My Economic Thought

On Altruism

2007-11-26T10:23:00.000Z

In helping someone you identify their weakness and inadequacies; this gives a non-altruistic feeling on the part of the so-called helper.

Publishing

2007-10-26T19:08:00.001Z

It might come as no surpise that the cheapest way to publish to an intended audience is through academic journals. These journals target specific audiences who wish to read articles in the field of writing. However, the opportunity cost of having one's work rejected also needs consideration. One must also recognise that one does not make coin directly from publications in academic journals. Articles are submitted without financial reward.

For those who wish to make a little money, there are other options. Even if one fails to find a publisher of reputation, there is also "self-publication" where there are finanical rewards. Such companies have an online presence.

It would be advisable to purchase an ISBN. An ISBN would make one's work more visible. These are considerably cheaper in bulk, as least through UK ISBNA: Lulu.com and Infinity Publishing.com

I might want to take heed of a few further considerations: To publish with Infinity Publishing, I filled in a questionnaire to obtain a free book of a few hundred pages which detail how to publish through their organisation. This book is NOT free outside North America. It can leave one to wonder whether this route is worthwhile at all, vis-a-vis, opportunity cost.

Second Thoughts on Organicist Metaphors

2007-06-05T12:12:00.000Z

The reason organicist images of economic were not adopted is possibly because such images are not as manly as mechanism or chaotic metaphors.

On Organistic, Chaotic, and Mechanical Economics

2007-05-10T11:37:00.000Z

Abstract

The author has divided this paper into two parts. In the first part, I deal with two themes. The first of which pertains to the problems of mainstream economists adopting positivism as their official rhetoric. This supports the already mounting criticism levelled against orthodox economists. Firstly, the author argues that econometrics is not objective but highly subjective and metaphysical. Secondly, the author asserts that the econometrician’s attraction to predictionism is ill-founded due to (only to name a few phenomena), self-referentiality, self-fulfilling prophecies, and self-defeating prophecies.

It appears, however, that orthodox economists follow their workaday rhetoric and not their official rhetoric. Their official rhetoric is just a device to help their numerology appear scientific. Following in the footsteps of Deirdre McCloskey, the author examines one important aspect of how economists persuade using their workaday rhetoric.

At this point, the author enters the second chapter of this paper. I deduce from a mountain of evidence that metaphor is one of the chief persuasive devices. The author then systematically goes on to highlight its taxonomy and characteristics before demonstrating a schema of how one might use it.

In the second part of this paper, the author mentions that there is a ‘right’ and ‘wrong’ way to use metaphor, both may be, nonetheless, persuasive. It depends upon the reader. This is why I have allotted a section to show responses to specific situations vis-à-vis interdisciplinary persuasion in the third chapter. In this chapter, I also expose some dishonest ways of using metaphor – justificatory metaphor. In the second section of this chapter, the author gives a brief history of orthodox economics and the abuses of metaphor. I also emphasise the phenomenon of economics imperialism and the main of its root in social-Darwinism.

In the last chapter, the author highlights the ‘right’ metaphors. These metaphors, practitioners honestly construct and use to guide research. I give a brief history of these metaphors before identifying its contemporary strand, chaotic metaphor. I conclude that this metaphor would benefit economics as a whole.

Introduction

The aim of this paper is to decide which metaphors are apt for the economic sphere. The author chiefly concerns himself with the mainstream paradigm and its alignment with mechanism. Mechanism is a constitutive metaphor. A constitutive metaphor frames the thinking of a target domain to the point where one cannot consider the target domain without the constitutive metaphor itself. With mechanism, the economy will resemble a machine with a price mechanism, elasticities, an equilibrium, etc. In a roundabout way, I argue that mechanism is an inadequate constitutive metaphor for the economic sphere.

I propose that Adam Smith adapted mechanism to help guide his research. The neoclassicals used metaphor per se, however, as a persuasive device to justify their particular points of view.

It is possible that economists on the strengths of these metaphors may have persuaded others (at some point or other) of the validity of their standpoints. The author demonstrates some cases where economists have abused metaphor to justify and bolster their standpoint. In some cases, however, economists who use metaphors are not trying to deceive others. Rather, the economist might be genuinely unaware of the magnitude of the persuasive power of metaphor. In addition, an economist’s choice of metaphor may even be fitting or manifest truth. This is, nonetheless, suggestive that economists persuade through non-empirical evidence as well as econometric confirmations.

Economists such as Geoffrey M. Hodgson, employ metaphor to guide their research. It is not unlikely that using metaphor in this way, may even solve old puzzles or open new channels of inquiry. I belief that chaotic metaphor has this capacity. This not discussed, however, in any depth until the final chapter.

Furthermore, there may even be a hierarchy of metaphors concerning economics in the sense that the discipline itself might be in turn deducible from stronger sciences. Ironically, reducing economics to the natural sciences has been the endeavour of social scientists since Saint-Simon (despite his misguidance). Frederick August Hayek labels endeavours to employ scientific methods to explain human action as scientism. The main downfall of proponents of scientism was that they misunderstood the implications of the uses of metaphor.

An understanding of the use of metaphor in economics is important for a deeper understanding of our discipline and possibly a locomotive to pave the way to a stronger economic science.

I now turn to the anomalies of orthodox economics. In a word, I explain why positivism is not a tenable world-view for economists. The author then goes on to mention why economists should adopt the role of literary critic to improve our discipline. Then I highlight exactly why metaphor is so important in this role.

Part 1
The Case of Positivism
From Positivism to Persuasion

Chapter 1

The State of ‘Positive Economics’

The Official Rhetoric of neoclassical Economists

According to Hardy (1975b: 15), an incentive to reveal God’s nature, until well into the eighteenth-century, had contributed largely to the Western knowledge system. Copernicus, Kepler, Galileo, Newton, Leibnitz and others regarded their discoveries as proof of God’s existence. With the onslaught of the separation of science and theology, however, many academics began to worship science. In short, science became a substitute for the omnipotent God.

Since the enlightenment, academics have venerated science as if it were some limitless form of knowledge – orthodox economists are no exception to such sheep-like behaviour. Due to the orthodox economists’ veneration of science, they embraced positivism as their official rhetoric at the time of the Marginalist Revolution. Official rhetoric pertains to what practitioners claim to believe and allege to practise but do neither.

In this chapter, the author endeavours to identify the official rhetoric of orthodox economics and analyse its associated problems. Due to the problems associated with the official rhetoric, I assert McCloskey (1983) claim that orthodox economists cannot adhere to it. Meanwhile, the author highlights specific cases where their official rhetoric conflicts with their workaday rhetoric. The workaday rhetoric is approximately but not entirely the antithesis of their official rhetoric. The workaday rhetoric pertains to what practitioners believe and practise.

This left McCloskey (1983) to ponder how orthodox economists managed to persuade without adhering to any coherent programme. Although, the author forwards a few constructive proposals concerning how economists can adhere to a more robust programme, he follows in McCloskey’s footsteps to identify the chief device of persuasion in the second chapter.

PROBLEMS WITH THE OFFICIAL RHETORIC

The philosophers of enlightenment have severely influenced orthodox economists. In McCloskey (1983) terms, orthodox economists have allowed philosophy monarchs to supply their ‘official rhetoric’ with the idea that positivism is the only foundation for sound argument. The official rhetoric of orthodox economics, therefore, became positivism. This means that orthodox economists officially believe all positivist propositions. For example, orthodox economists believe that they argue on grounds of: statistical inference; positive economics; operationalism; and behaviourism as they believe these to be the only grounds for science.

Nonetheless, Hands (1993) supposes that positivism provides criteria for the acceptance and rejection of research programmes. The methodology of positive economics sets standards that help economists to discriminate between wheat and chaff. This view is problematic, however, as the reader shall see that the case of positive economics is not so lucid.

Over the last century, most philosophers and heterodox economists have doubted over half the propositions of positivism – from Kelvin’s dictum to Hume’s fork. Thomas Samuel Kuhn and Paul Feyerabend were just two of the adversaries of positivism. Even Karl R. Popper was an adversary. For these reasons, positivism is becoming obsolete in philosophy. It is unsurprising that mainstream economists know little of its decline as orthodox economists read little philosophy.

METAPHYSICS

Ironically, if mainstream economists read more philosophy they would realise that their hostility to metaphysics is metaphysical itself. Positivism and the mainstream programme of economics also burns, if one is to cast metaphysical-sentiments into the flames.

Primarily, metaphysical-sentiments run through orthodox economics on all levels. This is true of natural science. According to Hodgson (1988a): x), however, orthodox economists often put the ideological cart before the theoretical horse. This makes econometrics less objective than natural science.

The author now supports this claim with examples of how even the act of choosing a topic for study is subjective.

Firstly, econometricians are ambitious – they want to work in important areas to improve their career prospects. Furthermore, their belief concerning what needs change, also drives the choice of one topic over another. Positivism ignores that for econometricians to test a theory they must care enough about it to bother. They care only when either themselves or some significant group of opponents believe it.

Secondly, the problem of whether bodies would fund an econometrician’s topic of research also influences an econometrician’s choice of topic. Therefore, the values of the researcher and of those who control the research funds are the basis of judgement concerning which area to study and model. For example, researchers might find it more cost-effective to study inflation rather than unemployment depending on the nature of funding that they would receive.

Thirdly, an econometrician then needs to decide what particular aspects of the chosen topic to concentrate upon, having decided what to study. This too reflects prior assumptions. His/her choice of one theory over another guides the research in one particular direction opposed to another. Econometricians do not formulate theories afresh. For example, if one wishes to study causes of unemployment then one is likely to draw from a previous theory. In this way, econometricians hold reality to reflect the econometric models rather than vice versa.

In the words of Mirowski (1994: 59), neoclassicals portray a world driven by interest and greed, where agents can indifferently buy and sell everything, it would seem there was no room left for objectivity.

Indeed, this whole process is subjective and metaphysical. The assumptions that one chooses as a building block for a model reflects one’s political sentiments. According to McCloskey (1983), it is rare that economists carefully examine these assumptions.

Fortunately, Ormerod (1994) examines the assumptions employed by neoclassical economists. He likens those who believe the premises of general market equilibrium to Alice in Wonderland’s Red Queen. The Red Queen insists on believing six impossible things before breakfast. Each of these things is analogous to a neoclassical assumption that neoclassicals use for model-building. To those uninitiated in economics, this would appear as unbelievable as the reason agrarian villagers, who in the last century, would not keep goats. According to Brooks (1986b: 91), these villagers thought goats to be unlucky animals as they believed goats had to pay regular visits to the Devil to have their beards combed.

In reality, economic agents cannot optimise their fitness nor their utility. The space of possibilities is simply too vast in an environment that is also complex and rapidly changing; economic-agents can at best improve on some dimensions, but never optimise. Possibly, according to Geyer (1994), it is meaningless to talk about the economy being in equilibrium as it is always is a state of transition.

Less radically, Lawson (1995: 4) asserts that:

If an acceptable specification of an “economy” allows for one equilibrium it typically allows for many ... Even if one finds any such equilibrium solution to be unique, there is no obvious mechanism in the standard orthodox specification of an “economy” to ensure that the economy could get there.

This does not, nonetheless, prevent orthodox economists from adopting such an unrealistic view of the economy. As Leijonhufvud (1981b: 349) accords that the backwardness and abject cultural poverty of so-called positive economists stem from that most of their models seem to be of little or no practical use. These economists, however, use these unrealistic assumptions to build models and predict.

PREDICTIONISM

Prediction is not a defining feature of scientific enquiry. Indeed, one of the most successful theories in science is the theory of evolution. It has no predictions in the normal sense, and is thus, not testable by prediction. It is strange that orthodox economists should insist upon prediction when non-predictive classical economics inspired Darwin’s theory.

Predictionism, however, plays an integral part of the orthodox research programme. Neoclassicals have often tried to use predictive power to justify questionable assumptions and theories. Importantly, Friedman (1953) asserts that if a model predicts accurately then, practitioners should not concern themselves with whether the assumptions are realistic.

On the contrary, it does matter whether assumptions are realistic. History tells us that if the assumptions that underlie a model are false then, the model may yield misleading results (cease to predict accurately). For example, according to Kuhn (1957), before the Copernican revolution, astronomers believed that the Sun orbited the Earth. This meant that one might have believed that the Sun evolved around Earth because the assumption held for t periods. During the Copernican revolution astronomers found that the Earth orbits the Sun. From this point, the science of astronomy improved and practitioners felt its repercussions throughout the natural sciences.

So it comes as no surprise, that models based upon ill-founded assumptions lose their predictive ability. No model has hitherto stood the test of time – there comes a point when the model fails to predict. Generalisations about economic behaviour have proved unreliable. (Orthodox economists argue that permanency of models does not provide the ground to dismiss the use of all models. It shows simply that orthodox economist and the reader should be alert and critical so not to make mistakes; one could say the same of any academic work.)

Neoclassical economists would argue that such information indicates that the model is misspecified – one can improve the prediction through re-specifying the model.

There are problems with re-specification. For example, it is difficult to highlight which assumption one should replace to improve prediction. Additionally, models are specific to particular times and places; also social, political, cultural, religious, and, other environmental phenomena influence these models.

According to Ormerod (1994: 104-5), models are like tarantulas. For if their handlers lose control and drop then, they explode. For example, professional macroeconomic models did not predict the deepest recession since the war.

Ormerod (1994) compares professional macroeconomic models with a naïve projection that next year’s rates of growth and of inflation would be equal to this year’s. Ormerod (1994: 105) concludes that this naïve projection performed as well as the professional models (over a period of five years), despite the sophistication of the professional macroeconomic models.

Simply, the diversity of the past has hitherto defeated the simplifying powers of the most complex static of models. For a model to withstand the test of time one must include an infinite amount of variables (on the condition that the assumptions of that model are correct). On this ground neoclassical economists cannot include this amount of variables in their models.

Their statistical tools, therefore, have limited value, and can be inappropriate to produce objective laws of economy. For example, Mirowski (1994: 65) as well as in Heinonen (1993: 516) has highlighted that facts and well-known regularities are difficult to find in orthodox economics. Surprisingly, this includes the so-called law of demand. The inadequacy of their tools is an embarrassment. With their model in hand, orthodox economists obtain new data. Once in possession of the data, they test their static model against them. Furthermore, for each test the practitioner runs a least-squares-regression upon their data. Mirowski, however, in Heinonen (1993: 517) asserts that the basis in probability theory of this technique is severely feeble and a matter of contention hitherto. Nonetheless, orthodox economists suppose that these tests can empirically confirm or refute whether hypothesised cause-effect relationships are right or wrong according to a static theory. Mirowski (1994: 65), however, accords that one cannot solve controversies with the so-called positivist method as one can obtain a t-statistic of a desired size by experimenting with the sample-size or augmenting explanatory variables, ad-hocery. Mirowski in Heinonen (1993: 517) claims that econometricians do not concede their position nor address the nature of the differences between those who are at odds. In reality, McCloskey (1983) accords that a considerable part of disagreement is over evidence that practitioners do not bring openly into discussion. Regardless, practitioners use such evidence.

Mirowski, in Heinonen (1993: 517), forwards that econometric methodology is a device to enforce consensus. When one econometrician follows the same procedures as another given a data set, they produce similar answers. At this point they stop arguing. Economists very easily break down the deadlock. For example, there have been arguments between Keynesians and Monetarists. Now arguments are between New-Keynesians and Rational-Expectationists. Firstly, A presents an econometric model and says A is correct in this particular instance. Secondly, B makes some type of methodological critique of A’s statistics and reverses the result. This two stage process continues until A and B become just bored.

CONCLUSION

Given the above, one might pose that orthodox economists should not continue to venerate their official rhetoric. In practice orthodox economists do not follow their official rhetoric from day to day in their research – they adhere to a workaday rhetoric. It follows from the above that orthodox economists cannot put their official rhetoric into practice. Albeit, even if orthodox economists admitted such a double standard, they would have problems clinging to predictionism.

The point is that orthodox economists have used myths of science to attempt to persuade. Although, positivism would regard such endeavours meaningless or unscientific, it is nonetheless their goal. Since McCloskey (1983) one must doubt that the official rhetoric is the same as the workaday rhetoric. According to Mirowski (1994: 53), McCloskey appears to suggest that neoclassical economics is a debased imitation of natural science, so we should all become practitioners of literary criticism instead. Although, Mirowski made this claim in jest, the author sees it as a way out of the rut of positivism. The author will, therefore, now examine persuasive devices of literary criticism.

Chapter 2

Devices of Persuasion & Metaphor

The Workaday Rhetoric of neoclassical Economists

In this section the author shall examine the main devices of persuasion employed in economics while adopting the role of literary critic. One can identify that these devices do centre upon appeals to authority.

Firstly, science is not the only authority to which orthodox economists appeal. Science has not fully displaced all other ideologies and values. This means that practitioners might use such ideological vices to persuade their readers to accept their points of view on non-empirical grounds.

Secondly, orthodox economists appeal to ideas of nature, ethics, as well as mathematics, physics, etc., with an uncanny glee in an attempt to persuade. The most important point of this section is for the author to explain the main devices that economists employ to execute their persuasion – metaphor:

Metaphor, according to Klamer and Leonard (1994: 46), is a language process where one transfers attributes of one object (source domain) to another (target domain). Metaphor borrows from a source domain that has in principle, nothing to do with the target domain. Metaphor, therefore, produces unexpected juxtapositions of subjects from apparently unrelated domains. Ironically, this is what makes metaphor so powerfully persuasive.

Fortunately, economists such as Mirowski and McCloskey have argued that practitioners of economics should recognise the importance of metaphor. This has encouraged the author to systematically highlight the taxonomy of and characteristics of metaphor before demonstrating a schema of how one might use metaphor to persuade.

WHAT IS METAPHOR?

The official rhetoric of the orthodox economists encourages one to relegate metaphor to the margins of discussion. This possibly stems from the positivistic influence of the enlightenment upon the sciences as a whole. Two such philosophers of enlightenment, Thomas Hobbes and John Locke, generally viewed metaphor as a distraction.

Even the weakest category of metaphor, however, pedagogical metaphor, is not a distraction. One employs pedagogical metaphor to make already understood expositions clearer. It relies on obvious resemblances between its source and target domains. Incidentally, according to Klamer and Leonard (1994: 47), the circular flow diagram of macroeconomics and the expression ‘time is money’ are examples of pedagogical metaphor.

McCloskey (1983) goes one step further. He argues that, aside metaphor being of benefit, its use is inescapable. He postulates that metaphor will continue to creep into reasoning even in the most Herculean branches of human knowledge, mathematics. It does not even disappear when mathematicians tokenise words to create symbolic expressions. For example, terms that haunt mathematics such as domains, groups, mappings, matrices, sets, etc., are indeed metaphoric. Specifically such terms constitute a category of metaphor called ‘dead metaphor’.

According to Klamer and Leonard (1994), one might mistake dead metaphor for literal language. This is a common mistake that one makes through overuse of a metaphor. Overuse can drain a metaphor of its figurative sense that renders it literal in impact. A metaphor dies when the analogical system of that metaphor eclipses the original metaphor itself. This happened with the once metaphorical terms ‘skyscraper’, ‘riverbed’, and the game chess. For example, chess was a metaphorical representation of war as a game. Chess-as-war faded away to reveal the game chess. Today, the chess-as-war metaphor has almost completely lost the connection with war. Chess is interesting only as a self-contained game. Chess is like a neoclassical economic model in that practitioners of both supposed that these metaphors represent the real-world (at least at some point) but lost touch with it.

Like McCloskey (1983), Lakoff and Johnson (1980: 235) highlight the inevitability of metaphor. They, however, posit this for a different reason to McCloskey. Their argument is similar to the one that the author will now present:

When the human brain undergoes a new experience, cognitive processes integrate this new experience (target domain) vis-à-vis those experiences that it has already cumulated (source domain) to create a different whole. When the different whole is ensembles, different meanings to those already cumulated experiences emerge as the brain assigns meaning to the new experience. Overtime, we can create new realities through this process.

The obvious implication of this argument is that there are close links between metaphor and human experience. For example, one can see how the human brain takes what is unknown and then assigns a meaning to it vis-à-vis what it already knows. In a word, constitutive metaphor is one of most fundamental cognitive processes of the human brain.

In short, one links their new experiences to their mobile army of metaphors. I shall call this schema, the ‘Lakoff-Johnson thesis’ for the sake of convenience.

There is one more argument that forwards that metaphor is inescapable. One might view this argument as proof of the Lakoff-Johnson thesis. Henry (1995) draws upon the work of Niko Tinbergen to assert that the Lakoff-Johnson thesis is not just applicable to humans but to birds too. He states that humans and birds use object mapping when reordering preferences vis-à-vis characteristics. Object mapping is a brachial process that deconstructs an object into characteristics and reassembles the object piecemeal to afford further extrapolations to new situations. Examples of which include: analogy, metaphor, and use of symbols. He argues that the process of evolution created the human capacity for these devices.

He claims that the human capacity for these devices is much more sophisticated than that of birds. He forwards that we employ system mapping. This works for humans to extrapolate solutions to problems of similar structure to new problems. Henry, nevertheless, goes further to assert that humans can induce patterns in unlike phenomena.

These aforementioned fundamental operations (mappings) of the brain come under the heading of constitutive metaphor. This metaphor works to frame the thinking about the target domain to the point that one cannot consider the target domain without the source domain. According to Klamer and Leonard (1994: 41), Stephen Pepper identified four constitutive metaphors: organicism, mechanism, formism, and contextualism. One can characterise each of these metaphors by its different properties.

For example, with mechanism, the economy will resemble a machine. With contextualism, the economy will have a history in which events are inter-linked and one can only understand human actions in the context of these events. With organicism, the entire economy is a living thing complete with closed circular flows.

Another taxonomy of metaphor is heuristic metaphor. This metaphor works to guide inquiry into the target domain through joining attributes of the target domain with the source domain. This metaphor allows economists to investigate phenomena without implying the casual relationships of the source domain to the target domain. For example, according to Klamer and Leonard (1994: 46), economists habitually develop and elaborate a heuristic metaphor into a model (as with the human capital metaphor).

Therefore, rather than setting ourselves some impossible-mission to dispense with metaphor, one should ask primarily: which metaphors have economists used to persuade in their work? This consideration has also prompted the author to speculate an economist’s motives for using particular metaphors (as opposed to others) in their works. (Paradigms in economics on the whole employ a diverse range of metaphors. Possibly, one might even define each school of thought according to its practitioners’ historical use of metaphors. Particularly in the case of orthodox economics; it appears that their choices of metaphors have guided their methods of research. This paper does, however, not examine this phenomenon in full.) This task I will leave until the second part of this paper as such an analysis would need to be lengthy. For the remainder of this chapter, however, I endeavour to highlight use of metaphor within the scientific community as a whole.

USE OF METAPHOR

The table below shows three sets of data in columns. The table represents the application of metaphor from one field (Discipline A or source domain) to another (Discipline B or target domain). One should interpret the table (below) by substituting each column heading with use of the following formula: C adapted A to B.

SOURCE DOMAIN (A) TARGET DOMAIN (B) PRACTITIONER (C)
THE CALCULUS OF VARIATIONS POLITICAL ECONOMY COURNOT
THE METHODS OF MALTHUS AND THE ECONOMISTS BIOLOGY DARWIN
THE METHODS OF THE THEORY OF ERRORS PSYCHOLOGY GALTON
THE METHODS OF THE DOCTRINES OF CHANCES THE THEORY OF GASES MAXWELL
THE METHODS OF HYDRODYNAMICS ELECTRICITY MAXWELL
Table 1: Abduction Diagram

For example, Charles Darwin adapted the methods of Thomas Robert Malthus to biology. Darwin achieved this when he associated ideas in these two fields through use of heuristic metaphor to create a cross-fertilised set of ideas that improved biology. This released him from questionable ideas and theories that previous biologists failed to grasp. Additionally, the cross-fertilised anthropomorphic and moralistic metaphors that Darwin developed were neither strictly reductionist nor mechanistic. In short, they were organicist.

The use of metaphor sometimes yields useful and fruitful results. According to Laudan (1981) and Feyerabend (1975), one may improve a research tradition through intermixing different research traditions. In addition, according to Kuhn (1962), practitioners of a paradigm within a particular field need to reconstruct it from new fundamentals to create a new and progressive one. If we, therefore, accept that cross-fertilisation is correct then economics can improve through abduction from other sources.

CONCLUSION

Nonetheless, cross-fertilisation can both be beneficial and problematic. Imagine that each academic discipline is an empire with its own explored and unexplored territory. Beyond each discipline’s official empire lies unofficial terrain that it shares with neighbouring disciplines.

Unfortunately, these empires fight over unofficial terrain and sometimes official boundaries. Sadly, during these periods, these empires become imperialistic. This means that warring bodies use their mobile army of metaphors to colonise or protect territory. I examine this war of attrition more closely in the next chapter.

Happily, there are periods of co-operation between disciplines. During these periods, practitioners use heuristic-metaphor. This metaphor works to guide inquiry into one’s domestic discipline through joining attributes of one’s discipline with that of another. I examine this level of co-operation in chapter four.

When practitioners examine territory unexplored by any discipline, they employ constitutive metaphor. This metaphor works to frame the thinking about this unknown territory. In the remainder of this paper, I examine mechanism (briefly in the next chapter) and organicism (used regarding chaotic metaphor in the last chapter).

Finally, there are interesting events that occur during times of both war and peace. This is when there is a challenge to the hegemony of an empire from within that empire. The élites promptly respond with a justificatory metaphor – this cuts across all barriers of metaphor. This metaphor works to abduct a robust idea from another discipline to disguise an anomaly in their domestic discipline. It is this type of metaphor that I now examine.

Part 2
Good and Bad Metaphors
Metaphors Employed to Guide or Deceive?

Chapter 3

Bad Metaphors

Justificatory Metaphors

In this chapter, the author manifests that there is a ‘right’ and a ‘wrong’ way to use metaphor. Nonetheless, both might be persuasive. It depends upon the reader. This is why I have allotted a section to show responses to specific situations vis-à-vis the negligent reader and Homo metaphoricus. In this chapter I expose some dishonest ways of using metaphor – justificatory metaphor.

In the second section of this chapter, the author gives a brief history of orthodox economics and the abuses of metaphor. I also emphasise the phenomenon of economics imperialism and the main of its root in social-Darwinism.

AN EXPLANATION OF JUSTIFICATORY METAPHORS

Metaphors in themselves are never bad. Economists can become bad economists, however, if they use metaphor as a persuasive device to bolster their particular points of view. At a push this is what the author defines a ‘bad metaphor’. I, nevertheless, will refrain from using such terminology and settle for the phrase justificatory metaphor. The author shall, therefore, this phrase as a surrogate for ‘bad metaphor’.

Now, the author shall describe a few of the characteristics of justificatory metaphor. Simply, this type of metaphor is an unrealistic metaphor and thus inapt; whereas ‘good’ metaphors are realistic and largely apt. One can observe justificatory metaphors throughout economics. One can see this when an economist borrows a robust idea from another discipline to disguise (whether intentionally or not) an anomaly in their domestic paradigm. When economists use justificatory metaphors, they use the foreign discipline as a holder of truth. This enterprise allows them to make affirmations of truth along lines of a foreign discipline. Strictly, justificatory metaphors are not attempts to seek truth. It is a deceptive device that tries to lead the reader to accept the view of the author. Usually, there are subtle endeavours to disguise the approach as being natural or scientific. This device is possibly the most important of all pervasive devices as it allows the practitioner to misguide the negligent reader to accept ill-founded arguments.

It is possible that economists on the strengths of these metaphors may have persuaded others (at some point or other) of the validity of their standpoints. Using an inapt metaphor to justify one’s standpoint is abuse of metaphor.

One can defend themselves again justificatory metaphor. The author suggests the strategy of homo metaphoricus (see below). I have provide a hypothetical schema to mediate between ‘good’ and justificatory metaphors. The schema is also follows:

A practitioner tries to explain discipline A vis-à-vis discipline B. In the two tables (below) one can see responses (to the practitioner) of two agents: homo metaphoricus and the negligent reader, respectively. Each cell describes a possible reaction of the agent given conditions of A and B.

On occasions, orthodox economists have borrowed from the stronger disciplines in an attempt to bolster their standpoints. Although, mechanism is usually not an apt constitutive metaphor for economics, it has not prevented neoclassicals from using it. In a word, mechanistic metaphor imposes structures on the subject matter that do not appear to fit. Mechanism imposes unrealistic structures upon economics. For example, neoclassical economic theory supposes an unchanging environment with static and set structures. It is that these structures are unfixed that institutional economists found their objection. This is what institutional economists mean when they claim that mainstream economists employ static models and theories. Albeit, many econometricians claim that they have dynamic models, they really mean that they incorporate ideas of logical time in their equations. This does not suffice to elaborate changes in historical time of complex economic structures. I intentionally deal with mechanism in next section.

[Matrix about here]

BAD ECONOMICS & MECHANISM

In the Genesis of modern economics, Adam Smith (an ancestor of orthodox economics) appealed to Newtonian physics for assistance in his enquiries. He transplanted mechanistic methods to develop economic laws. According to Cohen (1994: 65), Smith held the idea that the ‘natural price’ was the price toward which all others gravitate. This is an incorrect imitation of Newtonian physics. Simply, this would mean that the planets are unimpeded to gravitate toward the sun. This clearly is not the case for Newtonian physics.

Nonetheless, Smith was competent in physics. Cohen (1994: 66), therefore, calls such an obscuring of the idea: a creative transformation. A creative transformation pertains to an intellectual leap forward of a special kind. It occurs when one transfers an idea (regardless of whether the original idea survives in its exact form during the transfer) from one domain to another. Since the transfer is metaphoric rather than strictly identical, there is no reason to use a set of ideas that have the same form or degree of completeness as the source domain.

In a word, the author has no objection to Smith’s distortion of Newtonian physics. Cohen (1994: 68) claims that there can never be a comprehensive one-to-one identity between the target and source domains. He does not object, therefore, if an economist distorts an idea to make it more realistic in its target domain. The author has noticed that Smith was not using justificatory metaphor. He distorted Newtonian physics to improve its realism in the realm of economics.

The original sin of economics, however, came when the Marginalists rejected realism. This became a prime example of justificatory metaphor. One might postulate that they rejected realism because of the outstanding success of post-Newtonian physics. On the other hand, one might postulate that orthodox economists saw an imitation of physics as the key to making economics appear more coherent and truthful. Simply, one does not know for sure. Nonetheless, one can be sure that orthodox economists have based their branch of economics upon physics metaphor hitherto. For example, Cohen (1994: 61) tells us:

W. Stanley Jevons and Léon Walras went one step beyond introducing mathematical tools and actual equation from post-Newtonian mechanics. They attempted to show that economics could be like rational mechanics and accordingly entitled to share in the high esteem accorded to this exalted branch of the exact sciences.

In their decision to imitate post-Newtonian physics, orthodox economists assumed that the subject matters of physics and economics near enough identical. This means that economic agents must behave analogously to terrestrial bodies of the solar system. This would mean that agents are devoid of emotion, etc. Again, this assumption is unrealistic.

As a direct result of adopting Newtonian mechanics, the orthodox economists view the economy as a large and complex clockwork-mechanism. Newton believed that the whole of a system is merely a sum of its parts. Considering this Newtonian premise, therefore, orthodox economists believe that they can understand the complexities of the economy by bracketing out the whole economy into smaller parts to study individually.

Orthodox economists had, however, the problem of devising techniques that are capable of making scientific discoveries. Physicists employed mathematical form. They claimed that one can measure, count and otherwise express facts in quantitative terms, and that it is in these terms that practitioners should collect and analyse their data. The hope is that eventually practitioners will know enough of these laws to enable them to predict the future. The result of this would be that we could exercise some kind of control over events.

Orthodox economists, therefore, endeavoured to reconstruct a view of the economy by simplifying it to theorised sets of cause-effect relationships to create models for predictive purposes. Mirowski informs us in Heinonen (1993: 516) that before around 1920 there were no empirical practices in the neoclassical programme. Especially since the 1920s, orthodox economists have become increasingly interested in using mathematical form concerning Newtonian metaphor. Mirowski (1994: 54-5) represents this case:

The hegemony of American social science in the post-WW2 period has wiped the slate clean of any trace of [a distinction between the Natural and the Social]  The importation of an unreflective scientism characterised most of the American social sciences from the 1920s onward; and that they cry of the unity of the science  was remarkably vague about the exact character of what was shared  [In part] the confusion of the technologies of statistics with the practices of the natural sciences in the post-WW2 period, fostered the impression that ‘science’ was itself a species of generic procedure which any social inquiry could readily appropriate, due to the intrinsic unity of Nature and Society, be it economics or literary criticism or personnel management.

Mirowski (1994: 55) maintains that most orthodox economists would claim that the natural and the social are identical in: laws and epistemic methods. He maintains, however, that the best neoclassical economists have ever achieved by their efforts is a metaphorical resemblance between the procedures of physics and economics. Mirowski (1994: 56) expresses irony when he states that the inscription of a few partial differential equations implicitly unites Nature and Society.

Those economists who moved from physics to economics (such as Tjalling Koopmans and Andrew Pikler) are prime examples of those who wanted to imitate and did not criticise nor question the adequacy of imitation. Through use of Newtonian metaphor, the orthodox economists attempted to transfer truth from Newtonian physics to the economic sphere. They seemed to think that an adherence to scientific method would mediate between the economic and the natural sphere, i.e., that economics is somehow directly reducible to physics.

Today, the old physics metaphor continues to run through orthodox economics regardless of its suitability. One can only examine the Newtonian framework and ask of the applicability of Newtonian metaphor to economics. As Newton had intended his methods for astronomy and possibly not economics, Smith conceded that the analogy was potentially false. Such conjecture was typical of philosophers around the time of Smith. Unlike classical economists, the orthodox economists ask few conjectural questions that review the fundamentals of their field. Orthodox economists fail to notice that Smith may have based economics upon unsteady ground.

Instead of the mainstream economists revising their position, they have attempted to export their ideas to other fields. This factor is so important in the history of neoclassical economics, that the author has dedicated the next section to it.

ECONOMICS IMPERIALISM

The orthodox economists through the work of Edward O. Wilson, claim that nature manifests a universal economic schema that connects biology and orthodox economics. They forward a crude scarcity theory that they assert is natural selection. The schema is as follows:

Scarcity of resources motivates self-interest in organisms (human and non-human) to compete among one another to maximise these scarce resources. Unsurprisingly, orthodox economists would maintain that homo economicus has evolved from the contest.
::: The schema has misleadingly fuelled the argument for economics imperialism. One can define economics imperialism as a one-way transfer of ideas from economics to other academic disciplines where practitioners of recipient disciplines use and/or internalise these transferred ideas.

Mirowski affirms that once the economists convinced themselves that econometrics was true, in the 1950s it became a type of portable doctrine that the orthodox economists exported to other disciplines. As these orthodox economists suppose the schema to be visible in both social and natural spheres of inquiry, problems concerning biological issues are soluble with neoclassical apparatus.

According to Hodgson (1993b), Gary Becker, Jack Hirshleifer and Gordon Tullock attempt to build a bridge between a biology and an economics. Their views of biology and economics, however, have parallel defects. Firstly, both paradigms are Reductionist. Secondly both approaches exclude teleology. Thirdly, both have an essentially programmed or passive conception of the agent or organisms. Finally, both take the selector (nature or preferences), factors of production (nutrients or inputs) and information (genotypes or technology) all as given.

Biologists, therefore, assimilate orthodox apparatus into their discipline. In this way, biology becomes to resemble orthodox economics. Additionally, the effect of large scale assimilation would lead to orthodox economics absorbing biology. Biology, therefore, would become orthodox economics.

Coincidentally, a similar framework is supposedly applicable to orthodox economics absorbing other life sciences. As Wilson maintains that culture is not autonomous orthodox economists would need to forfeit the status of economics as a social science.

Nonetheless, one can mark the impact of economics upon biology. For instance, mainstream biologists use the ideas of: optimisation theory; satisficing; methodological individualism; indifference analysis; and game theory. Darwin took ideas of optimisation from economics in the nineteenth-century. Not to mention that, since the 1940s, economics has had more influence upon biology than the other way around.

I must emphasise, however, that if this metaphor of economics imperialism and actual imperialism is apt, then possibly it shares the same death. For example, Woodcock (1974) identified four elements of the expiration of empires:

• The will of oppressed peoples, often provoked by the desire to imitate and eventually supplant the alien rulers, helped to cause the collapse of empires;

• The threat of external enemies, especially of rival empires, aided the disintegration of imperialism;

• The decline of the will and ability of the imperial people to rule coupled with the erosion of their collective image of themselves as a master race, assisted the decline of empire;

• The faceless power of economic circumstances that, despite all the plans of imperialists can, from a crown of diamonds, transform an empire to a crown of thorns. This can make the imperialist’s burden so intolerable that he prefers to shed it.

One or more of the above could, therefore, crush economics imperialism. For example, those ideas drafted into biology from orthodox economics, contrast with organicistic metaphor in modern biology. Indeed, modern biology has an empire. This links closely with chaos theory. There is, therefore, already an element of the destruction of the neoclassical empire. I deal with chaotic metaphor in more detail in the final chapter.

In addition, ideas that mainstream biologists import from economics are rarely orthodox. For example, methodological individualism and game theory emanate with Austrians. Ironically, intercourse of ideas between economics and other disciplines has been largely of a reciprocal and non-imperialist nature. For example, the Marginalists in the 1870's revolution based their formal expositions on a field theory of value derived from a since obsolete branch of physics known as energetics.

The orthodox economist’s view of evolution is damaging. They have used organicist metaphor as a justificatory metaphor. Frequently, orthodox economists use the word evolution when they really mean natural selection – one of the many mechanisms of evolution. The phrase survival of the fittest, nevertheless, is not a summary of evolutionary theory nor even natural selection. Practitioners often use the phrase survival of the fittest synonymously with natural selection. The phrase is both incomplete and misleading. For one thing, survival is only one component of selection – and perhaps one of the less important ones in many populations. Furthermore, practitioners often confused the word fit with physically fit. Fitness, in an evolutionary sense, is the average reproductive output of a class of genetic variants in a gene pool. Fit does not mean biggest, fastest or strongest – sexiest might be closer to the truth in most animal species. This led a famous evolutionist, George Williams, to say evolution continues in spite of natural selection.

Furthermore, evolution is not progress as one cannot arrange organisms on an evolutionary ladder from bacteria to human beings. From this popular notion, one can trace the idea of the scale of nature to manifest as a series of improvements from simple cells through to more complex life forms. In this scenario, humans are the pinnacle of evolution. This view is incorrect.

Modern biologists hold that all species have descended from a common ancestor. As time went on, evolution modified different lineages of organisms with descent to adapt to their environments. Organisms simply adapt to their current surroundings and do not necessarily become better over time. A trait or strategy that is successful at one time may be harmful at another. For example, more complex strains of yeast can be competitively inferior to those of lesser complex strains. An organism’s success depends mainly on the behaviour of its coexisting organisms. For most traits or behaviours there is likely no optimal design or strategy, only unpredictable ones.

Additionally, one can best view evolution as a branching tree or bush. The tips of each branch represent currently living species. No living organisms today are our ancestors. Every living species is as fully modern as we are with its own unique evolutionary history. No existent species are lower life forms, atavistic stepping stones paving the road to humanity.

Typically the orthodox economists misunderstand evolution and the implication for its use in both economics and biology. One might observe that orthodox economists have appealed to nature and convenient ideas from biology to justify their theories and metaphysical sentiments rather than to replace them. Again, this is a manifestation of justificatory metaphor.

Behind the adoption of the term natural, there is a latent ideological agenda. They imply that what is natural is good, God-given, and unquestionable. Humans, therefore, must not interfere in the natural sphere. If what happens in the natural world happens in the social world then, again humans must not intervene.

To bolster their views, orthodox economists have abused ideas of nature and natural selection to: explain the behaviour of firms; support the profit-maximisation postulate; and forward that survival means efficiency.

In the recent literature, the most frightening examples of justificatory metaphor come from two authors: W. B. Arthur and Michael Rothschild. Although, both disapprove of mechanism and view the economy as evolving, it is of little consequence for what they advocate.

Particularly, Rothschild views the modern market economy as a tropical rain-forest, populated by vast numbers of highly specialised organisations instead of highly specialised organisms. An incredibly complex web of competitive and co-operative relationships links them altogether. Each company works to survive in its market niche just as each organism works to survive in its ecological niche. He uses the ideas of nature as an excuse for abstention of government intervention unless it cultivates spontaneous technical evolution and economic growth (whatever that means). He goes as far as to maintain that capitalism is not a belief system but is natural. He views interventionism as a result of predictionism. On the whole, he abuses ideas of evolution to bolster his republican ideology.

Similarly, Arthur forwards that simplicity is the obverse side to the complexity coin. He maintains that when we allow complexity (if one replaces the word ‘complexity’ with ‘the right-wing’ in this sentence then, one would be nearer the truth) to go unchecked it merely hampers. At such a stage we need to revert to simplicity to our organisations, our technology, our government, our lives – again convenient rhetoric to bolster political sentiment.

CONCLUSION

The social-Darwinists abused biological metaphor to justify classist, racist, sexist, and laissez-faire ideologies. According to Hodgson (1993b), Since the 1920s the separation of orthodox economics and biology has allowed for some of these economists to demonstrate social-Darwinist traits. Coincidentally, both schools have committed similar ideological mistakes.

For example, both have observed competition and egotistical calculation as universal laws in both the natural and social spheres. (Even Herbert Spencer, however, frequently stressed the existence of co-operation in nature.) Much evidence, nevertheless, from unorthodox biologists and economists suggests that both self-interest and competition are not universal rules in either natural or social spheres. Nature exhibits extensive waste and not the frugality of homo economicus as: rivers waste energy; and various species lay eggs that do not reach maturity. Furthermore, organisms hardly compete to maximise. Reasonably, organisms satisfice and acquire niches to safeguard themselves from competition. On a vast scale, successful organisms (including humans) modify their environment to assist each other. One should be sceptical about homo economicus even in the realm of economics.

Nonetheless, social-Darwinists perceived capitalism as the superlative and inevitably natural economic system. It is this type of reasoning that helps social-Darwinists reproduce themselves under pseudonyms.

Ironically, the implications of evolutionary thought do not necessarily justify discrimination, optimality, governments abstaining from state intervention, or even capitalism. One can find some neoclassicals who have advocated a state-run economy. This becomes apparent when one examines the socialist calculation debate. When modern neoclassicals use justificatory metaphor, however, they ignore such arguments forwarded by earlier neoclassicals.

Chapter 4

Good or Heuristic Metaphors

The Case of Alternative Metaphors

As we can see from chapter three, orthodox economists have certainly abused metaphor to their advantage. The author, therefore, shall use this chapter to identify the ‘good’ metaphors. These are metaphors which practitioners honestly construct to guide research. Good metaphors are realistic metaphors. I will give a brief history of realistic metaphors before approving of chaotic metaphor. I conclude that this metaphor will benefit economics as a whole. Nonetheless, I begin this next section with a short history of the challenges to neoclassical economics, before I tie-up these loose ends of the paper.

A BRIEF HISTORY OF ALTERNATIVE METAPHORS

Traditionally, orthodox economists have used Newtonian-physical metaphor to persuade. Pikler, however, expounded in the 1950s-60s that maybe economists should employ an Einsteinian quantum-field-theory. Similarly, the Austrians, particular John von Neumann held the orthodox use of Newtonian-metaphor in contempt. Neumann felt that economists could learn lessons from quantum mechanics – which informed the genesis of game theory. It appears, therefore, that Neumann wanted to update the old physics to newer strands. Strangely enough physics has moved into the realms of organicist metaphor. This might leave the reader to wonder whether economists should enter directly into the realms of biology and imitate that.

Institutionalists such as Thorstein Veblen used biological-metaphor to persuade; he particularly recommended neither imitation of physics nor of biology. Veblen maintained that biology is a fruitful source for improving economics. Even the orthodox Alfred Marshall held similar sentiments.

Furthermore, increasing numbers of heterodox economists echo the fruits of modern biology, i.e., evolutionary metaphor to move economics from its mechanistic modes of thought. János Kornai, Nicholas Georgescu-Roegen, Kenneth Boulding, and Frank Hahn have affirmed a positive role of biological thinking for economics. For example, practitioners have already shown several close analogies between the biological and economic spheres in the areas of economic evolution and technological change. Finally, Geoffrey Hodgson and the Evolutionary Institutionalists advise that economists should carry biology into economics.

Coincidentally, Hodgson (1993b) points out that mechanistic metaphor also has limitations in other disciplines. For example, although, Darwin transcends mechanistic metaphor, today, many biologists endeavour to explain biological phenomena in mechanistic terms. Some have even employed optimisation techniques (imported from orthodox economics). Nonetheless, there have been many attempts in biology to move away from mechanistic metaphor. For example, a few leading orthodox and heterodox biologists believe that Darwinian thought offers an alternative to a reductionist framework.

Scientists of various types (including economists), therefore, have proposed the use of alternative metaphors in their domestic fields as well as economics. For example, Juarrero (1995) maintains that a mechanistic understanding of causality is to blame for many of the biological puzzles vis-à-vis, selection and adaptation.

Many modern-day scientists have realised that imitation of the old physics can harm a discipline and restrict its capacity to understand the subject matter they endeavour to study. This means that the mechanistic metaphor that orthodox biologists have adopted is also harmful. It is the organicist strands that the author will now concern himself. Logically, it seems that there is no reason that economists should draft from any field of non-linear research. It is this science of complexity (crudely labelled chaos theory) that economists should align themselves. I shall use the term chaos theory, organicism, and chaotic metaphor interchangeably for the remainder of this paper as they are really the same thing.

CHAOTIC METAPHOR

Chaotic metaphor stems from three main sources. Luckily, one can trace the lineage of chaotic metaphor in mathematics, biology, and physics. Firstly, mathematical applications began being developed one hundred years ago by the French mathematician Henre Poincaré. Mathematicians now use non-linear models for studying data that mathematicians previously thought of as random. Secondly, in biology, one can trace non-linearity back to the work of Charles Darwin. Darwin's work conflicts with Newton's. He shows some time to be irreversible. Finally, in physics, Albert Einstein recognised the idea of complexity. Today, complexity theory is also having a major impact on quantum physics and attempts to reconcile the chaos of quantum physics with the predictability of Newton's universe.

Unfortunately, Codenotti (1995) expounds that the scientific community accepts no universal definition of chaos despite efforts to determine which properties a dynamical system must obey. This difficulty arises due two factors. These difficulties, however, are not insurmountable.

Firstly, according to Keirsey (1995), communication between different sciences concerning ideas of chaotic metaphor is difficult because each discipline speaks a different language. According to Codenotti (1995), Scientists study dynamic systems in different fields so that the word chaos assumes different meanings indigenous to each field. Chaotic metaphor, therefore, is an umbrella term for a variety of related disciplines: general systems theory, information theory, system dynamics, dynamic systems theory (including catastrophe theory), chaos theory, complex systems theory, complexity, non-linear dynamics, etc. In a word, it pertains to the study of non-linear systems.

Secondly, according to Codenotti (1995), scientists have not yet completely developed chaos theory. Further development, nevertheless, in all fields of science might alleviate the problem. Today, the science of complexity is beginning to provide information about this similarity, and it appears there is some important commonalty between the sciences. Chaotic metaphor, therefore, provides a toolbox of methods for incorporating non-linear dynamics into the study of economics as well as other sciences. Due to the works of David M. Keirsey, for example, one can see that the properties and processes of scientific phenomena are not so radically different after all. Keirsey (1995) employs analogy to look for the underlying regularity of the universe that can produce diversity and compares phenomena between scientific fields from economics to ethnology.

Keirsey (1995) maintains that: the analogous notions of birth, growth, and death appear to be common to all levels of complexity from galaxies and stars to human society and cyberspace. For example, it appears that catalysts in chemistry have a similar role of birth as genomes have in biology, and as memes have in sociology.

Meme. A term coined in Dawkins (1976). The term is analogous to “gene”. He defines a meme as a replicating information pattern that uses minds to get itself copies into other minds; it is the basic unit of replication and selection in the ideosphere. Memes float about in the soup of human culture where they grow, replicate, mutate, compete, or become extinct. Genes propagate themselves in the gene pool by leading from body to body through sperm or eggs. Similarly, memes propagate themselves in the meme pool by leaping from brain to brain through a process that, in the broad sense, one can label ‘imitation’. If a scientist hears or reads about, a good idea, he passes it on to his colleagues and students. He mentions it in his articles and his lectures. If the idea catches on, one might say it propagates itself, spreading from brain to brain.

In reality, chaos theory is so diverse that chaos scientists strongly resist attempts to classify the discipline as separate from other sciences. For many, the work represents a reunification of the sciences. With complexity theory, the distinctions between sciences are disappearing. For example, biologists use fractal research (from mathematics) for biological studies. Furthermore, there is the viability of further reduction from genetics down to molecular biology, and even below to chemistry and physics. In contrast, orthodox economists condemn discussion of the psychological or social foundations of individual purposes and preferences as being beyond the bounds of economics. Ironically orthodox economists draft convenient postulates from psychology and sociology as if these fields were somehow autonomous.

In most fields of science, scientists have accepted that systems are non-linear in structure. In contrast, orthodox economists endeavour to create behavioural representations of a system mainly for predictive purposes. One uses regression analysis in particular to reduce non-linear systems to linear relational representations as linear systems are more predictable – ceteris paribus. Nonetheless, the ceteris paribus assumption does not hold as all systems are non-linear.

Furthermore, since Newton, scientists blamed experimental error or noise when their model did not predict. This noise gives important information, however, concerning the experiment. For example, when one adds noise to the graph results, the results are no longer a straight line, nor are they predictable. This noise is what scientists originally referred to as the chaos in the experiment. The chaos term was one of the first concerns of those studying complex systems theory. Orthodox economists, nevertheless, reduce this noise to a stochastic error term that is by-and-large untreated in any meaningful way. As Mirowski (1994: 46), has asserted this means that orthodox economists do not control their so-called experiments.

In spite of this, there is little sign of a revival an organicism in orthodox economics. One can see clear signs of its revival in anthropology and sociology. Chaotic metaphor is now having an impact in a number of the social sciences.

Many biologists forcefully signal for Darwinian restoration. For example, Heschl (1995) claims if one eliminates Lamarckian elements then this will result in a scientific epistemology in the Darwinian sense that may lead us to modify parts of our self-understanding. This could have positive repercussion for economics if one aligns himself or herself with this organicist biology. In a word, the abduction of chaotic metaphor might be enough to breathe life into economics and overthrow the dominant orthodox paradigm. The application of a chaotic approach to economics seems to involve a number of advantages and improvements that overcome the orthodox paradigm.

One must take heed, however, of the so-called chaos theory that is apparent in mainstream economics. For Mansueto (1995), chaotic metaphor represents an ideological stronghold. In short, Mansueto (1995 views complex systems theory as providing scientific sanction for what amounts to a sophisticated neoliberal philosophy. He claims firstly that competition and natural selection (whether in the ecosystem or in the marketplace) are not an inadequate basis for explaining development. Secondly, he forwards that this type of reasoning might hold back the emergence of dynamic, organised complexity. The author somewhat agrees with Mansueto. One only need examine Arthur (1993) paper. See section on justificatory metaphor (above).

It is no wonder that orthodox economists who concern themselves with applying their numerology to life and death situations do not realise that all systems have self-referential properties.

For example, orthodox economists should recognise that external observers can never really observe a system of which they are also part – they can only examine differences between input and output. Coupled with the mind-set of the observer one can infer about the way the system works. This will determine the kind of research results the observer will obtain. This means that observations are not independent of the characteristics of the observer.

This is important considering that economic theories do change economic systems, and often entire societies. Economies are self-referential. This means that when an individual or society collects information about their functioning, it can in turn influence their functioning in the future.

Whenever economists accumulate new knowledge about the economy and subsequently make that knowledge known, the consequence often leads to utilisation of that knowledge (both by the economists and the objects of their research). They may react to this knowledge in such a way that they falsify the analyses or forecasts made by the economists. According to Geyer (1994), such action may even invalidate that knowledge.

The usual examples of self-referential behaviour in social science consist of self-fulfilling and self-defeating prophecies. These terms imply that the accuracy of earlier predictions (themselves influenced by the self-fulfilling mechanism) impacts upon the accuracy of the subsequent predictions. Furthermore, theorists often develop their theories precisely because they want to change the economic system.

Similarly, one could view choice as the driving force of economic behaviour in a dynamic way. This appears quite promising compared with orthodox perceptions of rationality. For example, all living systems have a will of their own. Biological systems, like social systems, show purposive behaviour of actors, self-organisation, self-reproduction, adaptation and learning. As a result, living systems are inherently more difficult to steer. Their interactions with their environment are more difficult if not impossible to forecast more than a few moves ahead. This implies, according to Geyer (1994), that economists cannot use the methods of the old physical sciences (at least for long-term prediction) because such systems are self-organising, self-referential and autopoietic.

Autopoiesis (Greek for self-production). This is an idea introduced in the 1970s by the biologists Maturana and Varela, with the aim to differentiate the living from the non-living. Indeed, these biologists explain these differences between the living and the non-living. Firstly, all living systems have a will of their own. Secondly, living systems are chiefly self-steering within certain limits and one can therefore steer their behaviour from the outside only to a very moderate extent. Finally, living systems reproduce themselves and produce spare parts too. In a word, one can define an autopoietic system as a network of interrelated component-producing processes such that the components in interaction generate the same network that produced them.

Realistically, the goal of attaining objective laws of economy similar to the reversible Newtonian Laws of Motion is an oversight. Even in a mechanistic world of astronomy, there still may be unpredictability. For example, according to Hodgson (1993b), Newton’s three-body problem results in chaos. The three-body problem is Newton’s attempt to calculate the independent effect of three celestial bodies upon each other. According to Cohen (1994: 72), Newton forwarded a somewhat restricted example of the moon’s motion about the earth with the sun’s perturbing effect, leads only to a series of approximations. One should, therefore, face and debate the issue of the measurement of complexity as many prominent scientists have done. For example, in biology, there is controversy over the appropriate units of complexity.

One can afford an approximate measure of the complexity of a system: the amount of complexity is inversely proportional to the accuracy of a model to predict it. The generator of unpredictability in complex systems is what Lorenz calls ‘sensitivity to initial conditions’ or ‘the butterfly effect’. This pertains to the idea that infinitely small changes in the starting conditions of a system will result in dramatically different outputs for that system. This is the idea behind a complex, non-linear system. If, as Lorenz demonstrated, a butterfly is flapping its wings in Argentina and we cannot take that action into account in our forecast, then we will fail to predict.

The rule for complex systems, therefore, is that one cannot create a model that will accurately predict outcomes. One can create models, however, that simulate the processes that the system will go through to create the models. With the increasing mass scale availability of high-speed computing equipment, it becomes possible to realistically simulate ever more complex problems, with the possibility to incorporate an increasing number of interacting variables in one’s model. The advantage of such simulations is that one can investigate the effects of changing some of the variables without changing them in reality through policy action. According to Geyer (1994), simulations with complex models allow one to discover latent consequences.

CONCLUSION

The orthodox economists should use a more dynamic methodology rather than a static system of analysis. Furthermore, it is important that the orthodox preoccupation with mathematical form does not obscure the study of economic agents. The mechanistic metaphor that underlies orthodox thought is at fault. Because orthodox economists employ a narrow sense of the idea of rationality, they fail to recognise that agents are living organisms who are active, purposive, uncertain, and knowledgeable choice-makers.

As I have mentioned earlier, the knowledge of social scientists as observing agents, is an essential facet of the social system itself. One cannot, therefore, investigate the social world without changing it. This places the idea of objective observation into the realms of fallacy. In many ways, the objectivity vis-à-vis econometrics in orthodox economics is, at best, highly questionable.

This means that we cannot talk about complex systems in isolation – which probably do not even exist – but about complex adaptive systems, interacting with an environment. In a word, the author suggests that economists should adopt a more organicist metaphor as it directly addresses the issue of life. Organicism is more akin to economics than mechanism as human beings are living organisms. Looking at an honest adaptation of chaotic metaphor, therefore, will benefit economists as a whole.

Political role of Trade Unions

2007-05-10T11:24:00.000Z

Introduction

In this paper, I have endeavoured to assess the political rôle of unions hitherto. However, to determine industrial relationships between governments and unions, one needs to examine ideological differences between them. Mainly, one must bare in mind, the origins and development of these differences to effectively perform this task. Therefore, I have examined the ideological origins and development of the consensus and conflict between unions and government in the succeeding section. Nevertheless, one must not forget that historically these relations have an impact upon the economy. In addition, this component of this paper leads to the second section that concerns modern day industrial relations between unions, the Labour Party, and the Conservative Party. Finally, I will conclude that to what extent (if at all) industrial relations between governments (that is, both Labour and Conservative) and unions are harmful for the economy.

Origin and Development of Industrial Relations

Unions stem from the changing infrastructure of the economy. Namely, unions became manifest in nascent-capitalism. Unions began their lives as a reaction to the inequalities and exploitation that capitalism generated.

Sparingly, Conservatives agree with these manifestations of capitalism as they blame the individual for their condition. However, the Chartists formed the left of the Whigs, and represented the interest of workers. Arguably, unions and Chartists were of a revolutionary nature in the mid-19th century. Unfortunately, they developed into mainly a capitalist accommodating agency by the end of the last century. Various academics have constructed theories surrounding their ideological change. However, E. Hobsbawm's Aristocracy of Labour Theory provides the most feasible explanation for this change. In a word, this theory describes how unions settled for concessions rather than revolution. The most important point surrounding this issue, begins with capital needs workers, yet workers do not need capital. Therefore, workers bargained and struggled until firms granted concessions. Metaphorically, workers could have achieved more than bread-crumbs from the table; workers could have owned the bakery. In short, sparingly workers pressed for an increase in wages but not so much that they lost their jobs because the industry became bankrupt.

Unfortunately, from these capitalist accommodating unions, the Labour Party was born in 1900. Shortly after, when Labour’s political sway began to grow, the majority of the Labour Party and unions became parliamentarian. However, few unions remained anti-capitalist. The Labour Party have rarely represented these anti-capitalist unions, hitherto. Sparingly, Lenin feared that unions were becoming increasingly self-interested, furthering the interests of their particular members at the expense of other workers. Furthermore, as Labour gained more sway, they began to represent the interests of unions less as unions became more institutionalised. Therefore, unions have maintained industrial-relations programmes and became little threat to social-order as there became less and less chance of the type of conflict that Marx predicted. Arguably, these programmes attempt to represent the worker in opposition to capital, so that firms and governments grant workers: higher pay; an increase in legal-rights; better working conditions; and so the list continues. In addition, the rôle of the Red Antagonist became a regulator of relations when unionists became too right-wing.

Nevertheless, the mainstream of unions remained more left wing than the Labour Party. The Winter of Discontent is one such example of conflicting ideas between these two groups. Here, the Labour Party introduced incomes-policy that had negative implications upon unions directly. Industrial relations and the Winter of Discontent, along with inflation and unemployment, played a central rôle in the Labour Party losing the 1979 election. In addition, unions were scapegoated by the Labour Party for loss of the election.

Contemporary Industrial Relations

The previous section has described that unions have internal ideological difference. In addition, it has explained that both the two major parities’ have ideological differences. Furthermore, it has demonstrated that the unionist's ideology differs from both the Labour and Conservative ideologies'. In a word, all of these agencies may have differing interests in the mode of production. Therefore, even in recent years, unions have maintained an industrial-relations programme and a political rôle. Thus, unions have clashed with governments on occasions (Conservative governments in particular). However, industrial conflict is not universal by any means. Media and government on occasions over-exaggerate its occurrence.

The Conservative Party

According to Neo-classical and neoaustrian economics (the economics of the Conservatives), these issues of unemployment and inflation pertain to too much union power. Particularly, Hayek claimed that unions cause unemployment, economic-decline and are the main obstacle to increasing workers’ living standards. Additionally, amid 1980-84 closed shop workplaces lost workers, whereas, non-closed shop workplaces increased their number of workers, according to Metcalf. Thus, since 1979, Conservatives have attempted to restrict the political sway of unions through union reformation and to introduce a more flexible labour market. They saw the problems as being the closed shops, increases in money wages not matched by productivity, and excessive real wage expectations.

Conservative policies rested upon ‘supply side’ economics. The idea was to decrease the union power through salami tactics, that is, careful piecemeal reforms so to avoid strike action that the Heath government witnessed. In addition the Conservatives had no intention of responding to union demands and influence, moreover, ideas of beer and sandwich meetings at Downing Street became antiquated. Sparingly, the Conservative government held fewer meetings with unions than the previous Labour government. The government showed contempt for unions in 1982 when they forced the TUC to withdraw from the National Economic Development Council. Moreover, the removal of union membership rights at GCHQ in Cheltenham in 1984 led to unions cutting more links with government.

In 1980, the Conservatives began their salami tactics that effectively reformed union law and weakened unions. The 1980 Employment Act outlawed secondary picketing by strikers: it became illegal for them to picket anywhere other than their own workplace. Secondary action, taken in sympathy with another group who were in dispute, became liable for claims for damages, except in special circumstances.

In the 1982 Employment Act, N. Tebbit narrowed the definition of a trades-dispute to one that was about the terms and conditions of employment. This act ratified a few additional restrictions upon unions that the 1980 act omitted. Moreover, governments can now confiscate union funds, if misused. Additionally, the act enabled companies to fire striking workers without it being regarded as unfair dismissal. In addition, it increased employees' and employers' protection from closed shops some of each disapproved of closed shops. Again this act negatively influenced union power.

The Trade Union Act of 1984 made it necessary for unions to hold secret ballots before strike action, if the action was to be legal. Furthermore, this act manifested the government’s overall strategy. They wished to: de-politicise unions; weaken union links with the Labour Party; force unions to concentrate on non-political activity; and address the political expenditure of unions. This act required unions to ballot all their members at ten year intervals, else lose their political fund. In addition, this became government's attempt to move away from a show of hands to postal votes. Finally, government amended social security laws so that civil servants calculated the benefits of strikers' families on the assumption that strikers were receiving strike pay, regardless of whether they were. Particularly, these changes made it much more difficult for unions and their members to take strike action and sustain it. They placed severe limits upon the legality of strikes and meant that unions and strikers could face prohibitive costs. Not surprisingly, they led a more cautious approach to industrial-action by some unions, and so contributed to a fall in the number of strikes, for example, the Austin-Rover dispute in 1984; although the legislation itself caused some industrial unrest. However, whether it had affected the Miners'-strike of 1984-85 is debatable.

The Conservative government attacked public sector employees. Budgetary controls on local authorities and nationalised industries forced them to offer low wage increases and stricter conditions of employment. Hyman points to examples such as British Leyland, where he considers there were systematic attacks on shop-steward organisation. In addition, this act also extended the definition of the purposes for which unions required a political fund. However, over 83% voted for political funds compared to 17% who opposed them. This shows that the unions' relations with the government were full of confrontation.

Then come the 1988 Employment Act, that N. Fowler ratified. This act removed the support for closed shops and protected scabs against disciplinary action, if they opted out of industrial disputes. Again, government was bribing employees to weaken union power. This act also went on to tighten the secret ballot provisions and improved the legal-rights of union members concerning things like unlawful use of union funds. The appointment of a commissioner for the legal-rights of union members achieved this.

Then Howard ratified the 1990 Employment Act. This protects anyone dismissed for not belonging to a union. However, it gives employers greater liberty to dismiss workers for unofficial action. Howard also removed immunity from union officials calling for unauthorised action, so it was much more difficult for unions to call strikes.

In October 1992, parliament replaced all these acts with a single act to make for easier reference. Finally, in late 1994 Clause 61 of the Criminal Justice Bill appeared to attack unions. Clause 61 effectively outlaws union pickets, or any other direct protest action such as road building protests or fighting closures, etc.

Finally, the rapid rises in unemployment in the early 1980s (i.e., 1979-83) led to a weakening of union power and a reduction in the effectiveness of strikers. Unionists became more concerned about keeping their jobs, and less willing to risk losing them by striking.

After 1979, the balance of power in industrial relations changed in favour of employers and management. There has been a decreased rôle of unions and an increased rôle of employers. N. Tebbit believes that management and the workforce will have to come closer together, since their common interest is in the firm - not the national union. However, workers, managers, and employers have no common interest in the mode of production. Therefore, Tebbit's mumbo-jumbo is unnecessarily superficial.

Summing up these Conservative innovations, this period has been particularly difficult for unions as union membership has decreased by around 10% (i.e., 54% in 1979 to 38% in 1990). This suggests that union power has decreased significantly. Therefore, the Conservative government have achieved their goal. There has been a progressive reduction in the number of unions. The peak number of unions was 1384 in 1920. However, this had fallen to just 287 in 1990. In 1990 just under half the unions had less than 1000 members each that accounted for only 0.3% of total union membership. These manifestations are the result of union mergers. As a result of these mergers, even the distinction between white collar unions and manual unions became hazy, for example, the merger between GMB and APEX confirmed this lack of distinction. Consequently, many people maintain that the governments' union reform-process has ensured that unions are too weak to represent their member interests adequately. Although, one must realise that the Conservative ideology is that of self-interest, therefore, as individuals they will try to ratify whatever increases their share-dividends. However, this can only widen the gap between unions and the Conservatives.

The Labour Party

The unions have mainly had a closer relationship with Labour governments than the Conservative Party. Nevertheless, in recent years fewer unionists vote Labour as some unionists approved of the Conservative reforms. When the Labour Party are not in power, it remains a financial relation. Unions fund the Labour Party (80%) and campaign for unions to vote labour (the TULV was one such campaign). Sparingly, they fund the Labour Conferences, and play a part. However, when the Labour Party are in power, labour gives unions some political sway. The national link between the two is stronger than the local level link, i.e., unions rarely fund constituencies. Nevertheless, the most striking point since 1979 about the Labour party was the changing rôle of constituency associations. At the 1984 and 1987 Party Conferences, Neil Kinnock tried to introduce a one member - one vote system for candidate selection. On both occasions, Kinnock was unsuccessful as unions wanted to maintain their rôle in the selection process. However, the TGWU and the GMBATU made it possible for the establishment of an electoral college system. Here, both the members and the unions have roles. Nevertheless, the unions have up to 40% of the vote and the individual members cast the remaining votes.

There has been a loosening of the ties between the TUC, unions and sparingly, the Labour Party. The link became worse, then the Conservative Party introduced legislation to require the unions to conduct political fund ballots. However, unionists sympathetic to the Labour Party voted first and established a bandwagon effect; and more than 70% of voters supported a political fund. This result legitimised the political rôle of unions in the Labour Party. It aided the link when it was under considerable threat. One can pronounce that this success enhanced union links with the Labour Party. Unfortunately, Kinnock, Smith and Blair have all distanced themselves from unions. However, the Labour Party would still restore unions some political sway that the Conservatives dissolved, i.e., gives them the legal-right to take secondary action and affirm that employers cannot dismiss individuals for lawful strike action.

At the 1993 Labour Party Conference, a one to one voting system looked promising. However, in 1994 it looked even more promising. Possibly, this year the unions might establish a true one member - one vote system. Nevertheless, if this should weaken the union movement, but increase democracy then it might be worth it.

Conclusion

Firstly, unions have a closer relationship with the Labour Party than the Conservatives. Secondly, unions are an essential industrial organisation in capitalism. Unions will always have a political rôle. Finally, modern unions and governments have under-estimated what workers have achieved in the past. The Conservatives might have indirectly created the dream for the future through anti-union legislation. Since the demise of closed shops, right-wing union ex-members have opted out of unions. This could increase the strength of the left in the labour movement. Furthermore, an increased merging of unions to form a few unions could again increase union power. Then these unions could legitimately call for a General Strike to shame the government in power when they so choose. Unfortunately, modern unions demonstrate a rigid Bureaucracy of Labour that could not care less about the working class as a whole.

Bibliography

Engels, F., Socialism: utopian and scientific, London: Bookmarks, 1993;

Griffiths, A., & Wall, S., (eds.), Applied Economics, Longman Group, 1993;

Hyman, R., Strikes, 3rd ed., Fontana, Aylesbury, 1984;

Ingram, P., Wage Bargaining in the 1980s, in Bird, G. & Bird, H., (eds.), Contemporary Issues in Applied Economics, Edward Elgar Publishing Ltd., 1991;

Marsh, D., The New Politics of British Trade Unionism, London: 1990.

Marx, K., and Engels, F., (1848), The Communist Manifesto, London: Penguin, 1985;

Sweezy, P., & Huberman, L., The Communist Manifesto after 100 Years, New York: Monthly Review Press, 1964;

Thompson, E. P., (1963), The Making of the English Working Class, London: Penguin, 1991.

Notes

The maturation of British Industrial Relations (hereafter, BIR): It's increased complexity and sophistication.

The increased maturity of BIR in the 1945-79 period had three main features:

1. The conservative nature of its institutions, I.E. their resistance to change, has become one feature. For example, one cartoonist once featured the TUC as a cart horse: hard-working, honest, however, stubborn and resistant to change. Similarly, another cartoonist viewed the TUC as having a cloth-cap image.

2. Increased complexity and diversity of its institutions and practices.

3. The growing specialisation of its participants.

Some commentators claim that BIR is historically unique. It is far more ancient (long lived). It has had 300 years of internal political stability. This established the British constitutional democracy where the government of the day sees labour as legitimate opposition. Furthermore, comparative international study suggests that BIR is again unique.

The industrial revolution (1760-1830) being defined by the economic climate - T. S. Ashton.

The BIR system is a vintage system that has developed and matured gradually to new circumstances.

TUs and employers have largely restructure the BIR system since 1945. German and Japanese TUs and employers copied this restructured system. This system grew out of and reflected the historical development of the UK capitalist system of free market enterprise from its economic base that is complex and diverse.

1. The structure of collective bargaining.

Joint regulation of employers and workers' representatives (not necessarily unions and union leaders) - 4 main periods.

1. Through the liberalism of J. S. Mill and D. Ricardo in the 19th century, local and district bargainings in mainly craft trades became manifest. In turn, this led to non-craft workers in textiles carrying bargaining out on this level also.

2. National pay bargaining composed of mainly two phenomena:

1. The increased concentration of British industry into a small number of firms.

2. The period of depression 1919-39 formed the official system of the national employers' federations and federations of TUs. For example, the agreement between the EEF and CSEU in 1920 was one of this nature.

3. There was a return to local bargaining at company and workplace level (rise of the unofficial system) in the period of prosperity and economic boom during 1950s-60s. Shop-stewards and personnel-managers bargained directly at this time. This became official in 1970s.

4. Rise of co-operativism. Government in 1960s-70s introduced prices-and-incomes policies to control inflation - the social contract. Some commentators blamed such policies for the Winter of Discontent in 1979. Stratification of BIR (piece-meal development) led to: a different system of pay bargaining with local agreements; industry wide agreements; and firm and plant agreements, all existing simultaneously. On the whole, the government regulated these agreements in some form of incomes-policy. N. Lamont and K. Clark have recently revived incomes-policy. The informal level of pay increases in the public sector stands at around 2.5%.

2. TU development.

TU growth has been similar to bargaining. TU growth and development have been piece-meal and a development of pragmatic adaptation. In the early 19th century the craft society developed based on workshops within a district. We had many small societies. It had an atomistic structure. By the mid-19th century these had amalgamated to form 'new model' TUs. Union amalgamation reflected the increased size of firms; the development of national firms; and the development of industry wide employers' federations.

In the early years of the 20th century (1920s) these craft unions developed in two ways. Firstly, TUs amalgamated. Secondly, TUs extended their membership intake to gain an increased industrial power (mussel). This continued in 1980s (for example, the electricians and engineers' union). Unskilled workers' TUs developed differently, I.E. the new TUs of 1880s-90s, E.G. dockers and gas-workers' unions. In 1920s these unions also amalgamated to form general TUs. GMB and the transport union more recently especially since 1945 (1960s-70s) there has been the development of white-collar unionism. ASTMS (under C. Jenkins) led to MSF. BIFU and APEX most recently in 1980s-90s formed the super union (UNISON). The spurt of the amalgamation had been due to two major recessions. Unemployment appears to be the driving force of these decisions. Unions have found it necessary in recent years to amalgamate to regain industrial power at a time of prosperity. Some observers believe recent recessions to have had more impact than anti-union legislation.

The Chaos Legacy - Hard Times or Great Expectations for Strategy?

2007-04-25T11:27:00.000Z

Introduction

The idea of future-oriented-strategy appears to have reigned for some fifty years. However, there is now the question of whether the chaos legacy will render future-oriented-strategy superfluous. The debate between the chaos strategists and those of the older genre might better be understood if we examined that discipline from where the former putatively crib their philosophy. In short, especially since WW2, we witness the changing face of physics; it has paradigmatically shifted its foundations from one of a mechanical orientation to one of an evolutionary direction (Mirowski, forthcoming). Of course, several decades later, the new physics has not fully subsumed the old; thus, the legitimacy of the old still holds much sway. Nonetheless, the old physics is becoming increasing less persuasive in its own field. When news of this came to the attention of some strategists, they began to doubt the legitimacy of much of the old physics in their field. The present controversy is testimony to it.

After the paradigmatic shift in physics, the structure of organisations (as perceived by T. Burns) was being re-read as if they were organisms. Moreover, objections to the mechanical legacy spawned rival camps in the Classical school of business strategy. Furthermore, cybernetics was rapidly extending its boundaries. There was the realisation that qualitatively different problems, in fields as diverse from physics to psychiatry, were essentially the same when described in mathematical terms. The lessons from disciplines outside management science became metaphorically transferable in the field of management science, usually through the medium of mathematics.

This facilitated the ease of transferring ideas from one disparate field to another. Management science began to become strongly influenced by fields such as: game theory, cybernetics, operations research and systems engineering. Strategists became better able to draw analogies between these fields and that of their own. In a push to curb an expected loss of currency in their theories, strategists would update their stories reflecting the fashions of ideas in the scientific community. This usually meant that they would imitate some new idea or other from the cyborg sciences, the new physics or, the storehouse of evolutionary metaphor, biology on which the new physics is based.

Chaos

No one so surely pays his debt
As wet to dry and dry to wet.

The recent shift toward chaos theory can only be understood in this context of fashionably drawing from the sciences. In other words, chaos science gives the authors a feeling of déjà vu; it is just one of the latest of those ideas cribbed from the scientific community.

It can be observed within the last decade, there are a surfeit of texts that have employed some variation of the chaos myth. Although the chaos metaphor has provided insight into short-term weather forecasting, it remains to be seen what benefit this holds for the business arena.

Despite previous attacks, the idea of future-orented-strategy had weathered-well. However, chaos theory runs smack into those precious beliefs in future-oriented-strategy. For example, one progenitor of the chaos management approach is David Parker. He asserts that modern corporations are complicated non-linear systems, in which those small random events that cumulate will have significantly more impact upon the future than planned events. Moreover, he maintains that managers’ decisions can shape the future of modern corporations for only a few steps ahead.

That the comprehension of the environment in which we exist, or at least the way that it is described, appears upon reflection, unbounded and subject to the ebb and flow of ideas. Notions are abducted from one domain, and memetically applied to another. Such a projection of ideas across academia presents a quandary for those who attempt to compartmentalize our world into academic disciplines. For example, as Darwin’s (1859) notion of evolution was inspired by the work of a putative social scientist, Malthus (1798), we could not say that the idea exclusively belongs to the realms of the natural. This situation is however further confused when we find Darwin’s work, or interpretations of it, recast back into the fields of economics and of business. The conclusion that is drawn from the likes of this exemplar is one of something amiss with our traditional hard-soft demarcations.

What is amiss? If ideas are shared accord the traditional subject boundaries then no-one can legitimately that the existence of a mutually exclusive set of ideas which define a traditional discipline, which renders that discipline either hard or soft science. However, this is not exactly the case; there is an approximate mutual exclusion of ideas. What is of further relevance, is that whilst the so called natural scientific protocol language (and its associated mathematical formalisms) have been applied by business strategists, business strategists are found to be almost innocent on the front of appropriating an analogue to controlling their experiments. Verily, there are few signs of hard empiricism in this field. Nevertheless, it is this caricature - the protocol language without sufficient scientific practice - that is somehow supposed to render the business discipline scientific. Regarding the language of science, we witness the filtration of a particular (mechanical) brand of metaphors into our discourse supports this hypothesis. For example, fine-tune, pump-prime, over-heating, re-engineer ... imply that the economy or firm is a process, with replicable tasks, to be manipulated. The Classical School, associated with authorities the likes of Igor Ansoff (1965, 1991) and Michael Porter (1980. 1985) where strategy is here, ‘a rational process of deliberate calculation and analysis, designed to maximize the longer term advantage’ (Whittington, 1993: 3), in particular can be found to mimic the language of the hard sciences as we have come to know them, believing the anecdotes of the superiority and mastery it purports to provide. For, if managers apply themselves to gather the appropriate information for the appropriate techniques the organization and the world can be shaped. Good planning (rational analysis) makes the difference between long-run success and failure. They imply the kind of control found in the laboratories of physicists. However, when we examine the situation more closely we quickly glean an almost absence of control at the empirical level. This is where the approximate mutual exclusion beings to bite.

The shadow that we have come to live under lures us to misspecify our social world or, deny reality, with the consequence of a high turn-over of theories from a slavish veneration of the hard sciences and a belittling of other perspectives. This stems from the legacy advanced by mid-18th Century Physics. At this time, and with their techniques, humankind’s understanding of the physical world was progressing at a pace unmatched by commentators in the social sphere. It appears that many human (social) sciences (economics in particular) simply attempted to replicate this success, cribbing the language protocols - without the aforementioned empirical accompaniment - of physics to putatively do so.

In the Shadow of Science

It is from two principal movements that the so-called innovators of the Classical school cribbed many of their ideas. On the former movement, that of neoclassical economics, in the 1870s, we find neoclassical economists imitating much of the specialist mathematics associated with mid-19th-century energy physics (see Mirowski [1984]). We witness the neoclassicals:

directly copying the equations of motion in a physical field from energy physics, renaming the variables potential energy, force, and space as ‘utility,’ ‘prices,’ ‘commodity space,’ and so on

(Mirowski 1990: 697)

Classicists such as Sloan, also found the neoclassical tale of firms seeking to maximize their profits in the long-run particularly attractive. With the use of simple differential calculus, to find a point of profit maximization became a effortless exercise. Indeed, early Classical business strategists, especially Sloan, took many these neoclassical ideas on board; adding Frederick Winslow Taylor’s (1911) thesis on ‘The Principles of Scientific Management’.

Taylor, one of the prime movers of time-motion studies was a major player in the second movement, that of scientific management. He provided three main principles, that were reminiscent of militaristic metaphor, that many Classical business strategists endorse in particular forms. Taylor’s first principle was that management should ensemble all the traditional knowledge of working people in a particular industry, and reduce this knowledge to rules, laws, and formulae. The second principle was that brain work should be taken away from the factory floor and carried out in the planning department. This process became known as the ‘separation of conception from execution’. The third principle was that management should plan out and give written instructions to each worker specifying exactly what she should do (Braverman, 1974).

Taking Taylor’s work as a basis, the early Classicists in management found the need to create a top-down multidivisional structure not only between managers and workers, but within management itself. With the onslaught of bureaucratization and professionalization therein, it was thought that the sheer scale and scope of a company were justification enough for this fragmentation; hence taking Taylor’s principles to the extreme. With the separation between implementation and formulation of strategy, a specialized group of executives became responsible for controlling the destiny of the entire enterprise. Such fragmentation simultaneously gave these executives the time, information, and even psychological commitment for long-run planning and appraisal. Disciplined and obedient divisional managers, responsible for the mundane operations of business and excluded from formulation, implemented the fruits of such planning.

Peter Drucker’s powerfully influential The Practice of Management Science (1954) and the legacy it has spawned, is perhaps a more contemporary example, where the prescription following the title of Drucker’s book, was at least to imply that managers had the intellectual capabilities (with a particular set of intellectual-conceptual tools) to lead the organization to a desirable futurity: To practice long range strategic planning.

One can glean from the account (above), the putative efficacy of an imitation of mid-19th-century physics and the enterprises of Taylor, Sloan and Drucker. However, especially in recent years, we also witness the urge of business strategists to update their stories (imitating some new idea or other from the sciences) to make them more à la mode and/or persuasive. As Kieser (1997) informs us, “Today’s management fashions [make]  reference to strict academic science” (1997: 50). Moreover, as Abrahamson (1996) asserts, organizations have to adopt structures that have become institutionalized in society in order to acquire and retain legitimacy and support by shareholders (Kieser, 1997: 52). Serendipitously, these passions have now led to objections of the mechanical legacy of mid-19th-century physics and on occasions spawned rival camps in the Classical school. It is interesting to notice at this juncture that Classical business strategists have been influenced by the cyborg sciences: cognitive science, computer science, cybernetics and game theory. However, on average, these influences were of an imitative character – comparable to those earlier appeals to images of science – rather than genuine practice of science (as mentioned at the outset). Nonetheless, on occasions, these techniques have proved useful and cannot be understood as mere imitation. At first glance, these might be signs that business management strategy is becoming borged. Nevertheless, the adaptation of techniques is not accompanied by a change from a popular scientific view to one of cyborgology.

Decline of the Autarkic Discipline and the New Mode for Viewing Science

With the mainstream of economics venerating a particular view of science, it is no wonder that the practitioners of business attempt to mimic the language associated with the traditional sciences. Nonetheless, these attempts have begotten failure, for the domain of business is almost devoid of all those characteristics that have defined a hard science and its methods. We take care to say here in the previous sentence ‘that have defined a hard science’. So the question arises: Should business strategists concern themselves with the hard-soft dichotomy? No. For whilst parleys in seminaries across many a subject discipline have debated the ‘hard’ or ‘softness’ of their intellectual arena, the notion of distinct autarkic social and natural disciplines are becoming extinct amongst historians and philosophers of science. As the example of evolution above demonstrated, the natural and social sciences were never as independent as we may have believed anyway, but they are less so now, and especially since WW2 (see on) when the conflation of the social and natural was more evident. Significantly these philosophers and historians offer us a new fruitful mode of viewing science to help us out of this rut.

To pursue this point a little further, in agreement with Philip E. Mirowski (forthcoming), the authors argue that no science can be sincerely described in autarkic terms especially since WW2. For example, after WW2 there was a paradigmatic cultural shift from mechanical physics proper to one of organical evolution (Mirowski, forthcoming). This shift is associated with Shannon and Weaver’s (1949) The Mathematical Theory of Communication. Particularly, this work became a vehicle of reinterpreting mechanical stories to those of an organical caricature. The central tenet of this thesis was an emphasis on information. Information came to be seen to be embodied in just about every system imaginable – from light-bulbs to genes. Indeed, information was seen to be common to all systems – unified in that each system was explicable vis-à-vis that it concerned information.

Moreover, it was no coincidence that with this emphasis on information, the notion of the computer featured prominently in the movement. The combined force of conceptions of information and the computer allowed the realms of the social and the natural to become conflated. Not only were these realms conflated, but those realms of the organic and the inorganic became violated.

This sequence of events gave birth to an alternative view of science, that of the ‘cyborg science’. Indeed, cyborg sciences paradigmatically examine both inanimate and animate entities as their referent subject matters, which would have previously been tackled by scientists of disparate disciplines. In short, through a process of subtle influence, the scientific community were moving towards a metaphorically unified ‘general theory of information’ (Mirowski, forthcoming).

Such professionalization of science not only transcends talk of the traditional dichotomies (such as the one of hard and soft aforementioned), but offers the scope to credit ‘management science’ with the status of cyborg science. Therefore, we assert that through an investigation of this particular historical and intellectual movement there exists the capacity for business strategists to be more scientific, instead of settling (on the average) to imitate the language of traditional science.

The authors now prognosticate concerning what a ‘Cyborg Management Science’ might look like and what it would entail, before concluding.

Borging Management Science

The Classical school of management is based upon a language of a period where the hard-soft science demarcation was trusted. That belief is now diminishing and being replaced by one reflecting the conflation of the subject matters previously compartmentalized, creating concomitantly the cyborg sciences (as mentioned above). So what would a cyborg management science look like?

Whilst beyond the scope of this paper to articulate the full answer to such a question, would be problematic as a comprehensive cyborg history has yet to be written. However, we contend that a survey of the central precepts is a useful starting point.

A few fundamental points are worthy of note in thinking what a cyborg science might look like. Firstly, one should not be fooled into thinking that the term ‘cyborg’ is just another misleadingly and empty piece of rhetoric. It is not a literary technique employed to do little more than ‘sell’ an argument and conclusion, using the image provoking nuances of modern populist culture (Star Wars, Cyberspace, etc.). Rather, the term was created in the 1960’s to denote ‘the co-operation of man with his self-designed homeostatic controls in quasi-symbiotic union’ (Clynes, 1995: 35). In lay persons’ terms, cyborg science is the investigation of how human beings may engineer their own internal regulation for the purposes of space travel. It denoted, in so doing, the invasion of one science, say the organic, by another supposedly based in the inorganic. However, it is not to be confused with the shallow mimicking of one science by another. The investigation instead results in a hybrid of its own. The problem as it was, space travel, meant deliberately incorporating exogenous components to the human natural biological regulatory control system so that she could adapt to new environments. Biochemistry, physiology, engineering and information management had to be conflated to solve the problem of human and machine in symbiosis - inseparable in this new (space) environment. In a similar vein, although not as dramatic as space travel, in the business arena the worker is linked to a machine (computer/information system) that connects them to their co-workers or market. Significantly, for the (space) cyborgologists, such a conflation was engineered - consciously made. A fact that should appeal to this audience. Being pre-planned, structured and coordinated it is then the grandest of all views of science exuding those qualities for which we frequently crave; command, control and information.

The second point is that there is no single species of cyborg science. Cyborg systems range from a mix including barest organic to barest inorganic. The defining feature instead is that, ‘a major transition from a world where distinctions between human and tool, human and machine, living and dead, organic and inorganic, present and distant, natural and artificial seemed clear (even if there weren’t) to the present, where all of these distinctions seem plastic, if not ludicrous’ (Gray et al., 1995: 5). There is now no longer a partnership between machine and organism, rather a symbiosis, and one managed by a new (cybernetic) language common to them both.

Where does the figure of the cyborg take us?

A view of science as being cyborgic helps us to re-evaluate the other stories of our time - the hard-soft science distinction for example. This begs a few further questions: Are these often ancient stories useful? Do they help to explain the co-evolution of the machine and human that marks our time? Moreover, do they help us to understand the implications of such evolution? Speaking cyborg as we in part already do [for example, Mitsubishi’s ‘sociotech’, Hitachi’s ‘humanication’. (Gray et al., 1995: 11)] means that we are better able to explain the circumstances of our time. The metaphors and analogies will allow us to better express the culture we live in, and perhaps address more appropriate questions - for example, on the nature of work. As the cyberculture extends beyond the individual to larger bodies, e.g., firms (business), government, state and transnational state, we require new ways to explain these too. The fact that cyborg technologies abound, further means that we cannot rest our understanding with the individual [a ‘black-box’ understanding]. We are not cogs in a machine; rather instead we are embodied, situated bodies of knowledge, ‘bodies hooked into machines, and bodies linked to other machines’ (Gray et al., 1995: 7). Thus a more holistic view is required for understanding. One that looks at the context of the subject matter.

Finally, we propose that the figure of the cyborg presents us with an uncertain future. For whilst cyborg technologies can be restorative, normalizing, reconfiguring, they can also be enhancing, and possibly degenerative. Thus whilst we [the cyborgs] look forward we can only hope to understand retrospectively. The future is yet to be created [‘enhanced’], it appears open-ended. Indeed, on this point, as well as on the former notion on asking more appropriate questions, cyborgology resolves the long-standing and on-going debate as to the pro-active [deliberate] versus emergent [reactive] debate in strategic management [P. O. Gaddis (1997); R. Whittington (1993)]. Quite simply, the polarization between the sides in the debates is as empty as the methods themselves if we believe in cyborgology. The world is not as receptive to the rational planning implied in the Classical School; nor is it as fatalistic as the theories that advocate a reactive powerlessness. Instead, the world is one of adaptive, incremental processes, where that adaptation is subject to imperfect and partial control processes (Kay, 1993), as many examples readily show. Boiling an egg, an IVF program, space travel ... are but three examples. The guided adaptation and managed incrementalism that this implies fits perfectly with cyborg science.

Cyborg science is, as we can begin to appreciate, not simple. Its boundaries are not well defined. What we can be sure of though, is that whilst the boundaries are being debated, cyborgism marks a transition in human history. This transition displaces the hard-soft science distinction and along with it those disciplines that have predicated themselves upon them. ‘Classical Management’ science is but one, even despite influences from the cyborg sciences, for these have mainly been imitative in nature. Appendages, as these are, to a fundamentally flawed foundation (notably the authors would content, the foundation of so much business and economics writings - a natural order) will not make us scientific in our domain. We would still be practicing scientism.

Conclusion

Clearly the image of being scientific is much more readily obtained than the essence of conforming to these images in reality. To have an image of being scientific (by our own standards) is not enough. As practitioners we should be concerned with going beyond image to accord to a status of science. The rational demarcation of subject categories is disappearing just as is the notion of where the machine ends and the human begins. Our methods and tools for understanding need to reflect this disintegration. Moreover, as economists and business thinkers have always been closet cyberneticians, we should get out there and expand our subject boundaries to engage cyborg science. This should be done in preference to the current trend of appropriating particular elements of other cyborg sciences onto our empty and redundant mid-19th-century physics rhetoric. A well articulated appropriate framework may finally rout the Classical (rationalism) about which there is widespread dissatisfaction.

On Tony Lawson - Transcendental Realism Revisited

2007-04-25T11:21:00.000Z

Section One

Orthodox economists down-sized their pure theory (i.e., demarcated between axioms and assumptions to render assumptions non-essential) because it was too general to explain real-world events and to assist in policy formulation. Now there are four es¬sential features of pure theory: 1) explana¬tions must reduce to individuals; 2) some sort of acceptance of rationality; 3) some sort of equi¬librium states; and 4) prefer¬ence for general rather than specific theories. Acceptance of such axioms explains why so much orthodox theory concerns indi¬viduals, rationality, and equilibrium states.

We can discern four movements: 1) replacement of highly generalised assump¬tions with more specific and often more implausible ones; 2) endogenization of previ¬ously given assumptions; 3) replacement of the rationality axiom by the claim that agents follow fixed, context-independent rules; and 4) movement towards rendering the project as realistic as possible.

Criticism

However, such down-sizing does not address that economic systems are open. More¬over, acknowledgement of an open system is necessary for economics to improve. Thus, economics under the orthodox programme will not improve. Furthermore, Law¬son claims that the outcome of all this does not amount to much. However, not only will the economic theory project persist, orthodox economists will not transcend the fictitious nature of economic theory. This is because orthodox economists have made changes to prolong the existence of this misguided project. These changes do not fa¬cilitate a theory capable of explaining real-world events or of assisting policy formu¬lation. Moreover, Lawson highlights that Hahn does not elaborate why orthodox economists have followed certain paths and not others; and why individualism and rationality explana¬tions persist. There is no explanation why orthodox economists condone ideas of agents as naïve fixed (context-independent) rule followers; and the continuing foci upon equilibrium (or equilibria) states are adhere to. One can address these questions can by providing a more adequate account of the real or essential na¬ture of the ortho¬dox pure theory project.

Section Two
The orthodox economist’s image of science - a one dependent upon the discovery of event regulari¬ties of the form whenever this then that - is rooted in branch of deduc¬tiv¬ism, what Lawson terms ‘Humean positivism’. Lawson posits that such an image is not only insufficient (as many economists contend) but unnecessary for scientific pro¬gress.

Lawson claims that their adherence to deductivism is central to theory. To explain a state of affairs or actual event, the deductivist ex¬tracts a statement concerning its nature from a set of universal regularities or of constant conjunc¬tions of the form whenever this then that.

Certainly, axioms take the whenever this then that form and serve to relate hypo¬thetical events or states of affairs. Indeed, Hahn claims that axioms are so deep rooted in actual experience that one does not seek to explain them. Thus, orthodox econo¬mists take for granted the centrality of the deductivist mode of explanation as obvious given. Moreover, the orthodoxy mainly dismisses those who disagree. The attach¬ment to deductivism is so fundamental that orthodox economists believe it needs no defence it is unquestionable. However, deductivism is not a universally legitimate mode of reasoning and its philosophical underpinnings are not sound. They only ap¬pear so because orthodox economists rarely question and examine them.

For example, an axiom of the form: firms maximise some function of profits is, de¬spite its apparent general¬ity, seen securely regarded as a real-world event regularity. Hahn contends that orthodox economists state the axiom that firms maximise some function of profits because many economists (empirically) believe it to be the nature of the capitalist.

It is only at this level of generality that orthodox economists have elaborated hy¬potheses that they hold to be empirically secure. However, they necessarily use lower level of generality. Nevertheless, such hypotheses are less secure; the more specific, the less secure. For example, Hahn asserts: that managers have preferences is an ax¬iom; that they are a particular form, for instance that they are linear in expected profit, is an assumption. If you want more out you have to put more in. That is, you must supplement the axioms with assumptions. Indeterminacy arises because of inadequate knowledge concerning (general) event regularities (that hold at lower levels). Hahn calls these confirmed lower levels, special theory (like special case). Thus, when theorists praise various of their theories for not placing single-val¬ued restrictions on the world, i.e., for not predicting specific economic outcomes or events, this claimed virtue must be seen for the rhetorical device it is (unsure about this). It is merely a state of ignorance. One can use a special theory to narrow down the set of outcomes. However, confidence in the special hypothesis is smaller than on the axioms.

In sum, theorisation depends upon the existence of axioms (including the event regularity view of laws or science on which the deductivist conception of explanation depends). This Lawson wishes to question.

Section Three
Natural Realm

Event regularities of the form whenever this then that are not only insufficient but un¬necessary for science. The world is open in the sense that universal constant con¬junctions of event are rare in the social realm and even in the natural sciences. Be¬cause whenever this then that are rare does not mean that the only alternative is an in¬choate random flux. These two possi¬bilities - strict even regularities or a completely non-systematic flux - merely consti¬tute the polar extremes of a potential continuum. However, there is an alternative conception of science (that contrasts to empirical real¬ism), transcendental realism. It deals with a move¬ment from a surface phenomenon to some deeper causal thing. According to this perspective, the world is composed, in part, of objects that are structured - in the sense of being irre¬ducible to events (which we may or may not experience) - and in¬transitive - in the sense that they exist inde¬pendently of their identification. Moreover, transcendental realists posit that there are three ontologically irreducible domains of reality are dis¬tinguishable: the empiri¬cal (contains empirical phenomena such as experience and impression), the non-empirical (embodies surface or actual phenomena such as actual events and states of af¬fairs), and the non-actual (comprises deep phenomena such as structures, mechanisms, powers, and ten¬dencies). Thus, the world is constituted by not only events (i.e., sur¬face phenomena), and our experience or perception of those events (i.e., empirical phenomena), but also irreducible structures and mechanisms (i.e., deep phenomena) that, although perhaps not directly observable, nevertheless underlie, govern, or facili¬tate surface phenomena. Therefore, not only does a leaf fall and we experience it falling, but, underlying such movement are deep phenomena such as gravity.

Moreover, these domains are unsynchronized. Thus, while experiences are out of phase with events, allowing the possibility of contrasting, as well as revisions to, ex¬periences of a given event, so events are typically unsynchronized with the deep phe¬nomena that govern them. On the latter, the deep-surface phenomena non-correspon¬dence, for example, leafs are not in phase with the action of gravity for the reason that they are also subject to aerodynamic, thermodynamic, and other tenden¬cies.

Thus, transcendental realism supposes alternative concepts of science and expla¬nation. Science is the illumination and elaboration of deep phenomena that gov¬ern the realms of experience. And because the underly¬ing deep phenomena are not straight-forwardly manifest or actualised in events (or appearances), this goal of sci¬ence can be recognised as necessary, possible, and non-trivial. Explanation provides an account of those deep phenomena that are jointly responsible for produc¬ing or conditioning some identified phenomenon of interest.

The transcendental realist is not concerned with events (or their supposed constant conjunctions), but with identifying non-actual phenomena that underlie and govern them. In a word, they are concerned with non-actual phenomena and not their effects (i.e., events).

It is important to recognise that the essential mode of inference presupposed by the transcendental realist is neither induction nor deduction but one that can be styled retroduction or as if reasoning. It consists in the movement (on basis of analogy and of metaphor, etc.) from a conception of some surface phenomenon to a conception of some deep phenomena that is re¬sponsible for the given surface phenomenon. abduc¬tive reasoning is to move from the obser¬vation of numerous white polar bears (surface phenomenon) to a theory of some deep phenomenon intrinsic (and per¬haps also ex¬trinsic) to polar bears that disposes them to being white.

Outside astronomy (at least) most of the constant conjunctions that are held as significant to science only in fact occur under the restricted conditions of ex¬perimental control, i.e., they are not typically spontaneous occurrences but are a product of hu¬man intentional practice. However, the results or laws supported in controlled experi¬mental activity are nevertheless frequently successfully applied outside of the experi¬mental situation.

These observations raise certain problems for post-Humeans who tie laws and ul¬timately explanations to constant conjunctions of events. For, if scientific laws or significant results, only occur in such restricted conditions as experimental set-ups, then this bears the implication that science and its results, far from being universal, are effectively fenced off from most of the goings on in the world. In other words, most of the accepted results of science are not of the form whenever this then that but are of the form whenever this then that as long as conditions e hold, where conditions e typically amount to a specification of the experimental situation. This means that any actual regularity of events that a law of nature supposedly denotes does not generally occur independently of human intervention.

In addition, the constant conjunction view of laws leaves the question of what governs events outside experimental situations both unaddressed and thus unan¬swered. Thus, there is no valid explanation why experimentally obtained results are successfully applied outside experimental situations.

Generalisations of nature do not consist of event regularities. Instead, objects of the world, including of science, are intransitive and structured. Only tran¬scendental real¬ism can account for science in the experiment and open world. That is, experimen¬tal activity and results, and the applications of experimentally determined knowledge outside experimental situations, can be accommodated only through in¬voking the transcendental realist ontology of generative deep phenomena and their necessary in¬terrelations, etc., that lie behind and govern the flux of events in an essentially open world. The fall of a leaf, for example, does not conform to an empirical regular¬ity be¬cause it is governed in complex ways by the actions of different juxtaposed and counteracting deep phenomena. Not only is the path of the leaf governed by gravita¬tional pull but also by aerodynamic, thermo¬dynamic, inertial, and other ten¬dencies.

Thus, experimental activity can be explained as an attempt to intervene in order to insulate a particular deep phenomenon of interest by holding off all other poten¬tially coun¬teracting deep phenomena. For it is only in such a situation that a one-to-one correspon¬dence can be obtained between the way a deep phenomenon acts and the events that even¬tually ensure. In other words, experimental activity can be rendered intelligible not as creating the rare situation in which an empirical law is put into ef¬fect, but as interven¬ing to bring about, or engineer, those special circum¬stances under which a tendency vis-à-vis the deep phenomenon can be empirically identified. The tendency in question is al¬ways operative - if the triggering conditions hold, the deep phenomena is acti¬vated whatever else is going on. For example, a leaf is subject to the gravitation ten¬dency even as I hold it in the palm of my hand. Through this sort of reasoning, then, the transcendental realist can render intelligible the application of sci¬entific knowl¬edge outside experimental situations.

In short, although the deductivist explanation necessitates results formulated as constant conjunctions of events, in practice such event regularities that have been re¬ported have been restricted in the main to situations of experimental control. Tran¬scendental realism unlike empirical realism can render this situation intelligible. And it follows from transcendental realists that the Humean conception rests upon an in¬adequate analysis, and illegitimate generalisation, of what emerges as a special case - a closed system situation wherein a single and stable (set of) aspects or deep phenom¬ena is physically isolated and thereby empirically identified.

Social Realm
The transcendental realist argument carries over to the social realm as so far, there are few if any interesting or significant event regularities (constant conjunctions) of the sought after kind in the social realm.

Human Agency
One can improve on Lawson’s port-over on transcendental realism to the social realm. For example, Lawson endeavours to reconcile that human agents possess the capacity for real choice (strict human agency) with an understanding of scientific explanation. Thus, Lawson appears to view the social realm as a somewhat autonomous entity to the natural realm. However, such assumptions are unnecessary as one can view the social realm as a part of the natural realm that manifests a higher level of complexity of subject matter to that natural scientists investigate. Moreover, I suspect such as¬sumptions to be incorrect as humans act out scripts and due to the complexity of these scripts, etc., it appears that we write these scripts.

If significant event regularities do not so far generally occur in the social realm, then the enduring objects of knowledge that condition actual human practices must then lie at a different level - at that of deep phenomena that govern, but which are irre¬ducible to, events, including human activities, of experience.

If we accept as criteria for the social, the property of depending upon human agency then we see that there are real material causes or facilitating deep phe¬nomena. Items such as (societal) rules, relations, and positions clearly depend on hu¬man agency as well as condition our every day (physical) activities. Intentional ac¬tivi¬ties would be impossible without social material conditions. If it is the dependency of such deep phenomena upon human agency that marks them out as being so¬cial, it is their ability, in turn, to make a difference in (to enable as well as to con¬strain) physi¬cal states, or actions, that (as with non-perceivable objects of the natural realism such as gravitation and mag¬netic fields) established that they are real. Human agency and social deep phenomena presup¬pose each other. Neither can be re¬duced to, identified with, or explained completely in terms of, for each requires, the other. The point of relevance here, of course, is that because social deep phe¬nomena is hu¬man agent-de¬pendent it is only ever manifest in human activity. Thus, given the open nature of hu¬man action, the fact that any agent could always have acted otherwise, it follows that social deep phenomena can only ever be present in an open system. Thus, any eco¬nomic laws must be interpreted as tendencies that are manifested usu¬ally only in par¬tial fashion and very rarely - usually in cases where they are con¬sciously brought about (i.e., the occurrence of annual holidays) - as strict even regu¬larities, so that the Humean project in its economic guise must, as a general ap¬proach, be recognised as misguided.

Section Four
Although the social world is open, certain deep phenomena can come to dominate over others for restricted spa¬tiotemporal re¬gions, giving rise to rough and ready gen¬eralities or partial regularities or event-analogues, holding to such a degree that an explanation is called for. Thus, just as leafs fall to the ground much of the time, so UK growth over the last century has frequently been slower than that of otherwise compa¬rable industrial counties. Such stylised facts can serve both to initiate investigation and to assess the relative explanatory power of hy¬potheses that may in due course be constructed.

Once a hypothesis, or a set of competing hypotheses, of deep phenomena is formed, such hypotheses can then be further assessed or selected amongst others on the basis of the empirical support for any further contrasting claims that are entailed.

For, to the extent that the concrete phenomena of experience are relatively unique or novel, being conjectures or resultants of numerous countervailing tendencies, their explanation entails drawing upon antecedently established knowledge of relatively enduring deep phenomena (rather than revealing them) and investigating ex post the manner of their joint articulation in the production of the novel event in ques¬tion.

The ob¬ject of economics is primarily to identify the deep phenomena governing the conditions sur¬rounding or facilitat¬ing as well as being transformed through, some hu¬man activities of interest. Social explanation entails providing an understanding of certain practices and activities of interest, that is, identifying and understanding the unacknowledged conditions of these practices, their unconscious motivations, the tacit skills drawn upon, and unin¬tended consequences. While society and economy are the skilled ac¬complishments of active agents, they remain to a degree opaque to the indi¬viduals upon whose activities they depend. The task of economics, then, is to describe all that must be going on (whether or not adequately comprehended by the agents in¬volved) for some manifest social phenomenon, for some set of practices or activities, to be possible.

Any such potential may or may not be precisely actualised because of countervail¬ing tendencies. Even so, concerning the magnitude or intensity of countervailing fac¬tors or events across spatiotemporal regions, it is to be expected that if the hypothesis in question is correct, the tendencies of interest will shine through on a (perhaps sig¬nificant) number of occasions. In consequence, the hypothesis has implications that can be empirically assessed (not according to any strict set of a priori rules, proce¬dures, or criteria) both within a region and between regions and over time, etc.

The essential point here is that while the tradition constant conjunction view of science entails the goal of control along with the amelioration of events and states of affairs, the transcendental realist perspective offers instead the goal of human emanci¬pation. For while on the former account the point is to fix certain event(s) x in order to determine/control other event(s) y, on the transcendental realist understanding the aim must be to transform deep phenomena to enhance the scope for realising hu¬man po¬tential and to broaden opportunities generally. The aim must (or can) be to re¬place deep phenomena that are unwanted, unneeded, and restrictive by those that are wanted, needed, and empowering - but structural transformation is not new. It is just not part of policy-makers’ official rhetoric. The best way to predict the future is to create it. Eco¬nomics can equal the other sciences.

Notes
. Both axioms and assumptions serve as premises for theoretical analysis. The former are unquestion¬able and indispensable whereas practitioners should only provisionally accept the latter to nurture analysis.
. In place of rational individuals, we see, on the one hand, stochastic, fixed (context-independent) rule following, automata, or ‘particles’; and on the other, groups or societies somehow co-ordinated with the goal to act as, or on average as, a single rational individual.
. In place of equilibrium states, any of a variety of ideas concerning system solution seems in order.
. Finally in place of simple, general premises, we see prescriptions for specific premises and a call to em¬brace methods of computer simulation. Indeed, there are prescriptions for orthodox theory to move from the grand unifying theory of particle physics to consider biologi¬cal, historical, psychological, and sociological matters.
. We see this in rational expecta¬tions where beliefs and/or expectations are endogenized. Here, we see the latter being determined as an equilibrium condition of the model. This will change if learning is introduced.
. Its advocates appear to accept it for an environment of random shocks motivated by the observation that, in physical sys¬tems, the presence of randomness in the movements of atomic particles often pre¬vents any such system from settling down in unstable equilibria or limit cycles. Moreover, a finding of sta¬tistical mechanics is that, in a system with a very large number of particles, the aver¬age position and velocity of these particles (i.e., when averaged over the entire popu¬lation) are ‘well behaved’. The point then is to seek analogous results for economic theory by considering human agents as particles, as simple rule fol¬lowers, or as some such, where practitioners can describe beliefs and preferences by points in some high dimensional space. When two or more agents interact, their beliefs and perhaps pref¬erences change, i.e., are endogenously amended, according to the rules that they fol¬low, so that the agents move to a new point. If the system, i.e., the number of agents, is large enough, the behaviour of any one agent, or so these practitioners assume, will be essentially random. In consequence, these practitioners suppose that, with beliefs and actions averaged over the entire population, average out¬comes will be ‘well be¬haved’ and hence predictable.
. Thus, assumptions need to be of an empirical edifice. not to be making these assumptions arbitrary nor endogenizing. For example, in real¬ity, context-specific values and habits condition individual decisions. This means that economists must include matters of history, biology, and sociology. This leads to us¬ing computer simulations. For example turning to other disciplines will not create greater empirical success for anticipating models of greater relevance to policy analysis.
. Deductivism is a preference for general theories and separation of axioms from assumptions.
. Marx’s ‘not another word’
. Hahn is rude (he thinks its universal) but Solow is more open.
. Once one supposes that reality consists only of atomistic events, it follows that one seeks constant event regularities conjunctions.
. This is to be distinguished from that of econometricians as denoting a (supposed) relation¬ship between measurable events.
. Or in the case of empirical/non-empirical, we witness all that associated with relativity – only time is measured and related. However, all observers see event (x, y, z) but not ct (nor even mass). Maybe relativism is something analogous to it.
. Important link with Peirce, Friedman (pragmaticism), and institutionalists – see footnote.
. Kill off free-will (for complexity) and introduce a new schema. Add Giddens and arguments from philosophy (particularly phenomenology and ethnomethodology). Free-will is a confession that one is a libertarian, religious, or hasn’t examined the evidence ... ideological. If the universe is determined then a glass will always fall ... We talk about deeper causes and not surface causes. An ideology is a belief system that: 1) has many false tenets; 2) a particular social group believe; and 3) the social group that believe it either subjugate other social groups with it or are subjugate by other social groups as a result of believing it. The brain is determined by external (environmental) and internal (culminated experiences that are stored within the brain) stimuli. Therefore, if the brain makes choices then these choices by definition are reducible to these internal and external stimuli. This means that they cannot be ‘real choices’. In a word, the brain merely fires synapses under certain conditions. And firing is completely determined by these stimuli. Thus, choices are the effects of the interrelationships of firing neurons.
. Control like in psychology too.
. make the epistemic either deontic or alethic.

What is Neoclassical Economics?

2007-04-25T11:14:00.000Z

It is difficult to pin-down exactly what remains historically invariant in the neoclassical tradition. However, there are four hard core themes that have run through the neoclassical programme since its emergence. Firstly, there is the idea that explana¬tions must be explicable in terms of individuals. Secondly, there is some sort of acceptance of a rationality postulate or that individuals follow fixed context-independent rules. Thirdly, an idea of equilibrium (not necessarily a unique equilibrium) is present. Finally, concerning methodology, there is a preference for general rather than specific theories. In addition to these themes, maximisation (or at least optimisation), some belief in market forces, etc., are also prominent ideas. One need only consult an introductory textbook for a more comprehensive list. (See John Sloman for example.)

The notion that all of those ideas employed by neoclassical economists were present at the time of Adam Smith or even in the late nineteenth century is a misguided one, particular concerning methodology. One can best be understand neo-classicism as “a sequence of distinct orthodoxies, surrounded by a penumbra of quasi-rivals” (Mirowski cited in Backhouse, 1994: 68). We shall now undergo a brief examination of neoclassical history.

With exception of the Austrian economists (who were not strictly neoclassicals as will be explained later in this module), there were a few defining features of neoclassical economics. From 1870 to the end of the nineteenth century, neoclassicals used mathematical equations as a means of demonstrating their findings. These equations were roughly analogous to equations employed in 1850’s energy physics. Moreover, the neoclassicals also displayed a glee for talking about “utility,” while linking it to maximisation techniques. (See Mirowski, 1989 for the specifics.)

For example, Jevons (1835-1882), a prime mover of neoclassical economics, wrote that: The degree of utility for a single commodity varies with the quantity possessed of that commodity and ultimately decreases as the quantity of that single commodity increases (Ekelund, 1988: 315). This became known as Jevons’s Law. Jevons also understood the eqimarginal principle, allowing for maximisation of utility across a space of more than one commodity.

Later, Marshall (1842-1924) taking this on board chiefly concerned himself with demand-and-supply functions and partial-equilibrium analysis, where the former was at least implicit in the Ricardian and Jevonian literature but not central to the works of either. On the other hand, Léon Walras (1834-1910) cultivated a broader and more complex method for examining markets – general-equilibrium analysis. (For an exposé see Ekelund, 1988.)

For some time the Marshallian and Walrasian approaches were viewed as complementary. Nevertheless, a major bifurcation happened in the 1930s, with the opening up of economics to the wider scientific community. On the one side, economics was largely formalised in a Walrasian direction. This is where the Cowles Commission began to bite, with the birth of econometrics. On the other, there was the Marshallian strand which led to the advent of Keynesian economics. Both divisions were neoclassical (or were at least incorporated in the neoclassical paradigm), with the latter forming the subdiscipline of macroeconomics. Although, both traditions were taught side-by-side (in the mid-20th century), it became apparent that there was some degree of incommensurability.

Shortly after, both strands of economics ran into difficulty. The Marshallian strand began to be consigned to elementary texts, as economists turned more in the Walrasian direction. By 1950’s, Alfred Cowles had opted for axiomaticization of Walrasian themes in place of structural econometrics (Mirowski, forthcoming).

Game theory, which began its development with the works of Neumann, was becoming a rival. In the late 1950s and 1960s, there was the linking of core and competitive general equilibrium concepts (Leonard, 1995: 757). The idea of the Nash equilibrium was later refined. Game theory is now widely used in economics, dominating much of microeconomics. However, non-game theoretic themes still play an important part in economics, particularly macroeconomics.

Nonetheless, a shift to game theory has not been the only change in orthodox economics in the latter part of this century. Indeed, we can discern four movements: 1) replacement of highly generalised assump¬tions with more specific ones; 2) endogenization of previ¬ously given assumptions; 3) replacement of the idea of rationality proper by the claim that agents follow fixed, context-independent rules; and 4) movement towards rendering the project as realistic as possible (Lawson, 1995).

To sum: The discipline of economics has undergone many facelifts in its methodology and preference for describing and explaining its subject matter. However, what has not changed is the hard core of their beliefs, which stem from its insemination. Indeed, mainstream economists still write down utility and preference functions, still stress some species of optimisation, and still assert the existence of a law of demand (Mirowski, forthcoming).

References

Backhouse, Roger E., New Directions in Economic Methodology, London: Routledge, 1994.

Ekelund, Robert and Robert Hébert (1983), A History Of Economic Theory And Method, Singapore: McGraw-Hill, 1988.

Lawson, Tony, “A Realist Perspective On Contemporary ‘Economic Theory’”, Journal of Economic Issues, 29 (1), March 1995.

Leonard, Robert J., “From Parlor Games To Social Science: Von Neumann, Morgenstern, And The Creation Of Game Theory 1928-1944”, Journal of Economic Literature, 33, June 1995.

Mirowski, Philip, More Heat Than Light, New York: Cambridge University Press, 1989.

Mirowski, Philip, “What Are The Questions” in Backhouse, 1994.

Mirowski, Philip, “Do You Know The Way To Sante Fe? Political Economy Gets More Complex”, forthcoming.

Jevons (1835-1882) and Utility Theory

2007-04-25T11:12:00.000Z

Using a simple algebraic notation his utility function is expressed as U= f(x) to be read as 'the utility of commodity x (food) is a function of quantity of x the individual holds' - as¬sume no other goods are involved.

Assuming that one could add using portions of food to the individuals - continuously one might derive a utility as depicted below.

Here the total utility of food may be seen to rise as quantities are added up to X0, ready a maximum at that point.

But the utility of an 'additional' unit of food, which Jevons called the 'degree of utility' declines as units of food are added to the individual consumption. The assumption that the marginal utility of food was declining after the very first until taken, although he was aware that this might not always be the case.

- See the equimarginal principle.

du = du or MUx = MUy

dx dy

Where MUx stands for the life of utility of commodity x in use x and similarly for y.

The equimarginal principle and holds for the allocation of scare, fixed means (EG. in¬come among all goods in the individual consumers budget.

If x numbers of beers + z represents packets of tabs then the consumer will allocate scare income y in such a way that MUx = MUz, assuming:

a. beers and tabs are he same price.
b. that all y is expended on two goods.

The “Marginalist Revolution”

2007-04-25T11:08:00.000Z

The “Marginalist Revolution” concerns the discovery of marginal utility theory, which oc-curred in the 1870’s. It embodies the birth of neoclassical economics. However, there are four main motivations for an examination of the origins of neoclassical theory. The first is romantic, concerned with tracing the intellectual background of this innovation. The sec-ond is pertains to an interest in the methods of celebrated discoverers, to provide a model for currently accepted methods of research. The third motivation is of practical impor-tance. For instance, the theoretical suggest around the time of marginalist revolution may serve to prompt novel contemporary lines of inquiry that may have possibly been clouded by modern theory. The fourth arises from the curious circumstances surrounding the marginalist revolution. For example, William Stanley Jevons once asserted that marginal utility theory had been independently discovered three or four time before.

Unfortunately, puzzlement about the origins of neoclassical economics has introduced controversy. Blaug (1978: 322) asserts that

This has led some to suggest that it was a natural outgrowth of those themes already pre-sent in classical economics (e.g., in the works of Adam Smith and David Ricardo) and French economic thought (e.g., in the enterprises of Cournot). However, this issue is still riddled with controversy. Thus, here are three views on the marginalist revolution.

Firstly, the marginalist revolution moved attention from accumulation and growth (formulated upon the labour theory of value), for which the classical economists had been concerned for around two centuries. At first glance, therefore, it appears the marginalist revolution could not have been some natural expansion of classical themes. However, John Maynard Keynes had certainly viewed the English contribution to marginalism as an outgrowth of Ricardian (classical) economics. Sam Hollander’s work also lends support to this idea as he has shown that the classical economists had a definite understanding of supply and demand in the formulation of price. In this scheme, the labour theory of value is held to be flawed. Therefore, 19th century economists eventually shifted attention from those themes predicated upon the labour theory of value to those which expressed more rigour, based upon marginalist principles. Hollander has also argued that this neoclassi-cal value theory is not decidedly different to the Ricardian classical value theory.

Secondly, Marxian economists view marginalism as an outgrowth of bourgeois ideol-ogy. This ideological argument says that the rejection of the labour theory of value emerged from the ideological responses to Marx; the labour theory of became too closely related to socialism to serve economists. In their view, marginalism was developed as a middle- and upper-class response to the attack on capitalism from socialism (especially Marx). In particular, the founding father of the Austrian school, Carl Menger showed concern about socialism and German historicism. Therefore, he has been alleged to have provided a coherent alternative to Marxian historical material, based upon the subjective estimations from which economic agents form the basis of economic value. This is ironic considering that socialism and the labour theory of value need not necessarily be related. For example, non-socialists, such as Adam Smith and David Ricardo, had their own la-bour theories of value.

Finally, the third view on the marginalist revolution stems from the work’s of, the In-stitutionalist and Post-Keynesian, Philip Mirowski (1988). Mirowski, like any good histo-rian, focuses on the intellectual developments of the time. He specifically examines the relationship between economics and the history of science, especially mid-19th century physics. For example, Adam Smith has long been identified as a practitioner who endeav-oured to provide scientific “laws” for the social world that would parallel Newton’s law for the realm of the natural world. Moreover, by the mid-19th century, Newtonian physics was being reformulated. Therefore, it is not surprising to here Mirowski claiming that some of these new formulations were being experimented within the social realm. One application of such reformation was in the field of economics, particularly with the theory of value. The reformulating of the theory of value was assisted by mathematization, which decided the way neoclassicals understood the theory. In this way, Mirowski ex-plains the marginalist revolution as an outgrowth of the history of scientific developments in physics.