On Fundamental Assumptions in economics and philosophy

Ingrid Robeyns has a very nice post at Crookedtimber with an excellent discussion on why "economics should become much more aware of the values it (implicitly or explicitly) endorses. Those values are embedded in some of the basis concepts used but also in some of the assumptions in the theory-building." Her post includes a lovely, brief and clear treatment of the abuse of the Pareto-improvement criterion; it's worth your time to check it out.

However, I worry a bit about the meme that focuses on the lack of clarity about values by economists. For, it reinforces the convenient economist's (and philosopher's) distinction between positive and normative questions, embraced since Sidgwick encouraged the split between the two fields (recall and here). To put the worry more constructively and subtly reinterpret my two earlier posts (here and here) on Raj Chetty's widely discussed NYT op-ed piece: economists are not transparent about their status-quo bias that is embedded in their empirical methodology, which (recall (and here and here), takes important institutions and norms as given).[+] From the point of view of the political economy of economics this (relative) status-quo bias of policy oriented economics is to be expected because the demand for economists is fuelled by existing institutions. 

Over the life of this blog I have explored the lack of transparency over fundamental metaphysical (modal) assumptions embedded in the mathematics of many areas of economics. I have argued (say, here) that by treating uncertainty as a species of (stochastic) randomness, technical mathematical economics takes unexamined bets on the nature of possible (or modal) reality. So, my claim is that rather than re-playing the familiar debates between the experts of values (philosophers) and the experts of social facts (economics), which ultimately reinforce existing disciplinary practices, we should open a discussion on the value of non-transparency of fundamental assumptions in economics (some of which do, of course, involve non-trivial claims about values).

Now, there are lot of respectable reasons to be non-transparent about fundamental assumptions in order to get on, as it were, with the hard work of empirical science. But the non-transparent fundamental assumptions in economics have something in common: they all facilitate consensus formation technologies in economics in the service of speaking univocally about policy issues. The success of such consensus-forming assumptions allowed economics to become the dominant policy science over the last sixty years. (I have traced this commitment to the writings of Koopmans, Lange, Arrow/Alchian, etc.)[*] As it happens, I believe the embrace of consensus-forming assumptions has prevented the development of economic theory as an organon of inquiry (recall my treatment of Ernest Nagel), but that's, of course, hard to establish.

Either way, it turns out that this commitment to consensus-forming assumptions also presupposes an image of science as a consensus-seeking activity that is very popular among philosophers of science--a view commonly associated with the unobjectionable part Kuhn and one that was actively embraced by economists. One philosophical reason to engage constructively with economics and economists not as philosophical experts in value, but as fellow enquirers that may have something to learn here: we may learn to better reflect on the way we philosophers think about our own commitments and distinctions (e.g., empirical science vs ideology) and the ways these play out in the real world.

 

[+] I thank the economist David Levy for this formulation.

[*] I mention these four names (I could have added Samuelson, Stigler, etc.) because their political views are diverse and because they cut accross familiar Keynesian/neo-classical lines.