism, in practice rather than in
intention, is how far he would admit that open systems might appear (or be
approximated) in reality. Lawson argues that his critical realist perspective
suggests at the outset that they are ‘limited’ or even ‘rather rare’.
Accordingly, the ontological arguments in Lawson’s critical realism lead him
right away to expect that the possibilities for formalism are highly
restricted. This sets limits on his anti-dogmatist stance, despite his
pronounced antidogmatist intentions. Although Lawson imposes no absolute
normative ban on the use of mathematics, his arguments limit its legitimate
use to ‘rare’ circumstances only.
Generally, one
can also ask if a pervasive anti-dogmatism were possible. The need for some
dogmatic presuppositions must be acknowledged by any philosopher or theorist.
The removal of all dogma would mean a disabling nihilism of universal
scepticism. In such circumstances, no theory could be established. Similarly,
human activity would become paralyzed if we ceased to believe in the
essential dogma that most of the natural regularities and social institutions
of today will survive until tomorrow. We often admire anti-dogmatism as a
commendable personality trait, but philosophy of science suggests that some
considerable degree of dogmatism is unavoidable.
The second
feature is the proclamation of ‘an essentially ex posteriori orientation’,
although what precisely is meant by this is insufficiently clear. Critical
realists rightly emphasize the importance and priority of ontological
commitments. Consider fundamental ontological commitments such as ‘ubiquity
determinism’ (Bhaskar, 1975, pp. 70-1), which means that every event is
deemed to have a cause. We have known at least since the days of David Hume
that it is impossible to deduce causes a posteriori from our
experience of events. It is in the very nature of such primary ontological
commitments that they are neither based on nor deduced from evidence or
experience. One of the crucial aspects of the philosophical assault on
positivism in the middle of the twentieth century was the reaffirmation of the
importance of such prior ontological commitments, which cannot be established
by appeal to evidence or experience alone (Quine, 1951; Caldwell, 1982). So
one is left wondering what ‘an essentially ex posteriori orientation’
means, and how it can be reconciled with an insistence on the primacy of
ontology.
Again I detect
a slight post-1997 shift of tone and emphasis when Lawson (2003, pp. 20-1)
openly discusses the possibility that econometrics might be of use in some
instances:
Clive Granger
has argued convincingly that it is possible to use econometrics to provide
relatively successful short-run forecasts of phenomena such as electricity
loads and peaks in regions wherein one factor, temperature, or more
specifically the extreme cold, dominates behaviour. … The point remains,
however, that the sorts of conditions in question appear a posteriori not
to be typical of the social realm. Rather, as I say, social reality is found
to be a quintessentially open, structured, dynamic and highly internally related
system, amongst other things, whilst the conditions for achieving a local
closure are seemingly rare.
This is the only example I can find where
Lawson has pointed to a specific piece of econometric analysis and
acknowledged its legitimacy. Note, however, the strictness of the key
condition involved. According to this passage, for econometrics to be
applicable, ‘local closure’ must be actually achieved, not merely
approximated. However, it is clearly the case a posteriori that
electricity consumption (even in cold regions) is a feature of an open rather
than a closed system. For instance, electricity consumption is generally
affected by its price. Such prices are heavily influenced by global market
conditions. Global markets are far from being closed systems. Granger did not
provide an example which establishes local closure. By the logic of his own
argument, Lawson should have deemed econometrics to be inapplicable to this
situation as well. His single claimed example of the legitimate use of
econometrics turns out to be illicit according to his own key criterion.
Indeed, if we
require that formal models can only be applied in contexts where local
closure is actually achieved, then this would mean that such models were
inappropriate in other sciences and disciplines, such as biology, physics or
engineering. Generally, in multiple contexts, in both the natural and social
world, such closures are absent, as Roy Bhaskar (1975) as well as Lawson
himself have emphasized. If formal models require strict local closure, then
formal models are never appropriate. But this would overlook the achievement
of mathematical models in some sciences. It may be suggested that local
closure is sometimes approximated in physics, and because of this some formal
models can be of use. But models and simulations have also been used with
some success in biology and evolutionary anthropology, which face a degree of
complexity and openness comparable to that found in human societies (Murray,
1989; Boyd and Richerson, 1985).
At least in recent
seminar presentations, Lawson has amended his position still further, by
proposing that econometrics might apply when local closure is ‘approximated
in reality’. This formulation contrasts with that in his two (1997, 2003)
books, which generally insist that local closure conditions must actually
apply for formalism to be viable. From his amended standpoint, admitting a
degree of approximation to closure, it would be possible to admit the Granger
example as a case of the legitimate application of econometric techniques.
The general problem for Lawson in applying this revised criterion more widely
is that the degree of acceptable approximation is left unspecified. In
general, once the insistence on the actual achievement of local closure is
removed, and approximations to closure are admitted, then the door to
econometrics is unlocked and opened.
Some Key Problems and Omissions in Tony
Lawson’s Critique
Much of Lawson’s discussion of formalism
concerns econometrics. He gives insufficient attention to other applications
of mathematical techniques, which serve primary purposes other than the
prediction or explanation of measurable variables. Such additional
applications of formalism include (a) heuristics and (b) internal critiques.
I shall address each of these in turn.
The purpose of
a heuristic is to identify possible causal mechanisms that form part of a
more complex and inevitably open system. Heuristics can be useful without
necessarily making adequate predictions or closely matching existing data. Their
purpose is to establish a plausible segment of a causal story, without
necessarily giving an adequate or complete explanation of the phenomena to
which they relate.
An example of a
formal heuristic that has been persuasive in economics is the ethnic
segregation model constructed by Thomas Schelling (1969). Using a very simple
model of housing location, Schelling showed that ethnic segregation can
result even from very small feedback effects. Even if people only have a very
slight preference for their own ethnic group, this can be enough to cause
migration out of mixed ethnic areas, with the end result of segregated ethnic
ghettos. The problem is extremely simple, and hardly realistic in its
detailed assumptions. However, making the model more complicated and
‘realistic’ would be beyond the point, partly because it is obvious that
similar outcomes might result from a more complicated model. Instead, the
Schelling model points to a credible mechanism that shows that ethnic
segregation does not necessarily depend upon the actions of bigoted racists.
Such racists exist in the real world, so their inclusion in the model would
make it more realistic. But this would defeat the object of the model, which
is to show that segregation might result even without them. The model
abstracts from the more forceful versions of racism that we find in the real
world to establish this key point. In this case, the power of the model is
helped by its unrealisticness. The power of the model lies in its capacity to
abstract a plausible bit hitherto eglected causal mechanism.
In a very
useful discussion of such ‘credible worlds’, Robert Sugden (2000) asks
probing questions concerning the role and ‘realisticness’ of this and other
heuristic models in economics. These heuristic models have the paradoxical
claim that they are literally unrealistic yet they seem to illuminate
important aspects of reality. Using the Schelling model alongside George
Akerlof’s (1970) famous article on the ‘market for lemons’, which again
claims to establish meaningful propositions about the world on the basis on
an admittedly unrealistic model, Sugden (p. 28) describes these models as
‘credible counterfactual worlds’ that give ‘some warrant for making inductive
inferences from model to the real world.’
In no case can
the construction of a heuristic or counterfactual model clinch the argument
concerning the causal mechanisms that actually exist in the real world.
However, what they sometimes do show – as in the case of the Schelling model
– is that outcomes might not necessarily result from the causal factors that
may be presumed at first sight. To complete the argument, further theoretical
development and empirical enquiry are always required. I have suggested above
that heuristics are appropriate if they successfully abstract an important
causal mechanism in reality. Accordingly, heuristics relate to the very
process of abstraction that Lawson himself highlights. But Lawson suggests
that heuristics are isolations rather than abstractions. So here I must return
to Lawson’s (1997, p. 236) attempted distinction between isolation and
abstraction, as quoted above. According to him, the key difference is
‘between leaving something (temporarily) out of focus and treating it as
though it does not exist’. Again take the Schelling model as an example.
Schelling himself accepts that bigoted racists exist, yet he leaves them out
of his model. The purpose of the model is not to excuse or deny racism, but
the more severe forms of racism are deliberately removed. Nevertheless, the
model is extremely and worryingly persuasive.
No-one to my
knowledge, including Schelling himself, has suggested that such as model is a
complete or adequate causal representation of the processes underlying the
emergence of ethnic segregation in reality. The model is simply a heuristic
step along the road towards that more complete end. More generally, no
sensible mainstream economist would deny that the world is open, and no
adequate presentation of a formal model would omit to mention that other
(omitted) causal mechanisms exist.
Ultimately,
Lawson’s attempted distinction between abstraction and isolation hinges on
the precise meaning of notions such as ‘treating [that which is left out of
the picture] as though it does not exist’ and the implied distinction between
a ‘temporary heuristic’ and ‘leaving something temporarily out of focus’. Yet
Lawson is insufficiently precise here. If I ‘focus’ on the workings of a
national economy (perhaps without building a mathematical model) and ignore
its trade with other nations, then in what sense might this qualify as a
temporary account, rather than a presumption that such exports and imports do
not exist? Surely, some verbal statement would be required, acknowledging the
existence of international trade, explaining its omission from the current
discussion, and suggesting that further work must be done to incorporate it
into the analysis. But this is also the kind of necessary qualification that
we should expect from the best presentations of heuristic models. On the
other hand, it would be impossible to mention all the things that we have
left out of the account. In this sense all theory is ‘temporary’. But do such
unmentioned omissions amount to treating some causal linkages as though they
do not exist? If this were the cases, then every theory, including
non-formal, discursive theory, by Lawson’s criteria is a failure. Once we try
to apply Lawson’s criteria, then their insufficiency and vagueness become
apparent, and his attempted distinction between abstraction and isolation is
revealed as highly problematic.
A crucial point
here is that in economics we should not and cannot judge models in isolation.
Lawson treats any model as if it were alone an intrinsic claim to be a
partial map of the world. Yet the meaning of any heuristic model depends upon
an interpretive framework that is not contained in the formalities of the
model itself. If heuristic models are suitably hedged and qualified, in the
manner suggested above, then these qualifications form part of the
interpretative apparatus for the model. If heuristic models are treated
within an adequate interpretative context, then such heuristic packages can
successfully defend themselves against they charge that they treat other
aspects of reality as though they do not exist.
By contrast,
Lawson himself isolates formal models from their interpretative contexts,
treating these as if they do not or need not exist, and denies the validity
of even ‘temporary’ heuristic models per se. The strictures of
appropriate contextualization that Lawson rightly requires of discursive
theory should apply to his treatment of formal models as well. Bringing the
interpretative framework of a heuristic model into the picture is highly
important in appraising the problem of excessive or misplaced formalism in
economics. An alternative diagnosis emerges, in which the malady is not the
use of formalism as such but the inadequacy and underdevelopment of the
interpretative context in which they are placed. Technique can take priority
over substance as a result of the relative neglect of interpretative context.
An adequate interpretative framework would depend on the discussion of the
genesis, meaning and methodological significance of key concepts that are
involved in the model or its interpretation. This is never a small task, and
if done properly it will be at least as weighty as the formal technique of
the model itself. Yet in modern economics such interpretative and conceptual
matters are often marginalized and underdeveloped. I contend that this is one
of the main problems with formalism in economics today.
While Lawson
implicitly treats formal models as if they were claims to map the world, his
explicit metaphor is more frequently of the model as a tool. For example,
Lawson (2003, p. 12) notes the ontological mismatch between formal models and
reality and suggests that this is grounds to question their use: ‘Few people
… would attempt to use a comb to write a letter … or a drill to clean a
window.’ This argument is not as illuminating as it may seem at first sight.
Of course, we would use a pen to write a letter and a clean cloth to clean a
window. Yet the ontology of pens is very different from that of letters, and
likewise there is a big ontological difference between clean cloths and dirty
windows. So there is nothing in this appropriateness-of-tools argument that
rules out, for instance, using closed models to help understand an open
reality.
I now turn to
the second use of formalism that is neglected by Lawson: that of an internal
critique. Generally, the impact of an effective internal critique is negative
rather than positive; it shows the limits of an existing theory rather than
building a new one. It is nevertheless important. Consider the example of the
critique of mainstream capital theory by Piero Sraffa (1960) and others. By
developing a model with disaggregated rather than aggregated physical
capital, Sraffa showed that the measure of capital could not be independent
of profits, wages or prices. Consequently, any attempt to explain the latter
by means of an aggregated capital variable must assume that which it has to
explain. The validity of this argument was later accepted by Paul Samuelson
and others (Harcourt, 1972). It meant that several of the models and arguments
used in the mainstream theory of capital and distribution were either invalid
or dependent on highly restrictive assumptions.
A demonstration
that a widely adopted approach depends on restrictive or even implausible
assumptions is a key feature of many of the successful and significant
internal critiques that we find in economics. Other examples include works by
Rolf Mantel (1974) and Robert Rowthorn (1999). Mantel and several other
theorists showed that even with the assumption of individual utility-maximization,
the excess demand functions in an exchange economy can take almost any form,
and there is thus no basis in standard general equilibrium theory for the
assumption that they are generally downward sloping. Their work proved very
influential in bringing the microfoundations project in general equilibrium
theory to an end (Rizvi, 1994). Rowthorn showed that prominent models used by
governments in macroeconomic policymaking are based on highly restrictive and
unwarranted assumptions.
Such critiques
do not themselves provide new theories, although they may suggest some
appropriate measures and establish some relevant pointers. By their nature,
internal critiques are not claims to map the real world. Instead, they are
attempts to show that that other theories are inadequate or overly
restrictive in regard to the kind of world to which they relate. I have not
come across an adequate discussion of the role of internal critiques in
Lawson’s work, despite their prevalence the Cambridge tradition of economics
that used to be well established in his university department.
Significantly,
neither heuristics nor internal critiques are attempts to map the world with
a model. Accordingly, insofar as they are of some scientific use, severe
doubt is cast on Lawson’s central argument that the adoption of a particular
model involves explicit or implicit assumptions about the ontology of the
social world. By contrast, it would seem that some models are of use, even if
there is a significant misfit with reality. If so, then Lawson’s main
argument falls.
Conclusion
In regard to formalism, many economists
propose the extreme view that it is the principal and necessary means by
which economics becomes rigorous and scientific, and thus the dominance of
formalism is a positive sign of success. Lawson takes a position near the
other extreme. He argues that formalism is justified in ‘rare’ circumstances
only, where local closure exists or is approximated. I propose that both
attitudes to formalism are flawed, partly because they both downplay its
necessary interface with interpretative structures.
Yet while
Lawson and the mainstream are at odds, there are some shared presuppositions.
Many mainstream economists assume that their models are sufficient to
represent the world, neglecting the interpretative discourses required to
make such a claim meaningful. Lawson too believes that the adoption of a
formal model intrinsically upholds some substantial claims concerning the
nature of reality. I believe that both positions are false.
If modern
economics is sick, then what is the nature of the sickness? A good answer to
this question is required to help us find an appropriate remedy. Lawson’s
medicine is to require the application of formalism only when local closure
is achieved or perhaps approximated. However this remedy virtually ends up as
an inversion of the disease itself, and I have argued that it is based on a
faulty diagnosis.
Especially in
his recent writing, Lawson has insisted that he is not against formalism as
such, and he has no dogmatic prescription concerning its use. However, I am
aware of only one example of a piece of econometrics which Lawson has deemed
as legitimate, and even here to admit it he has to fudge the criterion of
strict closure declared in his 2003 book. More recently (but until now only
verbally as far as I am aware), he has relaxed this criterion to allow
econometrics to be used when closure is approximated, rather than actually
achieved.
The consequent
challenge for Lawson is to be more specific about the degree of approximation
and to point to still further examples of the legitimate use of mathematical
models in economics. Until this is done, Lawson remains in the extreme
position of admitting as legitimate only one specific case, among hundreds of
thousands of examples that are available to us.
Middle ground
solutions are not intrinsically warranted simply because they are middle
ground. But part of the tragedy of modern economics is that they have so far
received limited attention and consideration, with notable exceptions such as
a recent article by Victoria Chick and Sheila Dow (2001).
I suggest that
the problem with formalism is not the general inappropriateness of formalism
itself, but it is the problem identified by Blaug in the quotation near the
beginning of this article. Blaug sees the kind of formalism in modern
economics as ‘an intellectual game played for its own sake’ rather than for
its use in explaining and engaging with the real economic world. Blaug
complains that in modern economics ‘analytical rigour is everything and
practical relevance is nothing’. Again the solution here is not necessarily
to confine formalism to the very rare conditions of actual or approximated
closure, but to ensure that concerns for practical relevance come to the
fore. Formal techniques should be the servants rather than the masters of
scientific enquiry.
It is also
worth bearing in mind that there is an example of a social science in which
formal methods and models have hitherto been put to little use, apart from
statistics. Yet this discipline is widely acknowledged to be in a state of
severe disorder, especially concerning its core presuppositions, its
self-identity and boundaries, and its relations with other disciplines,
particularly economics and biology. This afflicted social science is
sociology. The persistence of its acute scientific maladies alongside its
relatively infrequent use of formalism indicates that additional problems
exist within the social sciences today. These include the postmodernist affirmation
that one theory is as good as another, the frequent choice of a theory on
ideological rather than scientific grounds, and an occasional self-inflicted
blindness concerning the biological aspect of human nature and its
significance for the study of human society.
Despite our
differences of view, I wish to emphasize that both Lawson and myself, and
others here cited including Blaug, Chick, Dow and Mäki, adopt a realist
philosophical perspective. Realism acknowledges that a world exists beyond
our perceptions. Realists uphold that, to be adequate, sciences including
economics should not be self-contained logical games but attempts to address
and understand aspects of the real world. Accordingly, there is no room for a
philosophy of science in which ‘anything goes’. There is a shared realist
imperative: to understand the real world.
However, I
argue here that there is a place for mathematics in economics, even when
conditions of closure are absent or fail to be approximated. I have
emphasized the greater importance of the interpretative structure within
which the theory is placed. The pressing agenda issue for further discussion
and enquiry in this area is to explore the inadequately explored middle
ground between the unacceptable extremes of unreflecting worship and (at
least expectational) denial of formal models and methods.
Acknowledgement
The
author wishes to thank Mark Blaug, Sheila Dow and Tony Lawson for very
helpful
comments
on an earlier version of this essay.
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______________________________
SUGGESTED CITATION:
Geoffrey M. Hodgson, “On the
Problem of Formalism in Economics”, post-autistic
economics review, issue no. 28, 25 October 2004,
article 1, http://www.btinternet.com/~pae_news/review/issue28.htm
________________________________________________________________
Symposium on Reorienting Economics
Feminism And
Realism – A Contested Relationship
Irene
van Staveren (Nijmegen
University, Netherlands)
Introduction
This paper engages with chapter nine of Tony Lawson’s
(2003a) Reorienting Economics,
‘Feminism, Realism, and Universalism’. The chapter appeared as a journal
article in Feminist Economics, in
1999. That publication provoked a remarkable set of comments by feminist
economists – some of these highly critical – which were published in the same
journal as a dialogue, in 2003, including two responses by Lawson. Earlier
(in 1999), as well as in the set of comments in 2003, feminist philosopher
Sandra Harding gave her response to Lawson’s views. In my discussion of the
chapter/article on feminism and realism, I will regularly refer to this dialogue.
But before doing so, let me first briefly give some indication of Lawson’s
position towards feminist economics as a discipline.
Although I could not find his name in the two latest
membership directories of IAFFE, the International Associations For Feminist
Economics, he can certainly be characterised as a supporter of feminist
economics. In his book series with Routledge, Economics as Social Theory, he has published several books by
feminist economists (Nancy Folbre, 1994; Julie Nelson, 1996; Irene van
Staveren, 2001; Drucilla Barker and Edith Kuiper, 2003). He is member of the
editorial board of Feminist Economics,
the associations’ journal, and he has participated in several annual IAFFE
conferences over the past ten years. Lawson, together with some other male
economists involved in IAFFE and/or Feminist
Economics, can undoubtedly be characterised as a supporter of feminist
economics as a sub-discipline within economics. Acknowledging his clear
support for the feminist cause in economics, this paper will now focus on the
ideas of critical realism that he brings to feminist economics: what are
they, how are they connected to feminist economic research, and how are they
evaluated by feminist economists?
The
objective of his chapter on feminism is “to argue that (…) there are possible
advantages to feminist explanatory and emancipatory projects from engaging
(or engaging more fully) in the sort of explicit ontological analysis
associated with modern versions (at least) of scientific realism” (Lawson,
2003: 219). In his view, feminists too often reject universalism wholesale
(rather than only reject a priori
universalism as expressed in values, experiences, objectives and
interpretations of dominant groups) which would “be debilitating for the
feminist project” (ibid). In order to clarify his point, he illustrates his
argument with three examples, on formalistic modelling, epistemology, and
emancipation. The responses to his article agree unanimously with his
critique on formalistic modelling, whereas they disagree almost unanimously
(except Julie Nelson, who, however, has a related disagreement) with Lawson’s
universalism underlying his arguments on epistemology and emancipation.
In this contribution, I will
first discuss the strong disagreement of the feminist economists
participating in the dialogue with the universalism they detect behind his
critical realism. In doing so, I will not only rely on the dialogue following
Lawson’s article in Feminist Economics,
but also draw from a recent book (published in the book series under his
editorship) that provides a state-of-the-art overview of feminist economic
philosophy (Barker and Kuiper, 2003). Secondly, I will critically question
the apparent agreement between Lawson and the participants in the dialogue on
formalistic modelling as unhelpful for both ontological economic analysis and
feminist economics. For this part of my contribution, I will partly make use
of a paper on feminist econometrics by Brigitte Bechtold (1999), who instead
argues for a feminist approach to modelling. I will end with a conclusion,
arguing for a more explicit two-way relationship between realism and
feminism.
Feminist Opposition
to Universalism
In his original contribution ‘Feminism, Realism, and
Universalism’, to which I will refer to as chapter nine of his book (Lawson
2003a, with page numbers referring to the book version), Lawson rejects a priori universalizing, that is, the
mere assumption or assertion of a widespread validity or relevance of a
particular position. But he warns feminists for the opposite danger he
signals in feminist work, namely that “all approaches or stances are as
legitimate as each other” (Lawson, 2003a: 218). Now, what does realism offer
to feminism? First and foremost, Lawson claims, realism enables feminists to
study gender as an ontological category, that is, as a real kind of entity
rather than (only) as a representation of certain beliefs. Since gender, and
its derived concepts such as gender-relations, gender-inequality, and
gender-roles, is at the heart of feminist research, including feminist
economics, the potential contribution of realism to feminist research is not
trivial. Indeed, as Drucilla Barker and Edith Kuiper (2003: 2) state in the
introduction to their valuable volume on feminist economic philosophy,
“Gender analysis remains integral to feminist scholarship.” Lawson hastens to
emphasise that an ontological understanding of gender does in no way imply
essentialism. “… there is nothing essential to scientific or ontological
realism that supposes or requires that objects of knowledge are naturalistic
or other than transient, that knowledge obtained is other than fallible,
partial and itself transient, or that scientists or researchers are other
than positioned, biased, interested, and practically, culturally, and
socially conditioned” (Lawson, 2003a: 220). The participants in the dialogue,
however, are not convinced, as they notice a strong universalist claim in his
defence of realism. This disagreement underlies much of the dialogue. Lawson
perceives an understanding of realism among feminists which reduces this
philosophy to a simple, naive version of realism, from which he distances
himself. The feminists in the dialogue, however, perceive a strong version of
universalism to his position, that is, essentialism, a claim about the nature
of human beings, a claim against which the whole project of feminism is set
up, in particular post-structuralist feminism. So, the dialogue centres round
the opposition between essentialism on the one hand and relativism on the
other hand.
Now, do feminists, and in
particular feminist economists, reject or downplay realism as Lawson assumes?
Does critical realism indeed have the balanced position that feminists favour
between universalism and relativism, as Lawson claims in his assertion that
realism is not essentialist? In order to shed light on these questions, let
me now review the most important comments and replies from the dialogue on
the opposition between essentialism and relativism.
On naïve realism, Sandra Harding
(1999) agrees with Lawson that this version does not do justice to realism.
At the same time, however, she explains that strategically, feminists have
found it more helpful to argue from an epistemological perspective, in order
to be heard in the scientific debate (and get research funding, for example),
than from a realist perspective, in which they often remain marginalised. She
argues that feminists have perceived that ontologies are embedded in moral
and political projects, and are in no way disinterested. Therefore, she
claims, &# |