Wednesday, November 29, 2006

A Process by Any Other Name is Mumbo Jumbo

Two short posts caught my attention this morning; the second one comments on the first. The game, then, is to spot the subtle, unintentional, drift in language:

The first is from: Worthwhile Canadian Initiative:
“Intelligent Design as applied to economics takes pretty much the same form as it does with biology: "What we observe couldn't have just happened; it's obviously the work of some Greater Power." When it comes to evolution, the Greater Power generally takes the form of an omnipotent deity. The counterpart in economics is the 'economic elite': the existence of inequality is interpreted as evidence that those who have done well did so by design.

Economists do of course try to explain that market outcomes are the result of decentralised interactions between self-interested agents - and that these interactions generally lead to socially desirable outcomes.”

The Worthwhile Canadian Initiative Blog is sub-headed (“who would have thought an economics blog could be this exciting?”) and for once its claim is truly accurate of its content (i.e., worth book marking)

The second is from REG Monitor (‘a Roubini Global Economics Service’) and its heading is: “Intelligent design vs. the invisible hand”

“The analogy even bears some straining: Economics and evolution are both driven by an "invisible hand" of decentralized interactions between selfish agents, and both sciences are susceptible to interpretations that fall prey to the naturalistic fallacy: If it happens in the market, then it is good. If it happens in nature, then it is good. Neither inference holds, of course, and so we remain free to make normative statements about how best to regulate markets or how to lead a moral life.”

From: REG Monitor (a Roubini Global Economics Service)
“Intelligent design vs. the invisible hand” by Stefan Geens (28 Nov 2006)

The slip from “decentralised interactions between self-interested agents - and that these interactions generally lead to socially desirable outcomes” to the ubiquitous ‘invisible hand’ was inevitable, given the grip on economics of the metaphor today.

Actually, ‘Intelligent Design’ and ‘the Invisible hand’ fit together very well and both are equally fallacious. They both rely on a Deity (who designed the Deity?) somehow working in the background to explain what science explains more convincingly. Why economists feel obliged to rest their scientific explanations for the evolution of markets on pre-science explanations from pagan superstition is a worthy subject for speculation.

The Blog posts above are concerned with economists being confronted by non-economists, who are disrespectful of some of the certainties espoused by economists – the “yawning gap between economists' understanding of economic issues and that of non-economists – and what might be done about it by economists.

In my humble view, not much will be done to lower these barriers while scientific knowledge about how people in economies work is presented in the form of ‘miracles’, ‘invisible hands’ and related mumbo jumbo.


Anonymous Anonymous said...

I can honestly say that it never occurred to me to use the 'invisible hand' metaphor when I wrote that post - reading your blog must have rubbed something off on me!

And the title and subtitle of the blog are supposed to be ironic: "Worthwhile Canadian Initiative" once won a New Republic contest for 'most boring headline'.

9:25 pm  
Blogger Gavin Kennedy said...

Thank you for your comment. I read other posts in your Blog and found them interesting, hence my recommendation to the 400+ unique visitors each day to Lost legacy (I do not recommend that many Blogs).

Irony is a form of healthy self deprecation, in my view, and very 'British' if I may say so.

Your Blog's content is not 'boring' (which is an opinion, not a diagnosis).

Glad to note you avoided the dreaded metaphor; pity that this was not picked up by RGE Monitor.

Many people use the metaphor for purposes that its meaning to Smith does not justify, a habit encouraged by the Chicago interpretation of Smith's work.

I am reading the article mentioned in my last post from someone I am told (but have not yet confirmed independently) writes from an Austrian perspective. I will compose a comment for tomorrow's posting.

10:57 pm  

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