Why I am an economic agnostic

The age-old quest of humans for knowledge extends into prehistorical time. This quest has been driven by the desire to understand subjective experience and objective phenomena in terms of causes.

Early humans explained causation in terms of what we would now call the supernatural, which which at least some of them apparently claimed to experience through what we would regard as non-ordinary cognition and would write to imagination or affect. This stage of development is regarded as predominantly mythological, Greek mythos meaning story or narrative.

Around the time Greek philosophy began to develop with Thales of Miletus c. 624 BC – c. 546 BCE, we can see a transition from supernatural explanation to natural explanation. At first this was proto-scientific in the sense that the causes where physical. Thales is reported to have said that all things are of water, for example, Anaximines opined air, and Heraclitus, fire. This line of thinking soon developed into more elaborate metaphysical explanations, such as the abstract apeiron (indefinite, infinite, boundless, unlimited) of Anaximander, nous (intelligence) of Anaxagoras, and the one of Parmenides.

The metaphysical aspect expanded to included psychological and apriori factors, both of which are subjective. Socrates, his student Plato and and Plato's student Aristotle, who are the foremost shapers of Western thought, knew of their predecessors and built on their work. Socrates, Plato and Aristotle way of thinking and mode of expression is quite comfortable to us millennia later, whereas earlier thought seems quite remote in time. There is a perceptible maturing of the transition to abstract, "rational" expression at this point in time, which Karl Jaspers called the Axial Age.

No really significant change in the mode of approach occurred until the emergence of science the the time of the Renaissance. So it is possible to see a progression from mythological explanation, to philosophical explanation, to scientific explanation, as did Auguste Comte.

The difference between philosophy and science is that philosophy rests largely on imputing metaphysical and psychological causation that are non-physical, subjective or apriori. Consequently, assertions based on this methodological approach cannot be test empirically, while science requires testable hypotheses that can be falsified empirically. So a great divide began to appear.

The second great transition took place in the shift to scientific explanation, which regarded subjective factors as being nearly in the same category as the supernatural. The natural sciences made this transition due to the objective nature of the phenomena they deal with.

Social science is still struggling with the transition because the human element is both objective (behavior) and subjective (cognitive-volitional-affective). Economics is one of the social sciences, therefore subject to reflexivity of consciousness, future uncertainty, and "animal spirits" as Keynes called the affective aspect of consciousness.

Moreover, insofar as it is a policy science, economics is heavily value-laden and normative. For instance, capitalism is only one possible approach to economics based on promoting one factor of production over others. It is based on a particular, some would say
peculiar, ideological construction that predominantly values capital — financially as investment and non-financially as capital goods — as the scarcest factor of production and the most vital to economic growth.

Therefore, doing economics involves avoiding many traps. As Keynes pointed out in a letter to Roy Harrod,

...the art of thinking in terms of models is a difficult--largely because it is an unaccustomed--practice. The pseudo-analogy with the physical sciences leads directly counter to the habit of mind which is most important for an economist proper to acquire.
I also want to emphasise strongly the point about economics being a moral science. I mentioned before that it deals with introspection and with values. [3] I might have added that it deals with motives, expectations, psychological uncertainties. One has to be constantly on guard against treating the material as constant and homogeneous in the same way that the material of the other sciences, in spite of its complexity, is constant and homogeneous. It is as though the fall of the apple to the ground depended on the apple's motives, on whether it is worth while falling to the ground, and whether the ground wanted the apple to fall, and on mistaken calculations on the part of the apple as to how far it was from the centre of the earth.

In another letter to Harrod, Keynes wrote,

It seems to me that economics is a branch of logic, a way of thinking; and that you do not repel sufficiently firmly attempts à la Schultz to turn it into a pseudo-natural-science.

What is desired in scientific explanation is inclusive and compatible models among the various disciplines that comprehensively account for observable phenomena in terms of physical causes, which makes prediction not only possible but secured in scientific laws.

What this means is creating scientific theories formalized in terms of models that relate independent variables as causes and dependent variables as effects. The theoretical explanation also needs to show why the direction of causality is as claimed.

Simple models in the social sciences can be useful in moving in that direction and away from aprioris, but there are several problems to be surmounted. Without an operational account, the direction of causality may be reversed, or correlation may be mistaken for causality for instance. Nor is it simple to distinguish sufficient, necessary, and necessary and sufficient conditions in complex matters.

Moreover, hypotheses derived from simple models are difficult to formulate and test definitively in order to arrive at laws since the models are too simplistic to take into account the plethora of relevant data.

In addition, designing experiments can be difficult in the social sciences, with not only complex data but also ethic considerations in experimental design.

So we might say that economics provides frameworks for thinking about issues but not definitive solutions for running firms or formulating economic policy. However, referring to guidelines is often wiser than trusting to ideology, naive common sense, or bare intuition.

Belief is not knowledge. Many religious people think that faith makes them knowers instead of believers, when truth be told, they are in reality agnostics who refuse to admit it.

Neither are opinions knowledge, nor do stipulated assumptions yield anything other than deductive conclusions based on what is postulated.

Economists should admit their limitations where appropriate. I don't oppose the direction anyone takes. I do oppose theologizing it and making it dogma in the face of heterodox opposition — and heterodox opposition is mounting.

As a philosopher, my concern is not with developing economic models but looking at what economists and others say and do (context), and pointing out illogic. One of the most often committed logical fallacies is exceeding the bounds of an argument's conclusion in drawing implications from it. Another is using terms inconsistently.

But as far as the direction economists might take to improve their discipline — to paraphrase Friedman, the task of economists is to distinguish good economics from bad economics — heterodox schools are proposing new directions. Some call for building on the mainstream approach and others for a new paradigm.

Economics combines philosophical and scientific elements and this dichotomy needs to be acknowledge more, with less puffery about certainty and less propagandizing about what is essentially ideology as though it were scientific knowledge when it patently is not. Let's get some perspective here, which what many heterodox economists are attempting to do.