Sunday, April 19, 2015


Edward Chancellor posts (17 April) in Breaking News HERE
“Back in the 18th century Adam Smith established economics, according to Desai, as a combination of philosophy, history, economic theory and some practical policy advice yet modern economists, while adept at mathematics, lack Smith’s intellectual breadth. In particular, they are largely ignorant about economic history and know even less about the intellectual development of their own discipline.
As a result they fail to learn the lessons of history. 
Desai suggests that many of the flaws of economics derive from the attempt to turn the subject into a science; a development he traces back to the father of economics, David Ricardo, who theorised that the economy tends naturally towards equlibrium. Such a balanced state can be modelled mathematically with ease, allowing economists to satisfy their “physics envy”. As Desai points out modern economists are wedded to mathematical models, despite the models’ reliance on highly unrealistic assuptions about the real world.
I came acros this piece while browsing through the web this morning - taking a short break from preparing my new paper: “Adam Smith on “Self Betterment, Self-Interest, the Invisible-Hand metaphor and Intended and Unintended Consequences” - and thought it would interest readers.
In the mid-1970s, I attended several seminars at LSE (I was lecturing at Brunel University and National Defence College at the time) where, on occasion, I heard Professor Meghnad Desai of LSE (now retired) enthusiastically contributing to the various seminar topics. He struck me as an academic with his feet on the ground. I certainly agree with his quoted views above.
Working on my new paper, I cannot help but agree with Deasai’s general criticism of modern economists for their near total neglect of history and their almost total reverence for mathematical models with little connected relevance to the real world now or thoughout the history of the human species. Smith’s historical approach was richer in relevance and enabled him to write authoritatively about real people’s behaviours influenced and affected by their interactions with other real people, as the real people of history demonstrated.  Be clear too, that Desai was far from being innumerate and could ‘mix-it’ with his mathematically-minded collegues, of which LSE at the time abounded. (I published three text-books based on my lectures to undergraduates: 'Mathematics for Innumerate Economists' (1982); 'Invitation to Statistics, 1983, and "Defense Economics", 1983).
I have spent four days re-reading Wealth Of Nations - with side-forays into his “Lectures on Jurisprudence” and “Moral Sentiments” - while I went over my previous red-dotted paragraphs in his texts where Smith referred to the behaviours of a cast of self-interested players and how they behaved under such stimuli, when confronted by choices of economic and political importance to themselves (it is not a pretty sight). 
The general impression over the centuries that Smith covers is not attractive to those who believe, despite the evidence of millennia, never mind today, that people are and have been imbued with a matchless sense of humanity, qualifying their descendents, especially  in modern economies, to behave in the manner assumed by abstract mathematical models. You can measure and appreciate the regular and predictable behaviours of atoms, but, alas, not people.

I shall also take this opportunity to explain my few posts recently, despite a queue of possible posts I have lined up for Lost Legacy. My paper is taking all my attention at present and may do so for a few weeks more. It is progressing well and I am happy with its general approach. It requires knitting together without adding too much new material.


Blogger Paul Walker said...

"modern economists, while adept at mathematics, lack Smith’s intellectual breadth."

It may lack Smith's breadth but isn't the reason for this to be found in chapter 1 of WN: specialisation and the division of labour. Economists take advantage of the division of labour by specialising. We know more about less. The cost to this is a lack of breadth But its a cost that all academic disciplines pay because of what it buys them: a large increase in knowledge.

As to the maths bit, mathematics is just a tool. Whether it is good or bad for economics (or any other subject) is not down to the tool but how the tool is used.

5:45 pm  
Blogger Paul Walker said...

Let me make one more point about maths as a tool. My copy of the new book "The Next Generation of Austrian Economics: Essays in Hono[u]r of Joseph T. Salerno" turned up today (BTW its looks like a a good read). Chapter 7 is entitled ""Mises and Hayek Mathematized": Toward Mathematical Austrian Economics". For many, especially of the older generation of Austrian economists "mathematical Austrian economics" would be an oxymoron. But maths is just a tool and a tool even Austrian economists can use, if used property. The danger of maths is not the maths but the use of the maths.

1:06 am  
Blogger Gavin Kennedy said...

I have noted your views on mathematics as a “tool”, I used to concur with that view, but on reflection on my teaching career since 1970 (also 4 years before that as an undergraduate in economics, 1965-70), I have shifted my views. Maths in those days was just beginning to take a more prominent role in university economics, both theoretical and applied. Many students were not equipped to handle the simple maths then entering the profession. Hence, as a keen young lecturer, I attempted to address their deficiency with the 2 books I mentioned earlier ('Mathematics for Innumerate Economists’, Duckworth (1982) and 'Invitation to Statistics, Blackwell (1983), and I also ran a remedial class “off-timetable” for several years for students struggling with the increasing use of maths. By then I was a Senior Lecturer at Strathclyde.
My point is not that maths is ‘worthless’ in economics - it is mandatory in some universities and it is not uncommon for economics as subject to be moved out of social science faculties into pure Mathematical faculties. I just do not accept that the economies that exist out there in the real world are improved or relevant to the mathematical models purporting to be relevant to the subject. They may explicate the subject for some people.
My close study since 2003 of Smith’s Works, especially the Wealth Of Nations (and his Lectures on Jurisprudence, 1762-3), which went deep into history and are tested against the actual course of events as they happened, and continue to happen, do not support the belief that the behaviours exhibited could be represented by narrow equations nor assertions about human behaviour (that are devoid of actual human behaviours). In this recent decade the more sceptical I have become; Smith was more right than wrong.
I am addressing these views in my new paper on Smith’s work on “self-betterment” and “self-interest” (since deep, prehistory) in his “Lectures on Jurisprudence”, the rhetorical meaning of metaphors (from his “Lectures on Rhetoric and Belles Lettres”, 1763), and his historical work on social processes in “Wealth Of Nations” and TMS.
The more we study the past, including recent past events; the more the over-ambitious claims for “equilibrium” economics, etc,. and derived claims for “predictability” of future events, we should conclude that the value allegedly contributed by maths becomes quite shallow.
But I am not a fanatic; nor do I claim to be absoutely right, and I make no assertions that everybody else is wrong. I present my ideas as a contribution to the discussion.
Best regards

1:46 pm  

Post a Comment

<< Home