Sunday, July 24, 2011

Transcending Medieval Economics

In my new book, Sex, Lies and Economics, about early economics of the late seventeenth and early eighteenth centuries, one of the constant themes is the struggle against the medieval thinking. Beginning with William Petty, the early economists I am analyzing were following the new science, which emphasized close observation to replace received dogma. Here is a nice description of how the dogma was presented at the time. Notice how closely the medieval method resembles the scholastic method that the early economists opposed. In this sense, we are losing ground.

Matters of exchange: commerce, medicine, and science in the Dutch Golden Age by Harold John Cook:
15-6: "Universities were the preserve of the professors who had studied and disputed for long years and then passed on their knowledge to students by lecturing and debating. They valued demonstrative certainty above all else, wishing to draw conclusions that could be shown to follow from necessity. Such demonstrative certainty came from reasoning by clear and certain steps from premises known to be true. The classic examples are demonstration by dialectic, in which a proposition (thesis) is contradicted (antithesis) and resolved by a proposition containing truths from both (synthesis) or by the use of syllogism, in which a proposition known to contain true and universal assertions is linked to another that refers to a new premise, yielding new truths conclusively (as in "All men are mortal, Socrates is a man, Socrates is mortal"). These methods could be clearly explained and could be tested not only by writing things down but by debating with an opponent. Because such methods yielded demonstrative certainty, knowledge of this kind could be built into philosophical systems of great range and power capable of being passed on to others by explanation. Above all, they had the capacity to reason about the causes of change, probing for why matters were as they were."


TheTrucker said...

When economists insist on mathematics, the people (and the elected policy makers) are left out of any and all discussions. The lack of mathematics is the supporting backbone of Austrian/Libertarian economics. The painstaking descriptions of the actual _DATA_ and logic behind charts and graphs is the only way to go.

There is also the painstaking exposure of lies dressed up at truths. Best example of a lie is the analogy of government budgets to family budgets. That is a lie for many reasons, but most simply because the family cannot create its own money.

We will not see Treasury seinorage because it will expose all the current policy makers as liars. John Kenneth Galbraith called it "innocent fraud". But such fraud by a president is not forgivable.

Michael Perelman said...

One has to go beyond the data to get at the nub of what is going on. One one level, one has to get to the data beyond the data. How are GDP or unemployment or even the population measured?

Even more so, one must understand that there is no economy, which is an abstraction. As Karl Polanyi insisted, what we call the economy is embedded in a larger world. The danger of climate change, for example, suggests that purely economic data is not enough.