What Good Are Labels If They Are Not True?

Peter Boettke writes HERE  15 September, in Coordination Problem: “What Good Are Labels in Scientific Discourse?”

“In my recent book, Living Economics: Yesterday, Today and Tomorrow (2012) [GK: I recommend that you read Boettke’s book], I urge the reader to recognize the distinction between "mainline" and "mainstream" economics.  Mainline economics, I contend, is defined by the substantive propositions that have been held by economists from at least the time of Adam Smith.  In my characterization, those substantive propositions relate to the rational choice postulate, and the invisible hand proposition (and the reconciliation of rational choice and the invisible hand through institutional analysis).  This is what unites economic thinkers through time from David Hume and Adam Smith, to Mises, Hayek and Buchanan.  As Lord Acton once wrote, it is the traveling of the minds of the men who sit in the seat of Adam Smith that deserve serious attention.

On the other hand, mainstream economics I contend is a sociological designation, and refers to what is currently fashionable in the research and teaching of elite professional economists at any point in time.  Thus, the term mainstream does not reflect any one set of substantive propositions, but shifts constantly depending on what is the current state of the art among professional economists at the elite scientific/scholarly institutions. Sometimes the mainline is the mainstream, but at other times it is not.  It is at this critical junctures when the mainstream deviates from the mainline, that labels become particularly important in aiding acts of intellectual entrepreneurship which attempt to bring the mainstream back into line with the mainline of economic thought.”

Comment

I recommend that you read Boettke’s new book - he is an excellent teacher; it reveals useful biographical background on where he is coming from and of his approach to his teaching of economics.  

The distinction that he makes between “Mainstream” and “Mainline” economics is interesting. It does not surrender credibility only to "Mainstream" economics; nor accept the Heterodox label often thrown at it.   Regular readers will know how I would respond to this definition of “mainline” as economics with the “rational choice postulate, and the invisible hand proposition (and the reconciliation of rational choice and the invisible hand through institutional analysis)”. 

I am disappointed by Boeetke’s implied praise of the “rational choice postulate” and even more so by “the invisible hand proposition”, because the former does not explain actual behaviour, unless you accept the “MaxU” proposition (Deirdre McCloskey) which is a theoretical presumption and is not supported by evidence in the real world – it is an “ought” not an “is”.  It probably reflects his “Austrian” economic background.   Nor am I impressed with his linking the “the invisible hand proposition”, as he understands it directly to Adam Smith.  It was wholly invented following careless remarks by modern (Post-1948) neo-classical economists, for example by Paul Samuelson (see: Kennedy, G. 2010: “Paul Samuelson and the Invention of the Modern Economics of the Invisible Hand”, History of Economic Ideas. Vol. xviii, no. 3, pp 105-19;), and seized upon by both neo-classical and ‘Austrian economists (see Kennedy, G. 2012: “The Myth of the Invisible Hand – A View from the Trenches” HERE 

Boettke cont.: But the character of mainstream economics as Samuelsonian in form was never displaced.  Mainline ideas that could be readily adapted to the language of Samuelsonian economics had greater traction than those that did not easily fit into that form of scientific/scholarly argument.  Thus, we have a slightly separate debate that must be waged --- which has its own labels which must be understood.  And that is the debate underlying the claim to the mantle of science --- the deep waters of epistemology, methodology of economics, and the philosophy of science.  Methodology matters because it shapes not only the questions pursued by scientists/scholars, but even more importantly determines what is considered a good answer to those questions.   Without a shift in perspective over what constitutes the scientific enterprise in economics, various teachings of the mainline of economic thought will be dismissed scientifically even as they get a nod to their wisdom and good sense.

In fact, I have used throughout scientific/scholarly, but in the modern methodology of economics the goal is to be rigorously scientific, the scholarly quest for human understanding is dismissed as insufficient.  Thus, the way that the mainstream understands the teachings of the mainline of economics is through an act of translation of the rational choice postulate and the invisible hand proposition into a language which would make those core teachings incomprehensible to the leading practitioners of mainline economics in the 18th, 19th, and early 20th century.  Methodology matters.

But remember my point that we want to do Good Economics, and have as wide an impact on our scientific peers as possible.  Fidelity to a label should be the least of our concerns, but truth in economics should be the utmost of our concerns.  We need to think clearly, write clearly and speak clearly. And our thinking, writing and speaking should be about the mainline teachings of economics and political economy as passed down through the ages by the Scottish Enlightenment Moral Philosophers, the French Liberal Poltical Economists, the British Utilitarians, and the Austrian School Economists (and the subsequent development of economic thought in the second half of the 20th century that drew on these various traditions).  To accomplish this task of providing sound theory and clarity of exposition, we rely on exact theory (pure logic of action), institutionally contingent theory (comparative institutional analysis), and empirical analysis (history, policy applicaiton, statisitcal work, ethnography, etc.).  Each step in a complete social scientific analysis has different epistemological problems to be addressed and methodologies of analysis.  Confusion results when we fail to remember the distinctions and in the looseness of language blur the distinctions.  But that we need the skills of critical reasoning to do sound theorizing, and the skills of empirical analysis to do history should never be doubted.  The master economist and political economist does both theory and history.  

Mainline economists sought to produce sound argument (not just valid), and thus theory aligned with real world relevance.  The mainline economists from Smith to Hayek, did not produce free floating abstractions that were tested against momentary concretes.  That was the mistaken path that mainstream economics embarked upon in the second half of the 20th century and continues to plague the practice of economics to this day.  So if those of us who find the arguments of mainline economics persuasive want to impact the mainstream of economics and pull in the direction of the mainline teachings of economics and political economy we must engage in methodological debate.  We cannot ignore these issues. There is no such thing as philosophy free science, there is only science guided by an articulated and defended philosophy or science guided by an inarticulate and undefended philosophy."

Comment

Meritorious objectives indeed, but a historical perspective that recognizes that “The master economist and political economist does both theory and history”, surely ought to be based on an accurate account of the very roots of what “Smith actually said and not be based on an anachronistic transfer to Smith of modern ideas about invented attributions about what he supposedly said that conveniently gives unjustified credibility to those same modern attributions.

Follow the link to read Peter Boettke’s post on the “Coordination Problems” Blog.