Economics as a Science

Economics Economics Questions
1

I’m currently reading Where Keynes Went Wrong by Hunter Lewis.

In chapter 4, The Immoralist, he goes into discuss Keynes’s personal values, and on page 44 of that chapter, this is written:

Before leaving Keyne’s values, we must ask ourselves: do they really matter to our larger task, which is to understand and evaluate Keyne’s economic policy prescriptions? Economics is a science, is it not? And, as such, why would the economist’s personal values concern us?

The question of whether economics is a science is briefly discussed in this author’s Are the Rich Necessary? The conclusion reached there is that economics is not and never shall be a science. Why? In the first place, when we observe an apple fall from a tree, or deduce the force of gravity, it will not affect what the apple does. But human action, the subject of economics, is entirely different. It is very changeable, it is even changed by what economists tell us about ourselves.

If economist tell us that stocks are the most reliable long-term investment, we will all buy stocks and the prices will soar. Eventually there will be no sellers, the price will collapse, and we will discover that we have made a very bad investment. We saw that well enough in the 1920’s and 1990’s. So, on the whole, it is much better to accept that economics is trying to sort out probabilities, not truths, and is most closely aligned with moral philosophy, also known as values.

This threw me off, and I wasn’t sure if he was trying to interpret what Keynes has said, or this was from his perspective, because I didn’t expect to read that coming from someone with an “Austrian” view (and I use that loosely since I don’t know if he considers himself Austrian or not, but dedicates the book to Henry Hazlitt).

I have come to believe that economics is a science. Yet, there does seem to be dissent from that view. Can anyone clarify what the author is discussing (I haven’t read his other works) and a solid statement as to why economics is a science. I thought about making this a question (is economics a science?), but that seemed like beating a dead horse and I already know the answer. I find it would be better to interpret what the author is stating and a clear reason to why economics is a science.

2

I think he’s touching on something important but without the insights of Mises (or Menger, even) he is unable to see how the subjective nature of economics in terms of its subject-matter does not preclude it from being a science.

3

I think he’s equating “science” with “quantitative precision.” But “science,” broadly speaking, refers merely to an area of study in which we can discover causal laws, whether or not they are quantitative laws. (Thus when Aquinas referred to theology as the queen of the sciences, he didn’t mean it could tell us God was 55.7 feet tall.)

4
5

Bert and others,

Sorry I didn’t see this sooner.

Yes I am an Austrian. The point of my book is to make Keynes clear for the average person and , by so doing, to demonstrate that today’s economic policies are grounded in a quack system.

The comment that economics is not a science was an aside of mine, not Keynes’s. Keynes at times suggested that his economics was comparable to the physical sciences and even " a mathematical certainty", at other times that it was a “side of ethics”. When Keynes spoke of his science, he was trying to wrap himself in the prestige of physics. When he spoke of economics as a “side of ethics”, he was speaking privately to the archbishop of Canterbury. So it all depended on his audience. Interestly , Milton Friedman also said, as I recall in the 1950’s, that economics was just like the physical sciences. Of course we know that Milton Friedman had more in common with Keynes than many of his supporters realize.

I am glad to have these questions and criticisms. I was going too fast in this particular passage and should have slowed down to define what I meant in this context by “science” and “truth” or simply deleted it. I will try to remember to do one or the other for the next edition. My larger point was, of course, that Keynes’s economics is not independent of his moral philosophy but directly reflects it.

Tom Woods understood what I generally meant by “science”. I had in mind a layman’s streetside definition. I would argue that a layman’s streetside definition of science would refer to something that gives us predictions so “objective” and so “probable” that they are virtual certainties. It won’t do to say that a bridge is 60% likely to stand. It has to be as close as possible to 100%. The prediction has to be accurate in terms of both time and space. That is the average person’s idea of science, however oversimplified or reductivist. An investment that is 60% likely to turn out well within an unknown but reasonable period of time is a good investment, but it isn’t what most people mean by science.

Over the centuries, the common, everyday meaning of “science” in Anglo-Saxon countries has come to differ from the common, everyday meaning in Europe. My sense is that Mises was a bit more European in his use of the word. When I said economics is not a science, I meant a science in the sense used by Keynes or Friedman, not in the sense used by Mises. I am also no doubt recoiling somewhat from the rampant pseudo science that fills our society.

I have always found the differences between Mises’s and Rothbard’s epistemology to be thought provoking. My own epistemology is still a work in progress.

But the point of my book is not what I think. It is to honor and update Hazlitt’s pioneering and irreplaceable work and to make Keynes’ nonsense clear to people who cannot be expected to wade through his often intentionally obscurantist prose.

6

What a thrill to see Hunter Lewis on this thread. Your book on Keynes is very important and a very enjoyable read.

7

In my understanding, economics is a “social science” rather than a “natural science”. Austrian economics is predicated on a methodological dualism in which the difference between these two spheres is clearly demarkated, in contrast to the dogma of positivism and scientism which tries to claim exclusive authority on the behalf of empiricism and the natural sciences to the detriment of the meaning and truth value of anything else.

As it is presented by Austrians, however, this “social science” is essentially an extension of rationalist philosophy (I.E. a matter of strict deductive logic from what are considered to be a priori axoims). And there is nothing inherently wrong with it being “philosophical”. The tricky part, I would say, is avoiding the typical problems that go along with rationalism.

8

A couple of super stars, cool.

9

For the OP and others, I found this enlightening when I asked myself the same question, and hopefully it will be for others too.

The Mantle of Science - MNR

"In our proper condemnation of scientism in the study of man, we should not make the mistake of dismissing science as well. For if we do so, we credit scientism too highly and accept at face value its claim to be the one and only scientific method. If scientism is, as we believe it to be, an improper method, then it cannot be truly scientific. Science, after all, means scientia, correct knowledge; it is older and wiser than the positivist-pragmatist attempt to monopolize the term.

Scientism is the profoundly unscientific attempt to transfer uncritically the methodology of the physical sciences to the study of human action. Both fields of inquiry must, it is true, be studied by the use of reason—the mind’s identification of reality. But then it becomes crucially important, in reason, not to neglect the critical attribute of human action: that, alone in nature, human beings possess a rational consciousness…"

Praxeology, Value Judgments, and Public Policy - MNR

"To our contention that the sciences, including praxeology, are in themselves value-free, it might be objected that it is values or ethics that direct the interest of the scientist in discovering the specific laws of his discipline. There is no question about the fact that medical science is currently far more interested in discovering a cure for cancer than in searching for a cure for some disease that might only have existed in parts of the Ukraine in the eighteenth century. But the unquestioned fact that values and ethics are important in guiding the attention of scientists to specific problems is irrelevant to the fact that the laws and disciplines of the science itself are value- free. Similarly, Crusoe on his desert island may not be particularly interested in investigating the science of bridge building, but the laws of that science itself are value- free.

Ethical questions, of course, play a far smaller role in applied medicine than they do in politics or political economy. A basic reason for this is that generally the physician and his patient agree—or are supposed to agree—on the end in view: the advancement of the patient’s health. The physician can advise the patient without engaging in an intense discussion of their mutual values and goals.

…

In economic and political questions, in contrast, ethical and value conflicts abound and permeate society. It is therefore impermissible for the economist or other social scientist to act as if he were a physician, who can generally assume complete agreement on values and goals with his patient and who can therefore prescribe accordingly and with no compunction. Since, then, praxeology provides no ethics whatsoever but only the data for people to pursue their various values and goals, it follows that it is impermissible for the economist qua economist to make any ethical or value pronouncements or to advocate any social or political policy whatsoever.

The trouble is that most economists burn to make ethical pronouncements and to advocate political policies—to say, in effect, that policy X is “good” and policy Y “bad.” Properly, an economist may only make such pronouncements in one of two ways: either (1) to insert his own arbitrary, ad hoc personal value judgments and advocate policy clearly on that basis; or (2) to develop and defend a coherent ethical system and make his pronouncement, not as an economist, but as an ethicist, who also uses the data of economic science. But to do the latter, he must have thought deeply about ethical problems and also believe in ethics as an objective or rational discipline—and precious few economists have done either. That leaves him with the first choice: to make crystal clear that he is speaking not as an economist but as a private citizen who is making his own confessedly arbitrary and ad hoc value pronouncements.

Most economists pay lip service to the impermissibility of making ethical pronouncements qua economist, but in practice they either ignore their own criteria or engage in elaborate procedures to evade them. Why? We can think of two possible reasons. One is the disreputable reason that, if Professor Doakes advocates policy X and basically does so as an economics professor, he will be listened to and followed with awe and respect; whereas if he advocates policy X as plain Joe Doakes, the mass of the citizenry maycome to the perfectly valid conclusion that their own arbitrary and ad hoc value judgments are just as good as his, and that therefore there is no particular reason to listen to him at all. A second and more responsible reason might be that the economist, despite his professed disbelief in a science of ethics, realizes deep down that there is something unfortunate—we might even say bad—about unscientific and arbitrary value judgments in public policy, and so he tries desperately to square the circle, in order to be able to advocate policy in some sort of scientific manner.

While squaring this circle is impossible…"

Futher:

Praxeology as the method of the Social Sciences

Praxeology: The methodology of the Social Sciences

10

Thanks for replying (maybe Tom Woods told you?). This clarified what I was looking for.

11

The single best way to debunk Keynes is to quote that part of GT that Juan posted once about the money in bottles. If I were a comedian I would use that in a stand-up routine.

12

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

Statement’s like this lead me to believe that while writing General Theory he was sitting back in his chair drinking heavily laughing at the fact that people are actually going to take him seriously.

13

Tom, Thanks. I am a great fan of yours too. And I enjoyed the posts the followed, especially the excellent Rothbard quotes. Hunter