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« SEA/SDAE recap with Adam Martin and Dan D'Amico | Main | Occupy the Mind with Economics »


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I certainly hope there is something really valuable here, given how much time and effort it will take to get through the paper.

48 pages with tons of equations. We learn what being "respectable" means:
- "Respectable" or "normal", if v is in the lower tail, for instance because the cost c is low.
These are things that "everyone but the worst people do", such as not abusing one's spouse and
children, and which are consequently normative, in the usual sense that the pressure to conform
rises with their prevalence.

Bottom line: Austrians can no longer claim that we are the only economists, or that only heterodox economists, talk about values, beliefs, culture, social dynamics, etc. We have to know argue why are approach to these questions is more fruitful scientifically. The burden of proof rests on our shoulders. But claims to exclusiveness in research focus cannot be made. A conversation is on-going within the mainstream and either we engage it or we will be rightfully ignored.

Dr. Boettke, if values, beliefs, and culture is what you're interested in, why not start up a conversation with the Institutional School, and the people who publish regularly in the Journal of Economic Issues? I remember I was into that stuff for a while --- they all take their cue from the work of Thorstein Veblen and Mr. Ayres. The main idea in their work, if I remember correctly, is that cultural values are the principal impediment to the progressive development of technology. Yes, culture for the Institutional school is the great evil.

Um, austrian away, one of Pete's first publications was precisely an outreach to the old institutionalists.

Yes, I remember. But what has been done since then (wasn't it back in like 1989?)


I want to talk to the elite in scientific economics. Whether I have success or failure in doing so is a different point, but that is what I am trying to do and also what I am encouraging my students to do. Just trying to be the best economist I (they) can be, and to engage in productive dialogue with the best economists around that are interested in similar topics.

It is not a stealth strategy because I don't want to talk to the elite in scientific economics merely for the sake of talking to the elite, but because I think scientific economics is missing some critical insights supplied by the tradition that I work within. Intellectual life, like life in general, is full of opportunities for mutual gain from trade.

At one time in my career, I thought the most fruitful gains were from interaction with heterodox economists --- institutionalist and post Keynesians. At other times it was with other disciplines --- history, law, politics, philosophy, etc. And at other times with figures within the mainstream of economics. Economics is a fascinating discipline. These more mainstream economists are now addressing many of the same topics we used to think were an exclusive domain of heterodox economists. The intellectual landscape has shifted and we need to adjust our behavior to take that into account.

That is all I am saying.

There is no inconsistency in my position, my position is the same --- be curious and pursue intellectual gains from trade. The opportunities to realize those gains, however, shift over time.


I largely agree with Pete. (I never liked some of those heterodox types he "introduced" me to.) But I must say that my experience reading the mainstream on the topics that most interest me -- rationality and paternalism -- have convinced me that these guys get precious little out of their technically magnificent analytical apparatus. There are a number of reasons for this, including their lack of knowledge of much of a substantive nature.

The crux of the problem for us is that they believe that for our statements or results to be interesting they must be fit into the formalist framework. The framework is not simply a tool, among many, but a requirement for MEANINGFUL STATEMENTS.

I (and Pete) have made this point before. But how does one deal with the reification of the formal method? Some of the mainstream are arrogant, intolerant, and very narrow in the knowledge and vision.

"But how does one deal with the reification of the formal method?" You blow it up from the inside.

Ha, Yes, I remember that I was basically run out of Washington University's Center for New Institutional Social Science by Itai Sened (the program director at the time) when I admitted to him that my paper on Coase would not include any math or formalistic analysis. It is amazing how quickly he lost interest in what I was saying after I admitted to him that I would not be using a formalist framework.

So, Dr. Boettke, I would follow Dr. Rizzo's advice and caution you to BEWARE.

I have very quickly looked through the paper that Pete has linked to -- I emphasize very quickly skimmed through.

What struck me is the very point that Mario made, above. The authors write only for those who think and write like themselves. There is little or no attempt to summarize in "everyday language" any common sense explanations of their abstract mathematical formulations.

Their's is a "closed society" of fellow members of the "high priesthood" of the "math-econ tribe" (to use Axel Leijunhufvid's phrase from his great satire, "Life Among the Econ").

It also reminds me of a comment that Joseph Schumpeter made in a lecture he delivered in Japan in the early 1930s, that economics will have become a "real science" when the "outsider" can no longer follow the logic and the reasoning of the economist -- unlike the intelligent and informed "layman" during the period of classical economics and the early marginalist period.

As the it has often been pointed out, the "medium has become the message."

There is nothing inherently wrong or misplaced if an economist believes that a more precise and formal ("rigorous") understanding of everyday human action can be obtained through his attempt to express it in the language of mathematics for his own thinking purposes.

But it should equally behoove him to them "re-translate" his mathematical formalization into a "natural language" with descriptions and explanations of how this captures the aspects of human decision-making and actions he is concerned with analyzing.

If they cannot be so re-expressed so that people can "see themselves" in the logic of the explanation, then one must at least wonder if what is formalized has anything to do with the actions of real people in the real world.

Richard Ebeling


<<"But how does one deal with the reification of the formal method?" You blow it up from the inside.>>

I don't know how.

Just the opposite--you blow it up from the outside. If the formal method were internally flawed, it would already have been destroyed by its most powerful adherents. You beat it by presenting a superior alternative explanatory mechanism.

The problem is, will your alternative explanatory mechanism even be recognized as a legitimate alternative explanatory mechanism, let alone a superior one?

It doesn't help that the deductionist mechanism of economists is immune to the Kuhnian anomalies which would allow for a paradigm shift.

And where economists potentially do get empirical, it's in the realm of a thing called "studies" involving much impersonal data and series of regressions. Kuhnian anomalies don't build up this way. We know this. Studies on the studies have been done. They don't work. Physicists and biologists don't find Kuhnian anomalies this way. Economists don't either.

Mario: The idea is to use formal methods to find the limits of formal methods, just as Hume used reason to find the limits of reason. Computability theory gives us the formal tools to show the limits to formal methods. This sort of math lets you give a rigorous meaning to statements like "No economist can process information faster than the economy." Morgenstern was interested in self reference, as with his discussion of Holmes and Moriarty. And he knew about Goedel and, presumably, Turing. But he went for game theory instead of computability theory to get at the issue. That didn't quite work to get at the paradoxes of self references, IMHO. But today we have a literature on computability *in* game theory and *that* lets us really get at self reference and the corresponding limits of formal analysis.

I thought I would share a quick note to me from Stuart Kauffman:

"Glad to hear you are using my work with Austrian economics. They are not, I'm glad, so wedded to equations. Kind regards, Stu Kauffman"

Many, many years ago I used to listen to audio lectures by Murray Rothbard while I drove around town. I remember he said that you could always identify an "Austrian" book by its absence of math. Indeed, he went further and suggested that "Austrian" books even "smell" differently than most other economics books. He was quite an animated fellow in those audio lectures.

I posted Stu Kauffman's comments over at Austrian Economics and Literature, and he responded. I think everyone here would be very, very interested in what he has to say about a paper he's working on:


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