Economics as a Philosophical Science

by Gene Callahan

I happened to be reading R. G. Collingwood’s famous essay (at least famous in my circles!) with the above title. While similar in some ways to Mises’s philosophical analysis of the concept of action, there are some quite significant differences present as well, and I thought that Think Markets readers might enjoy a brief discussion of one of them.

Perhaps the most notable difference between Mises and Collingwood is that the latter denies the possibility of interpersonal exchange!

What is Science?

by Jerry O’Driscoll  

Some recent controversies move me to take up the topic within the limitations of a blog post.  Many years ago (1956), Fritz Machlup ably addressed the issue in an essay titled “The Inferiority Complex of the Social Sciences.”  He rejected limiting the term science to particular subject matters or methods.  He concluded that “there is no epistemologically defensible borderline short of the widest meaning of scientific method, defined in the Encyclopedia Brittanica as ‘any mode of investigations by which impartial and systematic knowledge is acquired.’”  

I endorse Machlup’s broad definition of science as any systematic study of a subject.  As he observed in a footnote, the German Wissenschaft is more inclusive: “the historians of literature, the philologists, the philosophers, the mathematicians, the sociologists, they are all scientists (Wissenschaftler).” In French, science is knowledge and one can speak of la science infuse, intuitive knowledge. La science de l’art is simply the systematic study of art.  

Mankiw And Meltzer Are Right! More Or Less

by Mario Rizzo  

As we have been saying here, the claims that the fiscal stimulus has saved or created X number of jobs is not a simple empirical question. It must be an inference from a model that tells us what would have happened in the absence of that stimulus. Collecting reports from various firms or local governments about their job situations will not do. At best these individual reports are based on pop-theories on the part of the reporters about what would have happened.

Mises Was A Scientist

by Roger Koppl

Over at Division of Labor, Noel Campbell picks a fight with Austrian fans of Mises.  “I always conceived of Mises’ efforts as attempting to build a logically correct and (therefore) irrefutable description of human behavior. As such, I always viewed Human Action as a work of philosophy, not science.”   Noel hints that he doesn’t want to be answered with a lot of philosophy of science.  I might whine about how unfair it is to contrast Mises’ “philosophy” with “science” and then expect a response that doesn’t get into the philosophy of science.  But Noel seems to be a nice guy with a sincere question, so I’ll take a stab at it anyway.

The Great Moderation In Macroeconomics

by Mario Rizzo  

I have now read both Paul Krugman’s New York Times essay on the state of macroeconomics and John Cochrane’s reply. They are each, in very different ways, quite disappointing. The level of argument is poor, the prejudices are simplistic, and the tones are annoying.  

Not Prediction But Explanation

by Mario Rizzo

Her Majesty Queen Elisabeth II asked why economists did not predict the current economic troubles. The British academic community (and some in the American) is using this opportunity to discuss views on the nature and limits of contemporary macroeconomics. This is very useful.  

Peter Boettke over at The Austrian Economics summarizes and discusses some of the main issues. I shall not repeat what he says in my post. Everyone should read Pete’s.  

It is convenient for those of us who never thought much of contemporary macroeconomics to support the complaints that the financial crisis and recession was not “predicted” by the Macroeconomics Top Brass. But, as tempting as it is, it would be a mistake.

Should Economists Think About What They Do?

by Mario Rizzo  

Believe it or not, this is a controversial question!

Brad DeLong has argued that the profession seems to know less today about macroeconomics than, say, Keynes did. Paul Krugman has expressed similar sentiments. They see a kind of collective or professional unlearning in the past thirty or forty years. They are right.  

The Failure of Macroeconomics

by Mario Rizzo  

The current issue of The Economist has a very interesting article on the turmoil among macroeconomists (“The Other-Wordly Philosophers”). Essentially, the article argues that although the dominant macro model, dynamic stochastic general equilibrium theory [DSGE], appears to be in a state of near-total breakdown, there is no agreement among economists as to what should replace it.

“Would economists be better off starting from somewhere else? Some think so. They draw inspiration from neglected prophets, like Minsky, who recognised that the “real” economy was inseparable from the financial. Such prophets were neglected not for what they said, but for the way they said it. Today’s economists tend to be open-minded about content, but doctrinaire about form. They are more wedded to their techniques than to their theories. They will believe something when they can model it.”  

An Austrian spin on baseball?

by Sandy Ikeda

Phil Hughes, the Yankees’ up-and-coming ace, may be throwing batters curves but not the kind they think.

Here we present an illusion that suggests that the perception of a “break” in the curveball’s path may be related to physiological differences between foveal and peripheral vision. We contend that the visual periphery frequently reports a perceptual combination of features (a process we refer to as “feature blur”) because it lacks the neural machinery necessary to maintain separate representations of multiple features.

Note:  The spin the pitcher puts on the baseball still deflects it — it’s the sharp change of direction that’s the illusion.  See the award-winning demonstration at Illusion Sciences.

Strategy and statistics play more important roles in the game of baseball than in most other sports, and perhaps that’s why it’s popular among economists.  However, with such a central element of the game now revealed to be purely subjective, depending entirely on the batter’s perception of his particular circumstances of time and place, one could argue that it’s really the quintessential “Austrian” sport.

Another Flaw in the Diamond

by Gene Callahan

The famed “geographical historian,” Jared Diamond, author of Guns, Germs, and Steel, is being sued, by two New Guinea tribesmen, for $10 million. It seems a feud he described didn’t occur, and a man he describes as paralyzed in that feud has been found walking about just fine.

Diamond’s failure, I suspect, is not one of honesty, but one of gullibility: he heard this story from someone and failed to check it out. This is something of which he frequently has been guilty in the past. In a paper of mine, which is forthcoming in a volume entitled The Meanings of Michael Oakeshott’s Conservatism, I write: