In economics, like all social sciences, the unobservables are usually things that theoretically can never be observed but are presumed to exist based on thinking about the world in socially and existentially relevant ways.
A theory that is constructed based on what can be identified as unobservables that can never be observed but are presumed to exist ... is a theory that has been constructed blithely ignoring the institutionalist critique.
And then you continue to pander to the mainstream economists pretense that their's is the only approach with which to study economics by identifying the incorporation of the critique with a field of study rather than an approach to a field of study. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
The institutionalist critique provides no solution other than maintaining some humility (also called reflexivity) about both the methods of inquiries and the discoveries one might make. Neoclassical economics frequently ignores the critique by (perhaps blithely) assuming that economic agents have more power and knowledge about things than can be possible if the institutionialist critique is true.
The critique can also be modified and applied to much of physical science as well by attacking the assumption on the part of the researcher that there really exists some objective vantage point from which the world can possibly be imagined -- that you can imagine a world without you, but still call it the same world. (This was the real mental breakthrough of Galileo, for instance, which has since been shown and accepted by philosphers since des Cartes as clearly false. We can't really separate our first-hand perspective from reality -- to do so is imagination.) But for most things in the physical sciences, like most things in social science, it doesn't make much difference. You can build sound bridges and supercomputers without resolving the existentialist dilemma. However, as Einstein pointed out in relativity, there are places where it makes all the difference and ignoring that problem masks the truth. Even the physical sciences must engage in unproven imaginations about how reality works -- called heuristics -- before analysis occurs, and the end result of analysis is always necessarily biased by possible misspecifications in that original, dreamed-up view. For Galileo, his epiphany was that human beings weren't the center of the universe. But Einstein had to have the opposite epiphany to solve the problem of relativity -- that he really WAS the center of it, as far as observing and measuring it is concerned.
Likewise, markets tend to work most of the time without taking account of the fact that institutional constructions bias actors through power and limits of information. The assumption that people really do know enough and are powerful enough to make rational choices is basically true regarding what we can observe. But there are certain cases where things go dramatically wrong when such ideas are applied, through policy or become ideological.
There's nothing wrong, in the institutionalist critique, with trying to find out the truth about things that cannot possibly be observed -- it just means that there are some reasonable limits to using observational methodologies to do it and researchers need to be honest about those limits.
And as a researcher within the radical school of economics, I've certainly never been accused of "pandering" to mainstream before.
There is everything wrong, in the institutionalist critique, to trying to find "the truth" about things that cannot possibly be observed and calling it science.
This is not the point at issue:
The assumption that people really do know enough and are powerful enough to make rational choices is basically true regarding what we can observe.
This is only possible true by redefining "rational choices" away from what it means in the context of mainstream economic modelling ... people clearly can not know enough to make perfectly foresighted rational choices regarding each action that they make and do not have the capacity to engage in the incessant decision making at the foundation of the mainstream model.
So the "rational choice" in that statement is a shell game, a claim about the plausibility of a more constrained form of rational choice than is presumed in utility maximizing modelling on a more constrained set of actions than a model of human behavior based strictly on utility maximizing is engaged in modelling.
However, beyond that, there is the point that the utility maximizing model of rational decision making is invalid, so whether people are or are not in fact capable of engaging in the form of rational decision making specified in mainstream economic models, we know that they do not do so.
If you are a researcher in radical economics, it makes it all the more puzzling why you defer to the right of mainstream economists to define a single approach to economics as the same as the field of economics. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
I have never argued that the neoclassical approach is the same as the whole field of economics. You've somehow inferred that yourself from things outside of my comments and have been misinterpreting my responses based on that.
The institutionalist critique is not at all concerned about searching for unobservables and "calling it science." That's what social science is, after all. The important thing is to recognize that it is what you're doing and presume that discoveries have universal conclusions. The institutionalist critique is concerned about presuming that one particular way of imagining the world is necessarily the right way, which is an assumption particularly strong today (although certainly not universal) in neoclassical economics and other fields that are "consultants to power" rather than critics of power. In physical science today, the institutional critique may be most valid for medicine, where institutional bias as well as profit incentives appear particularly corrosive regarding health care questions.
It would be good if you and Bruce took this debate to a separate diary... The brainless should not be in banking. — Willem Buiter
Some fields have merely already incorporated that critique better than others.
The institutionalist critique is not at all concerned about searching for unobservables and "calling it science."
Clearly you are only willing to recognize a portion of our critique. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
While there is a set of people who don't like calling social science, "science," (and which apparently includes you) that is really not a central part of the critique -- that is a mere semantic part. The counter-argument to them is that much of physical science is not really "science" then either -- much of medicine, genetics, etc., including a lot of theoretical physics. But that would be taking the argument too far, I hope you would agree. So I refuse to get hung up on yours or anyone else's obsession over a word, choosing instead to go after the heart of the critique, which remains valid: Especially in social questions, which usually involve unobservables because of the subjective, social nature of social science, an observer's institutional bias must be taken into account in some way in order to preserve some degree of honesty.
For example, Karl Polanyi, an important contributer to the institutionalist critique, did not expend a lot of effort pointing out how natural science was valid but social science was not. Rather, he argued that neoclassical economics is a political philosophy first and foremost and that distinctions necessarily biases its so-called scientific conclusions. Much work in History of Science uses the same strategy to critique virtually all of the natural sciences as well, particularly the applied parts of it in engineering and medicine.
So the critique is not centered, or really shouldn't be if some of you are, on categories of "real" science versus "fake" science. Rather the critique is centered, where is is useful, on the concept of honesty in any rational inquiry.
It is true that much of what goes out under the banner of social science is the fruitless chase of the unobservable, pursued sometimes by calculating the incomputable, sometimes by deploying the indecipherable in the attack on the inexcusable.
But much of what goes out under the banner of social science is indeed science, offering and contesting cause and effect explanations of observable social behavior and activity. Sadly, less commonly in my field of economics than in the other nomethetic fields of the social sciences. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
However, a lot has changed in the field since him, even if his critique still has validity. Heckman, for example, has re-focused much of what is considered economic inquiry precisely to question of cause and effect based on observables. However, the primary focus of social science remains on what one can deduce about unobservables -- justice, well-being, inherent traits -- from observable data. This differs from much work in natural science in one way very little: even if a phenomenon is unobservable to human senses, it's presence can be deduced from theory and observation of what can be observed. However, the key difference in social science are that the unobservable components are dependent upon social contexts, which are not the case in most questions of natural science.
Anyway, Migeru has warned me to not discuss this anymore in this thread. Good discussion.
However, as Einstein pointed out in relativity, there are places where it makes all the difference and ignoring that problem masks the truth.
No. Just... no. The equations involved are simply transformation properties of spacetime. Nowhere in the theory is the observer invoked, except in a same didactic sense that electrons are said to "want to go towards" the lower potential.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
But far more fundamentally, the laws of nature involved do not invoke the observer. Special relativity states simply that the length of the four-vector is invariant under transformation between inertial systems. Full stop. This does not invoke the observer any more than stating that the length of the three-vector is invariant under rotational transformations.
How Einstein discovered this does not matter. He could have come to this conclusion while tripping on acid, he could have had a divine revelation, he could have consulted an astrologer, for that matter. None of that would have changed the way the equations behave, nor the experimental results that confirm their utility.
Keep on keeping on... Fai de bèn a Bertrand, te lou rendra en cagant
Welcome back, by the way. The brainless should not be in banking. — Willem Buiter
But I don't agree, either. To say that intuition, or one's mental picture of the world has nothing to do with a discovery of a fundemental explanation of how the world works is just wrong. Maybe he could have solved the equation from the insights of an acid trip, but he didn't. That's says something about the difference between acid trips and human reason and experience. Instead he spent much of his time in a patent office imagining the issue of observing the same phenomenon and getting different results at different vantage points when a constant was needed instead. The observer was invoked for the expressed purpose of determining what is universal without an observer. And the implications of the theory are important for observers as well.
The observer was invoked for the expressed purpose of determining what is universal without an observer.
But you have one point which is that, at the time Einstein wrote, they were still mentally wedded to coordinate systems and the important thing was the rules for changing coordinates. In that sense Einstein was concerned with observers and not with what was universal. It's been over a century since 1905 and in the meantime physicists have adopted the mathematical point of view that what matters is the transformation group and its invariants, and that coordinates are not important. This transition started almost immediately with the work of Minkowski and others, especially Wheeler in the mid-1900's.
So you may be right about Einstein's heuristic basis for his discoveries but we already have a different understanding of them. Nevertheless, Einstein's thought experiments about train conductors flashing lights around relativistic trains remain useful to build intuition - too bad they are seldom mentioned to physicists in training. The brainless should not be in banking. — Willem Buiter
To say that intuition, or one's mental picture of the world has nothing to do with a discovery of a fundemental explanation of how the world works is just wrong.
But I'm not. I'm saying that there are three distinct aspects of science:
You are using the language of bullets 2) and 3).
An insight to that effect may have inspired his discovery of special relativity, but it is not pointed out as an assumption in the theory itself. And the original source of inspiration is no more necessary to understand the theory of relativity than having an apple-induced headache is a prerequisite for understanding Newtonian gravity.
an apple-induced headache
