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Your last parenthetical is a good point Pete. Hutt nailed Leijonhufvud on this in his book on Say's Law. I discuss this in my Routledge book on pp. 197-200.

My reading (198): "The problem, in Leijonhufvud's view is that employers are currently unwilling to pay workers what their marginal products would be if the system were in equilibrium. Of course, the observing economist can know this differential because the model is of his design. But how firms in an actual market process would ever know the relationship between the wages they were offering and equilibrium marginal products is a question left unanswered."

Hutt is great in arguing that wages are based on *prospective* marginal products and describing the competitive discovery process by which they and others re-ignite employment and learn what wages they can afford to pay.

"Leijonhufvud appears to argue that because the market cannot simply leap to the Walrasian solution when the problem is first recognized, that it therefore has no way of getting there." (p. 199)

"What is your explanation for why the Clower/Leijonhufvud approach did not have the same professional impact as New Classical economics had?"

A representative mailstream reply could sound like this:

Since also Austrians believe that market coordination prevails empirically (almost always), why should GE-theorists take non-convergence or inferior equilibria more seriously? Seriously, the Clower approach attempts to explain equilibrium with unemployment. Today, we approach the same problem by adding frictions to a benchmark-model (accounting for search and matching). As long as such models predict well, why bother and switch to non-Walrasian models (of course, you may also call GE-models with frictions non-Walrasian if you wish).

The devil's advocate ;-)

mainstream ... not mailstream ...

Well, the main answer is that indeed their timing coincided with the surge of popularity of ratex, which would later lead to RBC and DSGE. There was a strong appeal of ratex in that it gave a definite answer to what expectations are (or should be). They are what reality is, on average, thereby avoiding the sticky wicket of a plethora of adaptive expectatons models. However, even at that, this ignored the problem, recognized upfront by the better new classicals such as Sargent, that a priori there are an infinity of possible ratex solutions, leaving up in the air how the appropriate one is coordinated on, the focal point problem.

As for Clower and Leijonhufvud, it was Axel who would later move further away from their more conventional formulation than did Bob. This is why he has made for much more interesting reading in recent years as well as exercising more recent influence.

It should also be noted, as it has elsewhere, that Clower was a very open-minded and innovative editor, with a reputation of having been one of the most so ever of the AER. He also edited other journals, and my first publication was accepted by him to appear in Economic Inquiry in 1978, a comment on a paper on capital theory by Leland Yeager (if he could accept something by me, then he must have been open-minded, although he told me that while I was right on the technical details, I was wrong on the big picture, oh well).

I remember thinking in the 1970s and 1980s how "revolutionary" Clower and Leijonhufvud's approach was when I read their pieces.

Here was a dynamic micro-approach that attempted to make Keynes intelligible, while restoring and refining a version of Say's "Law of Markets" -- what they called "Say's Principle."

I even wrote my undergraduate senior thesis about them -- far back in the previous century -- and I remember thinking that if this is going to be the "New" Keynesian Economics, than, finally, it was possible to find "common ground" between this type of Keynesian Economics and Austrian Economics.

But it was not to be . . .

Seemingly all the "micro" disequilibrium process analysis to explain "macro" problems (like Robert Barro's at the time, also) were soon abandoned.

Arash makes it sound (I know he added, "devil's advocate") as if, "Well, since 'everyone' believes in 'A' (convergence to equilibrium) as opposed to 'B' (non-convergence or inferior equilibria), then preference for wider and more general consistency and tractability suggests staying with general equilibrium models ('A' phenomena models)."

But I believe, as Pete is suggesting, that it runs a bit deeper than that. It reflects the continue bias ("prejudice") in favor of the standard mathematical Walrasian approach that carries, still, the quality of seeming to be more in line with "scientific" methods, and easier deterministic "solutions."

I might add that the "window" when Robert Clower was the editor of the "American Economic Review" was the time I found more articles in that journal to be interesting and worth reading. That disappeared soon after he stepped down as editor, and the articles that he had accepted for the journal had finished going through the pipeline to publication.

Richard Ebeling

@ Richard Ebeling

I do not deny that there is a lot of inertia in economics ("the continue bias "). I also believe that some of it can be explained by the appeal to the "scientific" Walrasian approach (or scientistic, as the CP-crew may prefer).

I do not agree, however, that the profession sticks to Walrasian methods because their ability to generate "easier deterministic 'solutions.'" Indeterminateness is a major plague to general equilibrium analysis (B. Rosser makes the case for Ratex equilibria; he may agree that indeterminateness also prevails in more general classes of models like ADM-equilibria, Radner equilibria, etc.).

The way I read your comment is that you answer Peter Boettke's question of why economists stick to Walrasian methods by their aesthetic preferences for Walrasian tools. Isn't that somewhat circular?

I rather believe that the profession believes in the productivity of the Walrasian approach (in terms of it being able to generate models with excess empirical content as well as partial corroborations of such new predictions).

Please don't get me wrong. I admire Clower and Leijonhufvud's approach and take it seriously. Perhaps one should also mention Edmond Malinvaud:


Gee, it's as if individual arbitrary difference in scientific vision can quickly and radically shape what "good science" is in economics ...

Richard writes,

"I might add that the "window" when Robert Clower was the editor of the "American Economic Review" was the time I found more articles in that journal to be interesting and worth reading. That disappeared soon after he stepped down as editor, and the articles that he had accepted for the journal had finished going through the pipeline to publication."

No. It's not at all circular.

Arash writes,

"you answer Peter Boettke's question of why economists stick to Walrasian methods by their aesthetic preferences for Walrasian tools. Isn't that somewhat circular?"

This begs the question. The issue is "productive" of what? More publications? A formal metric for doing "good science"? A machine for producing easily publishable dissertation puzzles / papers?

Arash writes,

"I rather believe that the profession believes in the productivity of the Walrasian approach.

You move to a whole different dimension when you move from "tractable but indeterminate" to "not tractable".

Arash writes,

"I do not agree, however, that the profession sticks to Walrasian methods because their ability to generate "easier deterministic 'solutions.'" Indeterminateness is a major plague to general equilibrium analysis."


productivity "in terms of being able to generate models with excess empirical content as well as partial corroborations of such new predictions.".

This, of course, is just conventional. You may have good reasons to disagree with such a measure of productivity. The question is: what is the alternative?

Let me tell you why I'm sceptical with the Austrian approach (even though I once started as an Austrian):

Like me, most Austrians believe that the economy is a system of profit and loss such that relatively bad decision-makers lose wealth to relatively good decision-makers (so that prices tend to signal relevant or appropriate tradeoffs).

Now, Walrasian theory at least try to make precise the minimum set of necessary assumptions, even though the program faces strong limitations. Austrians may be able to provide a list of necessary condition for successful coordination, however defined. But is this list also sufficient? This is important to know if you want to make policy recommendations (like less regulation). If you cannot say that your list of necessary ingredients to economic coordination is complete, what makes you (the Austrians) so sure that 'free markets work'. Walrasians at least face the problem. I highly recommend the work of Alvaro Sandroni. Name me three Austrian papers coping with such issues.


Not really, you're right (that's why I wrote 'somewhat' to immunize myself from such a clever response ;-)). Still, PB asks why the profession do stick with Walrasian methods and RE answers: because they like it. Why do they like it? Because they like to be scientists. I cannot believe that this is it.

"It's not at all circular"


1. The Limits of The Market by Israel Kirzner.

2. James Buchanan -- multiple papers

3. Take a look at the various papers by the group at GMU -- which focuses on the "hard cases" of self-order --- heterogenous agents, large groups, and high discount rates. The entire focus is on what institutional mechanisms are in operation that enable self-ordering to work. These papers give institutional answers, not behavioral assumptions.

Now, you might scuff at all of these efforts, but let me suggest that the work you are looking at is not really about the market economy, but instead about formal conditions required for a Walrasian market to work. Sandroni's work is a perfect case in point. He has not "broken out of the Walrasian box". This is not a knock, it is a statement of fact.

The rhetoric of your posts is always one of posing as the standard bearer of mainstream and what is respectable. But there are a lot of respectable slightly out of sync approaches --- take a look at the exchange paradigm work of Axtel (EJ paper), or the Ostroy paper on creativity (JEL paper), or the low intelligence traders (Sunder and Gode), or the work on novelty and unknowledge (Aldo Rustichini), let alone the Nobel Prize contributions of not just Hayek, but Buchanan, Coase, North, Phelps, Ostrom, etc.

Have you looked at the work of Frydman on Imperfect Knowledge Economics?

There is no doubt a dominate paradigm in economics --- much of which captures things I wholeheartedly endorse (see, e.g. Acemoglu's JEP paper on general equilibrium and political economy from fall 2010), but many within that dominate paradigm also admit the intellectual straightjacket it imposes (again see Acemoglu's recent remarks on the need for economics to embrace innovation and dynamics and he has been explicit that we need to move more toward Hayek and less Arrow).

Also, and I don't want to start an issue with Greg and others --- but in all honesty I have never felt outside of the economic establishment in the way that both you and Greg tend to suggest from different sides. My teachers included a John Bates Clark Award winner (Kenneth Boulding), a distinguished fellow of the AEA (Gordon Tullock) and a Nobel Prize winner (James Buchanan). I wrote a book on a Nobel Prize winner (Lin Ostrom). I edit a book series with Cambridge, I have published in some of the top journals, I have held faculty/research positions at top universities, given seminar as even more of the top schools, etc., etc. Do I feel humbled by the very talented economists I've had to present my work in front of? Of course. VERY HUMBLED.

I don't believe in unpublished genius; I don't believe in permanently underplaced academics; I don't believe in brilliant work that isn't recognized. Are there "frictions" in the academic marketplace for economics? Of course. But do those frictions cause inefficiencies that are never addressed throughout a career? No, I don't believe so. You might not teach at the top jobs (tenure causes problems), but if your work is valuable it will be read; if it is very valuable it will be cited; if it is widely cited, you will be recognized as a major thinker; if you are recognized as a major thinker, you will get the recognitions and the appointments.

Bottom line --- I take full responsibility for my own lack of status in the mainstream of economic science, and am humbled by the brilliant work of those guys. But I don't believe I have been discriminated against or dismissed because of my perspective. In fact, I'd argue that whatever degree of professional success I have had is because of the Austrian perspective I have pursued not in spite of it. I think there are very many very intelligent leading economists who would like to see more Austrian ideas represented in the elite discourse. It is up to the us who are active researchers in the tradition and the new PhD students entering the profession.

Arash is surely correct about why the majority of the profession sticks with the Walrasian model. As Pete details, however, Austrians are hardly alone in exploring alternatives. I've recently been reading Brunner/Meltzer on expectations, and they criticized retax plus the Walrasian model as sterile.

Clower and Leijonhufvud were in the Alchian mainstream at UCLA in the 1970s in working with non-Walrasian search models. Brunner taught at UCLA and Meltzer studied under him there.

I second Barkley's assessment of Clower as very open to ideas. He was also supportive of students.

I like this little gem from Arash:

"As long as such models predict well, why bother and switch to non-Walrasian models"

If he and his "we" think they are doing a good job predicting things my "we" must be living on a different planet.

Equilibrium and prediction are property of models. Walrasians win that game hands down. The issue is empirical relevance.

One can add assumptions to produce frictions, but the Walrasian model cannot provide the theory of the frictions. Alchian spent his life providing the theory behind "frictions," which he identified as efficient behavioral adaptations to uncertainty.

Charles Darwin's work was FAIL as "science" by this criterion.

Worth thinking about ...

Arash writes,

"in terms of being able to generate [math] models with excess empirical content as well as partial corroborations of such new predictions."

"Charles Darwin's work was FAIL as 'science' by this criterion."

This is a very good reason for just ignoring what is considered "science" and instead simply focusing on what it takes to advance knowledge.

Pete, we've heard this profession of idealized faith before, and I've pointed out before how so much of it is non-responsive, or fails to engage the counter-argument, or is factually off target (two very tiny examples from an avalanche of possible examples: Continental Drift theory excluded from science for more than half a century, conceptions of genius from folks like Darwin, Hayek & Wittgenstein unpublished for decades, and on and on and on and on).

Among other things, you fail to take into consideration the "unseen man" or "unseen research work" fallacy implicit in your pointing to what exists -- you fail to take into consideration all of the possibilities with aren't considered and aren't selected among because they never developed out of research programs that did not receive wide spread exploration and development (you yourself raise the possibility of a Clower research program that never developed -- we have no idea where it might have gone.)

A few small chance events made it possible for "Austrian economics" to survive extinction -- it's highly likely that if only a few factors changed, we would today live in a world where Austrian economists does not exist.

Does that mean it shouldn't exit? The conclusion -- easily imagined -- is absurd from the lights of your own cognitive criteria, but your own picture of the "mechanism" of science should lead to to conclude that Austrian economists shouldn't exist, because the mechanisms at work make it highly probable that it would not exist given the scientific standards of the profession, and a few chance events.

In any case, science, academia and the evolution of ideas simply do not work the way you imagine it in your profession of faith. You can go department by department and you can see all sorts of mechanisms at work your profession of faith that whatever rules the roost at the time somehow tracts "truth" is refuted by the fact that disciplines suppress conceptions for long periods, then cycle through to other incompatible paradigms, and then sometimes they flip back to the old paradigm.

There are academic standards even in Women's Studies -- but the fact that "better" work "gets to the top" tells us nothing about the validity of the criteria which are used to identify "better", and nothing about the cognitive merits of what "rises to the top".

You are selling fallacies of mindless collective wisdom on the part of academic guild structures which fail to guarantee the linear evolution and tracking of truth.

And you've completely missed my point about the centrality of replication and population in thinking about this.

GMU Austrian economists are like a small replicating population on a not very well endowed island with distinct characteristics differing from most of the great mass of the population, replicating in mass quantities in the great expanses of the most well endowed land masses.

Now and then the GMU island sends off a replicator to an island which doesn't itself sustain replicators.

GMU is in the game -- its replicating -- but its contribution is constantly swamped by the great mass of high fecundity replicator on the well-endowed land masses.

Is Austrian economists had the resources of all of the to 50 research departments in the world, there is no telling what it would become or whether it would achieve complete dominance, to the extinction of other rivals (as Institutionalism is mostly extinct).

The formalists got to work on Clower's central idea--the so-called "Clower constraint"--which was intended to make money "matter" by allowing a wedge to be driven between what he and Leijonhufvud called "effective" and "notional" demand for goods--and ended up with an institution-free, beefless version. The story is best told by Peter Howitt, in "Cash in Advance, Microfoundations in Retreat," in the Leijonhufvud festschrift.

Clower, by the way, was a famously crusty fellow. But I learned that he had a sweet side also. I invited him to give a talk at UGA years ago, and while we were walking around campus I happened to mention that I was a Dennis Robertson fan, and that I regretted never having been able to find a copy of Robertson's Banking Policy and the Price Level for my library: like many other P.S. King & Son titles that one fell victim to the blitz, and this was in the days before instant online used book search engines.

Anyway, about a week after Clower had left, I got a package in the mail from him: it was his own personal copy of the book, inscribed "Transferred, with compliments, and in memory of a very pleasant 2 days." The date was May 30, 1991.

There's a real schizophrenia in your picture, Pete.

On the one hand, you have a set of criteria of "good science" that privileges Austrian econ over "mainstream" math econ.

On the other hand, you privilege a very _different_ set of criteria for "good science" in economics held the economists in control of the top journals and top Grad departments.

And then you say that if these other economists succeed in weeding out economists with your own criteria for "good science" in economics, then this means that your criteria of "good science" have been exposed as false criteria.

In other words, you are so confident in your criteria for good science in economics that you'd happily let the institutional inertia of the discipline decide for you what is "good science" in economics -- when we have seen this sort of inertia churn over one fashion after another for decades, and when we've seen institutional inertia fail in a variety of different scientific domains, from geography to biology to psycholog.

"weed out" = simply means fail to create an ever increasing population of replicating replicators.

sorry .. "from geology" ..

Pete, it is particularly incoherent for you to privilege the criteria of "good science" driving the "mainstream stream" given that.

1. The best of them repeatedly come to the point where they acknowledge that their research program is a failure according to the image of "science" that has drivwn their research. We coukd name names a day, starting with Samuelson.

2. Their criteria of "science" doesn't work for many of our most powerful explanatory sciences.

3. We know the pathological roots of their image of "science" in failed programs in ohilosophy.

4. We know they don't get their explanatory rival, we know they have it's cognitive basis all wrong, etc. I.e. we know they "reject" rivals on false grounds based on failures of comprehension.

And on and on.


I agree that while Bob Clower was "crusty," he was a fine person and a great editor.


Yeah, not my authoring, but while Wikipedia casts me into your hell of sinners known as "mathematical economists," I continue to struggle to defend and support the Old Institutionalism, long story (heck, it is old and institutionalized).


Now, now. We all know that you are trying to give good advice as you usually do to all those young people out there, but let us face it, you were discriminated against for your peculiar positions. As it is, I prostrate myself admiringly and adulantly before your humility, :-).


thanks for the extensive reply.

1) The literature you provide: Does Kirzner really tackle the problem I introduced above? I didn't read the Limits of the Market (but I will), yet all his work I know is open to my criticism. For instance, 'altertness' is a fuzzy concept and neither proven to be necessary nor sufficient for convergence to his deterministic stationary old-school general equilibrium vision.

Further, is Buchanan really an Austrian? I don't think so! Did he consider himself to be Austrian? (BTW, I don't consider George Selgin to be Austrian). I know Frydman's work. He has good points. The problem is that you believe that I'm a narrow follower of Walrasian econ. This is not the case: I just think that it's not as useless as you suggest.

Let's turn to the GMU literature you refer to. You write: "These papers give institutional answers, not behavioral assumptions". To make institutional answers you have to make behavioral assumption! Foremost, answers and assumptions are no substitutes. Ranging from zero intelligence to full rationality you have to make some assumptions about how your agents interact, their payoff functions, thresholds, etc.

2) Your perception of me and my views. You write: "The rhetoric of your posts is always one of posing as the standard bearer of mainstream and what is respectable." First, you are the one attacking the profession for remaining withing the Walrasian box, which you describe as empirically empty and unproductive. Sandroni is a case in point. Here, we have the first formal statement of impersonal(!) market selection with low informational requirements and no auctioneer/recontracting, but still within the Walrasian program. He shows under what condition we can expect a Walrasian economy to converge given such a selection process. BTW, he introduces his efforts as an attempt to model the ideas of Friedman and Alchain. And Sandroni shows that the Austrian believe in the economy as a profit-and-loss system makes a lot of sense in Walrasian economies (BTW, no one believes that they are real). That could convince a lot of mathematical economists of the use of Austrian insights. You could embrace it. Or you could at least say: 'hey, still Walrasian but a major step in the right direction.' Instead, you reject it right out of hand. Isn't it you, who decides what is respectable or not? I for one just like to play the devil's advocate. Further, I'm not posing. I consider this as weakly ad-hominem. As non-native speaker, I just try to stick to econ-slang to improve communication. Perhaps you don't like it; but at least you get what I want to say!

3) Finally, stop arguing as if I treat you as an academic outsider! I would kill for your carrer (metaphorically speaking). You don't have to mention your great teachers and publications each time we discuss economics. I know them and have great respect for you and the CP-crew. I learn a lot in our discussions! No chance for peace?

Arash --

Jim Buchanan is an Austrian fellow traveler --- a methodological individualist who got his idea about applying economics to politics from his reading of Human Action; an exchange theorist who acknowledges Mises, Hayek and Kirzner on the idea of market process as opposed to market equilibrium; a consistent subjectivist who acknowledges Mises, Hayek and Rothbard. Buchanan is not a "cult member" if that is what you mean by an Austrian.

Same with Selgin --- he is a thorough going Austrian, unless you define Austrian so narrowly that nobody who engages seriously with his professional peers is an Austrian. In other words, you have it seems a preconceived notion of what it means to be an "Austrian" that I would argue with result in excluding from the Austrian camp everyone I would include --- from Rizzo to Koppl; from Lavoie to Leeson. The reason we changed the name of this blog was precisely because too many people were taking the overly restrictive meaning of the term Austrian among the internet community. But you are a serious economist, not an internet "student", you should know better I would think.

Anyway, whatever, lets just talk about good economics. To me good economics starts with a rational choice model, but where the choosers are human --- capable but fallible choosers. And the puzzle is to see under what conditions the interaction of these capable but fallible human choosers produce a dovetailing of the underlying conditions of technology and resource availability with the induced variables of the market process -- prices and profit/loss. In other words, how does the market selection process work to assure that opportunity costs are taken into account as individuals realize the gains from trade and least cost technologies are employed in the process of production? There is something meaningful to the concepts of exchange efficiency and productive efficiency. The answer, however, is not to change the behavioral assumptions of capable but fallible, nor even to make the "environment" one that is conducive to an answer by assumption. Instead, the answer -- if there is one -- is to be found in the institutional FILTER mechanism. So the answer is in institutional analysis, but an analysis of institutions as if history mattered.

To me if you look at what I just laid out, you can get a clue to various catch phrase that I utter --- "Shackle with price theory"; or Ostrom's "Behavioral approach to the rational choice theory of collective action"; or Buchanan's "order defined in its process of emergence." The idea is to demonstrate a rather orthodox conclusion (about market efficiency) from a radically heterodox problem situation. This is the hard case; the robust political economy case. Inspiration of this comes from Hayek's Individualism True and False, and his Economics and Knowledge papers.

Now I think you raise a VERY good point about both Walrasianism, and also that any institutional analysis must have some behavioral assumptions. I guess my answer would be on the side of stressing the absence of heroic behavioral assumptions and the inability to rely on magical theorizing.

Choosers enter an institutional filter, the filter mechanism spits out equilibrating tendencies. But the inputs into that process are subject to constant change, so disturbances lead to new processes, etc. I really like Russ Hardin's Indeterminacy and society. It is not that anything goes, but it is also not that we have single exit models.

As for Barkley --- I attribute my own failures, honestly, to my inability to compete at the level I was supposed to compete to maintain those positions or obtain them. That is the only way I can personally deal with numerous scientific disappointments. It is the same way I deal with the history of my failures in the field of sports. If you would have met me when I was 16, I would have told you my future was in the NBA, or in Europe, followed by a career coaching. That didn't happen. Why? Well for one reason --- I wasn't good enough. When I was that age I played basketball 10 hours a day in the summers; I dribbled a ball to school every day back and forth; I dreamed it, worked it, and believed it. I loved playing that game, and still love that game to this day. But my love for the game far exceeded my ability to play the game. I stare in the mirror and live with that. I feel the same way about economics. When I got introduced to economics, I fell in love with it --- the reasoning, the history of debate, the importance of the conclusions, etc. I still do. I just spoke yesterday to a 10th grade girls math class about economics and statistics because somebody asked me to. I am evangelical about economics. But I am NOT as good an economist as I would like to be. That is nobody's fault but my own. Greg says its a myth my notion of science --- and he makes some good sociological points. A part of me used to believe what he is saying. But I don't really believe it now. Honestly. When I meet the economists that are considered top draw it is not like I am amazed that they are there, just as when I watch an NBA player play I don't say --- how did that guy make it and I didn't?! Those guys are just "bigger, stronger, faster" --- they are "better". The only way to compete with them is to get "better". Find your niche and exploit it. There are 6'0" guards in the NBA, there just aren't 6'0" guards who are slow, cannot jump, and cannot dribble, shoot and pass with great profficiency. As we used to say to the young kids as we cut them from teams --- you have great character and I am sure you can contribute to the school in a variety of ways, but basketball is not going to be that -- at least not this year. You cannot be short and slow and compete in this game.

Economics is a competitive business. The top guys are like LeBron James or Dwayne Wade. They are bigger, faster, stronger. All "mythology of science" taken into account, the best and the brightest rise through the challenge. If we want to compete in that world -- which I believe we do -- the first thing we need to do it recognize that and then figure out our weaknesses and our strengths -- and then exploit our strengths and improve on our weaknesses. It does no good to focus on discrimination and barriers, we just have to be better at our chosen profession.

Barkley, your care to understand me (big "if" there) it should be clear that my case isn't against math, it't against the demonstratively pseudo-scientific and failed explanatory / "preditive" use of math constructs and statistics that most economist assume -- i.e. I've made the case for Hayek's account of economic science.

It's.a risible and dishonsted strawman to suggest otherwise, but of course, this has always been the FAKE case made againdt Hayek, made in orderr to duck force of his rival account of your science.

Pete, economics is a team game. You are play 1 against thousands. There is too much for any one person to do. There is too much for 20 to do, even in a sub fiked like macro. You are outmanned.

Kobe would lose every game if every game was one on 200, etc.

Think about it.

Pete, Imagine if they moved the height of the rim to 20 feet, and extended the court to 1/4 mile.

Imagine if players on the home team where the refs, and your team was required to always be the visitors.

Perhaps I just don't know enough about your understanding of how scientific economics explanation works, Barkley.

But what I've never understood is why your father's exploration of Godelian limitations of the formalist project hasn't sensitized your to the cognitive limitations of the formalist project more generally when it comes to the human domain.

Have you ever read Wittgenstein?

Do you have no sense of the common anti-formalist insight of Wittgenstein's work on language (e.g. his private language argument) and the Mises/Hayek critique of socialist calculation -- and more generally Hayek's case against the Walras math construct as a supposed causal "explanation"?

There is so much interesting stuff on this thread. I just want to make a few points:

1. Pete is in many ways the eternal optimist. Good ideas will somehow win out despite various transient(?) barriers. The academic market is competitive with smart people, etc. This is a big topic in itself. Suffice it to say that I am not the optimist that Pete is. Consider that one famous economist interviewed by Russ Roberts doesn't believe that economics has much to do with reality. In any event, it is clear to me that the trends at the highest levels in economics are not favorable...yet. (Don't not be fooled by Nobel prizes to outlier economists -- look at what is happening on the ground. Look at the AER, for example!)

2. On the issue of "excess empirical content" and corroboration, I have to laugh. Most of the developments in macroeconomics in the past thirty years or more do not have such advantages over their predecessor ideas. I have recently thought that if you construct a "value of marginal product" for contemporary macro and compare that with the direct costs of production you will get a big negative number. Now add opportunity cost and standard macro economists would be better off watching Vampire Diaries (one of my favorite shows).

3. On indeterminism. YES. At the risk of being self-serving, read The Economics of Time and Ignorance. Austrian economics is not about providing some special magic process theory that converges on a Walrasian GE. No process is real time is error free; no process in real time fails to affect the equilibrium toward which it moves.A institutional system that encourages alertness to profit opportunities is better than ones that do not, but it is not a panacea.

Pete, the FBI reports that 27% of captives show evidence of the Stockholm syndrome -- it seems to be something of a universal of human nature.

There is a great documentary on the life of the Americans who "defected" to North Korea.

It's amazing to watch those in the film and their overwhelming loyalty and attachment to the Great Leader who controls so much of their lives.

"Austrians" in many ways are captives of an overwhelmingly powerful academic environment not of their choosing which controls much of their lives.

One out of four of you would be predicted to suffer some form of the Stockholm syndrome.

Sorry, Barkley, I think I misread your remark above.

Nevermind. As they say.

Just to add to Mario's first comment. Pete loves Public Choice, but does not apply Public Choice to the economics and education profession itself.

Two examples. The tenure system ensures that academics do not bear the full cost of hiring less productive but more congenial colleagues. The political ideology of academics differs markedly from that of the general public and could not possibly be the result of a random draw. And so on.

Institutions and incentives matter in academia, too.


That sounds like work that needs to be done. Won't make you popular among your fellow economists, though. It gives me a new way to think about these things in education, in any case.

Stipulate the following:

-- Bright people populate academic departments, including economics.

-- Bright people share in validating the logical / mathematical soundness of the steps in a formal construct.

-- Bright people do NOT share in their assessment of the cognitive value or significance of any particular bit of formal work, whether "pure theory" or "empirical/predictive".

-- Bright people in a department are narrow specialists and they are not competent and don't really understand the specialist work of the majority of their colleagues.

-- What bright people share is reliance on an "objective" & universal formal filter that extends across the discipline and easily crosses sub-specialties -- the use of a formal metric of mathematical soundness or predictive "empirical significance" for filtering "good work", i.e. formal results are used as a universal certifier regardless of differences in assessment of the cognitive merit of any particular piece of formal work.

Conclusion: we will always see many of our colleagues as amazing "athletes", whether or not there is any "objective" value in what they do -- and the specialties which will be filtered in will have objective metrics, e.g. measured times, measured heights, points scored, etc., and the specialties filtered out will be "subjective", e.g. they won't have formal metrics for "goodness" or "soundness".

Note well. There is no formal metric for many kinds of understanding or "getting it", i.e. performance is all you have, you don't only have substitute numerical or formal checks on that understanding.


Not sure which remark of mine you are responding to that you misread. I did think it was a bit odd to throw my father at me. Please read some recent papers by me on my website (, "On the Foundations of Mathematical Economics" (in press at New Mathematics and Natural Computation) and also "Constructivist Logic and Emergent Evolution in Economic Complexity" (out last year in the Velupillai festschrift). I note that Roger Koppl has been one of the main guilty parties dragging me into all that stuff. And, it is certainly some admirers of my father who were responsible for labeling me a "mathematical economist" in his Wikipedia entry, not a label I apply to myself in my cv.

Pete, I admire your willingness to "take the hit." But, lets' face it, shooting baskets and providing assists are measurable outcomes with fixed standards in ways that pubbing in the AER is not. You are certainly smarter than, and more innovatively productive than, many people who succeed in that, although certainly not more so than all the people who do.

And as for "who is an Austrian?" well, I would contend that at best you are merely a "neo-Austrian" if you have not spent serious time sipping coffee on the Karntnerstrasse (sp?) in Vienna, preferably before WW II.

A parallel:

The entrepreneurial changing in understanding which drives the market has no formal structure, has no set formal matrix.

The changes in understanding which mark scientific advance has no formal structure and no formal matrix of assessment.

Entrpreneurs do have the matrix of money calculations of profit and loss to assist them.

Academics have nothing of a like kind, so they put in place formal standins as a universal and easily assessed proxy for certfied "understanding".

For generations academic philosophy of science, language, mind etc. has been dominated by a formalist project with well known intractable pathologies.

To show competence and understanding in the field and to publish and advance careers philosophers extend out some extention of one of the developments of one of those formal sub fields.

If you don't show competence in one of those, you aren't judged competent in the discipline.

Work developing the attack on a formalist understanding of various domains of human understanding, e.g. Wittgenstein or Kuhn does not supply easy puzzle development, easy dissertations and easy publications.

I see a clear parallel with "mainstream" vs Austrian economics.

The casual mechanism in econ isn't formalizable or numerically "testable" etc. just at the cuasal background of shared understanding through language can't be put in a formal construct, or numerically "tested".

The folks who dominate work under the pretense that it is.

And, Greg, yes, I have read Wittgenstein, both the Tractatus and Philosophical Investigations.

I take it, then, Barkley that you understand Hayek & Wittgenstein's point about the fallacy of mistaking a formal construct made out of "givens" knowable to one mind manipulating the construct for the social phenomena which is language and the market process.

Is that right?


Point well taken about the "objectivity" and also on the label I prefer "contemporary Austrian economics" or better than that "Virginia Political Economy". But I'd love the day when we just call it "economics" or "political economy".

I don't disagree with anyone's sociological observations, or even public choice observations, of academia. I am just explaining my own personal psychology. If I didn't believe my failures were my own and instead we somebody elses, I think I personally would devolve into a funk of paranoid depression. But if I persuade myself it is all about my shortcomings, then I know what I need to work on to do better and that is also what I want to suggest for my students. Ruthless self assessment, great respect for the top scientists in the profession and the reward structures of the profession, and cultivating a sense of scientific ambition as well as a commitment to truth tracking in research.

The "half-time" speech isn't always as welcomed and persuasive as I might hope it is (even to me). But as all good coaches know, sometimes you have to be able to sell ice to a eskimo.


Let us just say that while I continue to find the formalisms extremely interesting, I know what their proper place is.

The point of Wittgenstein and Hayek is that our background understanding consists in shared patterns of going on together, and there is no other "foundation" of language and rule following than that.

The point of Kuhn and Hayek is that learning and discovery takes us into new realms of understanding that can't be captured by a formal construct or math algorithm, etc.

Now look what someone folks like Searle and Kripke and Quine have done with Wittgenstein -- they've tried to stuff his insight back into the formalist box.

And look what Hurwitz & Arrow & on and on have done with Hayek on "information" and the signaling role of prices in the coordination process of market adjustment by entrepreneurs -- they've tried to stuff his insight back into the formalist box.

You get all that, right, Barkley?

Saying that you "know" the limitations doesn't _show_ me you understand the limitation -- sort of my whole point in this thread.


I'm too busy playing word games with that ladder old Ludwig pulled up after himself at the end of the Tractatus to show anybody anything. In any case, one can stuff things in boxes all one likes, just as long as one knows how to take them back out again.

Beetles all the way down, is it?

Actually, I prefer the Beatles.

It is too late, but I was going to say to Barkley, do yourself a favour and don't read Wittgenstein:)

I must admit that I have done so, also a giant load of logical positivism, logical empiricism, Kuhn, Lakatos, POMO and Habermas. On the basis of that reading I am prepared to advise that they only need to be sampled before moving on to better pastures, they do not cut it as a foundation or starting point for good research programs.

You need to read Mises as a Popperian and Popper as a Misean, get the best of both and eliminate some errors from both as well. Not that I know enough economics to criticise Mises but I think I have learned enough to criticise Popper!

You've read enough of my posts to know how close I came to typing:

"Beatles all the way down, is it?"

Barkley, I read the papers you refered me to. Think I might have read one of the before.

Note that my interest is prior to and supersedes these old worries about the foundations of justification in mathematics -- I'm interest in the grounds of shared significance. I'm convinced that most of what is going on in these foundational and metaphysical struggles is founded upon mistakes. See for example Rech on Frege, Wittgenstein and Platonic Realism:

I'm not persuaded by the false motivation of the Euclid model of justification to look for a demonstrative formal machinery that limns and justifies the natural ways we go on together in doing math or coordinating our behavior in the market.

I reject justificationism, logicism, formalism, Platonic realism, intuitionism, and the various efforts to embalm the significance of language and our understanding in a constellation of related sentences written and interpreted in the language of Frege's logic.

The failure and pathology of the Carnapian world view offers us a parallel to the failure of the Arrow-Debreu world view, if I can call it that.

We need to aks first, how can these public symbols have any shared meaning at all, and how can we learn them?

Once we do that we've we see that "grounding" one set of symbols in another or in perceptions or in a magic land or in anything else dooesn't get us anywhere, it just gives us a false picture of the phenomena

Similarly, we have to ask, how can these shared public prices have any significance at allmfor us, and how can they help coordinate our plans and behaviors?

Once we do that we see that "grounding" our understanding of the market in a set of symbols interacting with one another in a formal math construct doesn't get us any where when it comes to undersatanding how actual people in the world make use of money signals to adjust their plans, instead it gives us a false picture of this processes of changing understanding, groping and learning, and evaluating the possible significance of profit and loss signals.

But I don't see, Barkley, an appreciation in your discussion of this deeper level of critique.

The categories you discuss are still assuming the pictures of econ, math and language that Hayek challenged in 1929 and Wittgenstein challenged in the mid 1930s.


I am indeed guilty of reading too much, and overciting too much of it, even some of the worthless dreck, although with the scandal over the failure of Bruno Frey and some coauthors to adequately self-cite now blowing up in the blogosphere, maybe there will be less pressure from editors to reduce citations, or at least self-citations, although there are many guilty of over-self-citing while not citing others.

And I confess that I like to read people from both inside and outside of the box(es), at the same time even, :-).


Of course I am guilty, guilty, guilty (something about A Day in the Life, or whatever).

More seriously, the critiques you mention are critiques relevant to all languages, not just mathematical ones. They are useful for making sure that people do not treat math language as some sort of magic, but that math is not necessarily superior for discussing the world to non-mathematical language does not make it therefore inferior. Everyone needs to view all forms of language with equal degrees of care and caution, although I suspect you disagree with me on that one, despite throwing Wittgenstein at me (and having thrown my father at me earlier, although I suspect I am closer to his views than you are).

Formal constructs build of "givens" almost _always_ are used as magic when the attempt is to understand social phenomena like language, the economy, science, and even math language itself -- and they this magic game goes back to Plato and before.

I don't know how I'm "throwing" anything at you.

I'm using examples I know you share with me.

What else could I use?

My point is that the formal constructs are inherently misleading and inadequate for capturing a bed-rock understanding of the bedrock of human social phenomena.

That's Wittgenstein's point, that's Hayek's point, that Mises' point, that's Kuhn's point.

It's a hard point to get.

Hackneyed shibboleth like, "view all forms of language with equal degrees of care and caution" doesn't communicate an understanding of the deep insight, it's too commonly said by people who don't get it.

Barkley writes,

"They are useful for making sure that people do not treat math language as some sort of magic, but that math is not necessarily superior for discussing the world to non-mathematical language does not make it therefore inferior."

The "givens" & "formalism" pathology (which are build as if the brain and the social learning of language and math don't exist) --

"Meaning" comes from:

A world of "forms", from a third realm of "senses", from phenomena "given" in experience, and all sorts of other imagined magical solutions.

Learning & its "justification" in the empirical & formal realms comes from:

Phenomena "given" in experience, from relations between stipulated symbols in a construct, from deduction or probability math using formal symbols and "givens" in experience, from constant conjunctions of "givens" in experience, and all other sorts of magical solutions.

Greg, I confess that despite my claimed ability to be both inside and outside of boxes, I am getting confused. "Senses" are among the "imagined magical solutions"?

Sorry, but I fear that I cannot resist, :-).

So, I agree, Greg, I am superficial and you are deep. I am merely a mud puddle on the earth's surface, leading people astray with my unwillingness to fully pull back the curtain on all the phoney magicians of mathematics, etc.

However, you are very deep, a serious hole in the earth's ground. My only concern is that perhaps your hole got that way through the efforts of some workers digging who might have been successful entrepreneurs but were led astray by some misguided central planner Keynesians who distracted them with evil fiscal stimuli. Maybe they have also been paid to partly fill the hole back up, so that it is still much deeper than my mud puddle, but not so deep as to become lost in the bowels of the earth, :-).

Surely we don't need to discuss how perception is theory laden, do we, Barkley?

We don't have to talk about Wilfred Sellers & "The myth of The Given".

We don't have to talk about the failure's of Mill's "empiricist" account of meaning and math.



Barkley, 'd like to see your vindication of naive empiricism of Mach, Mill or Hume sort. Where is it?

Or are you throwing out red herring?

Explanations come to an end in shared ways of going on together.

They don't end in bare particulars of "given" phenomenal experience.

You don't get the Hayek / Wittgenstein / Mises or Kuhn critiques.

That's my take away of both your "disarming" attempts at jokes and your attempts at seriously discussing this issue.

That's the evidence I see.

And people who don't get it and haven't attempted to get it shouldn't pretend otherwise.

Shouldn't pretend they've engaged the argument on Hayek.

Or the argument of Wittgenstein.


But that is what I see all of the time.

Conversation ending belittling humor from professors falsely pretending they've grapple with what they don't understand, and don't want to understand.

I've see a lot of it.

Naive empiricism as as account of meaning and symbols and logic and math and knowledge was a dead end magical solution to the problem of the acquisition and sharing and use of language and symbols, and the growth of knowledge more generally.

This sort of empiricism is the magic land of the humunculi spectator constructing everything out of bare particulars, as if we didn't have brains and weren't social creatures.

So, yes, MAGIC.

Why can't academics ever admit simply:

"I don't get it. I haven thought of that. I haven't studied that. And I don't want to think of that."

Or even simply. "I don't care whether or not that is true. I have more fun doing this other thing, made possible by pretending that that argument does not exist."


Sigh... I made jokes because I suspect that this has become tiresome to all but the two of us. Furthermore, as we disagree on some substantive points, it is pretty clear that you will never accept that I "get it" and will insist on repeating what amount to personal insults in a whiney tone. I figured I would go out with some humor, but I have just triggered you to further magical efforts.

This will be my last comment on this, and I will make it serious for your benefit. Frankly, my teasing about "depth" and confusion (and the reference to senses) involved what appeared to be a commingling of critiques of formalism with critiques of naive empiricism on your part. I do not find much foundation for such a commingling in the works of Hayek/Wittgenstein/Mises/Kuhn, although clearly you disagree and will decide that my unwillingness to agree with you is clearly a sign of my ignorance and superficiality. However, I am not going to argue this matter here and now any further beyond the following.

My bottom line is that there is more going on to the problems with formalism and the problems of naive empiricism than are found in the works you cite, and while they overlap in places, they are not identical, and despite your apparent claims that they are, I am not remotely convinced.

Barkley, you are using "formalism" as a technical term.

I'm simply attempting to gesture at something encompassing encompassing a wider net, pulling in "atomistic" Russell, early Wittgenstein, Mach, Carnap and even Mill and Hume in the domain of those attempt to create a construct from which to "build" up knowledge and structures of meaning.

I'm sorry I misled you.

I'm still like a straight answer which indicates you to get Hayek's critique.

You've lurked for years in the Austrian forums, you written on Austrian economics, yet I can't remember much indication in your work or your remarks that the fundamental core of the Hayek critique is on your radar screen.

Barkely, encompassed in my wider net would be something like Neurath's "War Economy" construct or Wieser's Socialist Dictator model.

It's the sketch of a construct made of "givens" which can be imagined given to a single mind, and manipulated like blocks in front of that single mind.

It's "formal" in the sense that it's a construct of stipulated elements.

Hayek's position is that the causal element of an entrepreneur adapting using profit and loss signals and price signal and local information isn't like and isn't captured by the math constructs of the economist.

My reading of your work, Barkley, is that you not only think it is, but that you can't imagine any other game in town.

Straight up, I'd like to know whether you share Hayek's view, you share the view I attribute to your, or whether you have some 3rd point of view.

If you don't want to say, why can't you simply say that: "I'd prefer not to say".

Or even say this: "I don't understand what you are saying."

But instead of being a stand up guy on this -- what we've been talking about for comment after comment -- you dodge the topic.

What's up with that?

Later Wittgenstein is attacking Russell's logical atomism and his own phenomenalistic / picture account in the Tractatus (inspired in part by Mach).

Carnap was in this same tradition.

It's absurd not to see the "co-mingling".

Make that:

"My reading of your work, Barkley, is that you not only do not think it is, but that you can't imagine any other game in town."

OK, Greg, one more comment to answer your plaintive plea.

So, yes, Hayek was the one of the four you roped together who actually commingled the critiques, and rather deftly, with his view of the Godel problem entangled with his theory of mind. But this does not hold for the other three. As you yourself stated, Wittgenstein contradicts himself and does not make the link in the way Hayek does. Hayek of course would become frustrated with Mises's a priorism, much to the annoyance of many Misesians. And Kuhn is far less the believer in the supremacy of paradigms than he is widely believed to be.

Furthermore, while indeed Hayek did the commingling, the hard fact is that there are various matters involving critiques of formalism that are associated with the debates in logic that he did not discuss, and that do not necessarily link to critiques of naive empiricism, as I said. I discuss some of these in the papers I cited for you.

That satisfy you? And if it does not, this really is it from me.


The question I want answered I made plain, and you clearly don't want to answer, Barkley.

I can't image why.

The question I want answered is whether You agree with Hayek that entrepreneurial adaptation / learning is not captured by and is misrepresented by econ math constructs.

Note, Hayek didn't do what you say with Godel, but merely suggested the possibility of a link. He didn't declare that their was such a link.

I have no idea whar contradiction you are asserting in Wittgenstein.

You don't address Carnap, or Quine formthat matter.

Who would deny this? Why is it even worth mentioning in the context of the above. I'm baffled:

"the hard fact is that there are various matters involving critiques of formalism that are associated with the debates in logic that he did not discuss, and that do not necessarily link to critiques of naive empiricism."

Kuhn, Wittgenstein, and Hayek all emphasize training, and mastery acheived with exemplars, and the existence of deep acquired patterns that are prior to and primary over anything articulated.

Even Mises argued for tpthe fundamental significance of this fundamental domain of universal ways of understanding or going on together that is prior to and primary over written rules and defined terms, etc.

The "primacy of the abstract" and the primacy or training and the primacy of natural commonalities of mind are common to Hayek, Kuhn, Mises and Wittgenstein -- primary over constructs concpsciously built and manipulated by single minds.

My sense, however, is that you have no idea of this aspect of Wittgenstein, Hayek, Mises, and Kuhn, and youmhave no idea what I'm discussing.

There was never any singular "formalist" program -- there were all sorts of various efforts with all sorts of family resemblances.

And the wheels came off on MULTIPLE front.

I've only alluded to some of those.

I'm well aware that there are dozens of broken wheels everywhere -- what's important is that I've pointed to the 800 pound gorilla in the room, i.e. the one identified by Kuhn, Hayek & Wittgenstein, and you, Barkley, either aren't aware of its existence, or you'd prefer not to acknowledge its existence.

It's one or the other.

There are not any good mathematical models of entrepreneurship that I am aware of. While some of Hayek's arguments are relevant to this (and ones of Mises and Kirzner arguably even more so), Kuhn and Wittgenstein (and Carnap and Quine also) are pretty much irrelevant to this.

All relevant to the larger and more important general issue of the limitations of formal constructs, however, and linked directly via tacit social rules e.g. property and language use, and exemplary problem solution application, directly linking Hayek, Mises, Kuhn & Witttenstein.

IE constructs can't incoorporate social context learning -- the stuff of Mises & Hayek on property and entrepreurship contr socialist calc constructs.

Ditto deductive / formal systems -- they can't capture the learning and open-ended used of languagemand symbols.

All of this stuff is know via shared minds and shared patterns of doing.

It's a false pretense of knowledge to pretend the non existense of this common insight & common domain.

"Irrelevant" - a report of your tastes, not a cognitive remark.


Gosh, if my remark about "irrelevant" is "not a cognitive remark," then why is your comment about "relevant" one?

Increasingly, Greg, your argument is converging on "math bad; word good!" which is about as cognitive as "two legs bad; four legs good!"


Guys, really. Enough already. Take it to email or play nice.

This isn't at ALL what I've said.

"your argument is converging on "math bad; word good!""


You keep changing what it is you say. When I answer your questions, you change them, and then contradict yourself. Did Wittgenstein contradict himself or not? And do you really know my father's work better than I do, as you seemed to suggest early in this thread? I think I have made my position clear here.


As for you, you can go to your room without any dinner tonight, :-).

Wittgenstein came to see the Tractatus' God's Eye View / spectator view as mistaken -- yes. Abandoning a view is not contradicting oneself.

I'm not changing what I've said.

The theme is the failure of various "formalist" projects aiming to build constructs providing foundations for and limning such things as language/meaning, empirical knowledge, an economy, or procedures for transfering truth or significance.

Paradigms would be Carnap's The Logical Structure of the World or Russel's Principia or Wittgenstein's Tractatus.

The wheels came off this wider notion of the formalist project in all sorts of ways.

Just one aspect of this was the various ways the wheels came off the
narrow axiomatic dreams of Hilbert -- but this is only a very narrow piece of the story (if particularly spectacular) and a piece that hasn't produced nearly as clear lessons as the destruction of other efforts as construction encompassing more than systems of math -- but ALL of language, meaning, significance, knowledge and symbol use.

I don't and didn't claim to know your father work better than you. The incompleteness result I simple used as on tiny example of one wheel falling off in one narrow branch of the wider formalist dream with reached far beyond mere systems of math to the whole of knowledge, mind, and language, as in Carnap, Russell and Wittgenstein of the Tractatus.

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