So I just finished reading Dr Long’s article Realism and Abstraction in Economics: Aristotle and Mises versus Friedman… and he made some interesting points in it. One was that economic laws as described by the Austrians tend to be non-precisive, that is to say, they omit certain non-essential factors (contrast this with precisive abstraction, in which case what is omitted is specified, e.g. the absence of entrepreneurial error under perfect competition.) He makes a comment in the article to the effect that by thinking in terms of non-precisive abstraction, one can almost entirely eliminate ceteris paribus clauses, or at least narrow them heavily. My thought was that this sounds an awful lot like marginal analysis - i.e. a phenomenon’s effect is that which would not have taken place in its absence (e.g. if a minimum wage were absent, unemployment would not have risen to the extent that it had, or conversely employment fallen to the extent that it had.) So, could this sort of counterfactual marginal analysis be a way of ridding of ceteris paribus clauses entirely?
I wouldn’t say “entirely”, because ceteris paribus is an efficient way to explain a concrete (if unrealistic) model. However I think it could relegate ceteris paribus clauses to basic micro classroom discussion (and people who are lazy or short on time).
I suppose there would be some limited scope left for them. At any rate, it would render the explanation of economic laws far more plausible, IMO.
Apparently I can’t read! Could you try to clarify what you mean?
I understand marginal analysis, I understand ceteris paribus clauses, and I sort of understand precisive and non-precisive abstraction. I don’t really understand how you are tying non-precisive abstractions to marginal analysis though!
I’m trying my best; do you mean the following?
“Marginal analysis doesn’t require that all other things be equal, so ceteris paribus clauses aren’t needed. Because non-precisive abstraction implicitly takes everything into account, ceteris paribus clauses aren’t needed, either.”
[edit]:clarity
Well ceteris paribus clauses are typically attached so that a theory will not be falsified by the simplest variances with empirical evidence. If, however, a phenomenon is analyzed in terms of how much it contributes to a given outcome, and what its absence would mean (this is essentially the marginal bit), ceteris paribus clauses can be narrowed greatly or even eliminated in some cases. This is what Long seems to imply, and I think he’s right.
Can you provide a link to that essay? I’d like to read it after my class tonight (right now I have to write an essay for said class).