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Tuesday, June 7th 2005

1:47 PM

The Socratic Problem in Economics - Michael Thomas

 (inspired by Eric Schliesser’s talk at the Summer Institute; logical and historical errors are mine)

 

So Dr. Schlisser told us that there is a Socratic problem directly related to the application of Economics.  

The Socratic Problem outlined (briefly):  Socrates was charged with corrupting young minds through his teachings.  Since he was such a well known teacher and deep thinker, it was assumed that the ideas of his students could be attributed to him.  Socrates was later tried on the capital offence related to the political moves of his student (Critias).  So the greatest thinker of democratic Greece was held accountable for the mistakes of one of his students.  This suggests that the insights of the “experts,” who have the luxury to opine on issues in an artificial environment, can lead to action by those who do not fully understand where these ideas fit into practical context.

 Schliesser’s application to economics:  Milton Friedman trained several economists from Chile.  Many in their number were included in the Pinochet overthrow of Chile.  Their motives generally considered consistent with maximizing the economy in the eyes of many of the positive economists (positive here meaning normatively value free).  Freedman even visited some of his former students in Chile to (questionably) endorse some of their schemes.  At the same time that Friedman was nominated, won, and received the Nobel prize in Economics; his students were in some way responsible for the disappearance and death of at minimum 3,000 people under the Pinochet government.

 This brings up the idea behind economic policy, but also education in general.  If education only serves to make those with power more efficient at wielding it, than education is not a good thing.  It also raises the point about philosophy.  If this search unlocks truths about the universe, but does not at the same time teach us how to reconcile these truths, than the pursuit of philosophy is a sham.  

Friedman was famous for taking John Neville Keynes three part distinction on economics (positive, normative, and art) and simplifying the profession of economics into just that part which was positive economics.  David Colander (1992) discusses the effects of losing these other distinctions on the modern science of economics.

It seems important to note the impact that this distinction has made on the profession.  Economists seek to see themselves as scientists.  In a way this is the promise that Friedman offered in limiting his students to “positive” economics.  This also abstracts the necessary consideration of the other two legs in this three legged stool.  While positive economics may have its place in the laboratory atmosphere of a theoretical paper, it cannot be expected to function in the real world of normative evaluation.  In this real world, students will apply the lessons of economics to everything they see around them.  Had they not been taught to reconcile these ideas with the strains the political environment places on them, they are not capable of handling the new insights they have into the economy.  

I join Colander in emphasizing the importance of making the distinctions, and teaching all of the aspects of economics.  He recognizes that telling an empirical tale is an art form.  It is also important to realize that the student is a searcher.  All students have different reasons for entering the pursuit of advanced academic study.  For some they are compelled by real world problems.  What we can realize is that these gaps in their education will be filled in by something.  How much better is it to give the student the proper education from the beginning, rather than forcing them to fill in the gaps with no guidance?  

I don’t speak of a complete doctrine, rather I speak of problem solving that takes into consideration the higher level of complexity which is seen in the real world.  The tools of the positive economist are only as good as the mind behind the wielding of these tools.  The Socratic problem teaches us that we are responsible for the discourse we undertake.  We are responsible for giving the tools of the profession without the insight of countless generations of normative and artistic application to real life.  There are generations of thinkers that have come and gone in the taxonomy of economic thought.  It would be useful for these categories to be recognized for what they bring to the science as a whole.

It seems that Economics has an image problem; it thinks it can grow up into a natural science.  This claim, while also being ambitious, is reckless because it ignores the unique understanding behind what economics studies.  The discipline does not seek to help reelect dictators, or justify bad political regimes.  The discipline focuses on better understanding the action of man, praxelogy.  With deliberate poetry Ludwig von Mises chose this as the title of his English translation “Human Action.”  What better way can we understand what properly falls within the category of economics?  We don’t seek to understand animals which lack reason.  We don’t seek to understand the way in which the earth ages.  We don’t even seek to understand the way that the brain responds to physiological stress and trama.  What we do seek is a theory of how man should be expected to act from interplay between two individuals, to interplay over the whole human inhabitants of the globe.

 Without the insight Dr. Schlisser offers we can seek how economist will continue to be sources of perversion with no feedback check to keep them honest.

13 Comment(s).

Posted by Jenica Wurm:

Yikes! Were those all Dr. Schlisser's words? Did you contribute to any of that, Michael? Either way, I'd say it is right on(also very well written)! Talk about hitting the nail on the head! I think Dr. Schlisser and Dr. Colander really see the whole picture. I have to honestly say that I got the most out of hearing Dr. Colander speak at the Public Choice conference. I guess it's because he put to words what I was thinking but unable to communicate. All throughout the conference I was slowly being overwhelmed by the over emphasis on numbers. It was as though we were being told to see the world in terms of + and - and not right and wrong. I'm not saying there is anything wrong with numbers. The problem is that, try as one might, it is impossible to eliminate the "normative" all together. And I felt that we were being told that..well..Actually, I think I'll just write about it on my journal because I could go on forever. Also, my thoughts on this are related to Dr. Hanson's paper. But great entry!
Tuesday, June 7th 2005 @ 5:42 PM

Posted by Michael Thomas:

The two paragraphs outlining the problem are my best attempt to paraphrase what I remember from the conference. The citation from Colander is from a paper I found on jstor. The rest is my inference and extension of the ideas. I shared the concept of positive economics as an "organic" tool with Dr Schlisser, he liked that.
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