Economists Confuse Greek Method with Science

Post 3/4 – Continuation of Emergence of Science

A well-known historian and philosopher of science Pierre Duhem reflects the typical Eurocentric attitude: “There is no Arabian science. The wise men of Mohammedanism were … faithful disciples of the Greeks, (and) … destitute of all originality.” It is amazing how prejudice can blind historians to the vast original Islamic contributions to mathematics, medicine, chemistry, optics, astronomy, as well as a wide range of technological developments. In contrast, Briffault in The Making of Humanity, writes that  “The experimental method of Arabs was by Bacon’s time widespread … throughout Europe. Science is the most momentous contribution of Arab civilization to the modern world.” Our focus in this essay is not on the injustice, but on the misunderstanding of science that results partly from minimizing the Muslim contributions.

By a strange paradox, while the accomplishments of modern science are bright as the sun, philosophical attempts to understand the nature of science and the scientific method remind us of the parable of the blind men and the elephant. Different schools of thought contend with each other, and each school has a fragment of the truth, but there is no coherent overall picture, and massive confusion prevails. Pre-Islamic Greek science was based on axioms and logic, much like Euclid’s geometry. The radical innovation of the Muslims was to drop axioms, deductive logic and thought experiments, and base science directly on observations and real experiments. Eurocentric accounts omit this chain of transmission of knowledge – an internet biography states: “Bacon took up Aristotelian ideas, arguing for an empirical, inductive approach, known as the scientific method, which is the foundation of modern scientific inquiry.”  In fact, most propositions of Greek Science were later proven to be false; it has been argued that Aristotelian ideas created a huge obstacle to the emergence of science, since his enormous prestige made people afraid to oppose him. Bacon actually opposed Aristotelian ideas, arguing strongly in favor of the observations and experimentation that were part of Islamic science. However, Bacon missed the crucial importance of the formulation and testing of hypotheses, which is a core scientific activity. In the early twentieth century. the logical positivists added to the Baconian mistake by asserting that facts and observations were enough by themselves; there was no need of hypotheses. Both Bacon and the Positivists missed a vital component of scientific activity. Science is founded on careful observations, but reaches beyond them to arrive at the hidden reality which drives the observations. The proverbial apple of Newton provides a perfect illustration of this aspect of science. Science involves going beyond the falling apple, to see the invisible force of gravity which was responsible for this fall. Centuries before Copernicus, Abu Raihan al-Biruni hypothesized that the earth goes around the sun, and used precise geographical measurements to deduce the existence of an unobserved continent, later discovered by Columbus. What makes science interesting and exciting is that reasoning about the invisible reality is always fraught with danger, since one can never confirm this reasoning by direct observation. Karl Popper picked up on this aspect of scientific theories, that they can never be proven true, since they deal with unobservable structures. Popper came to the mistaken conclusion that the defining characteristic of scientific theories is that empirical evidence can falsify, or disprove, them, but they are impossible to prove. Thomas Kuhn studied the history of science, and realized that it proceeds by revolutions. One dominant hypothesis is often rejected and replaced by another entirely different hypothesis about the hidden structure of reality. However, the Kuhnian picture of science created many un-resolved puzzles which continue to vex philosophers of science.

Major confusions about the nature of scientific methodology led economists to mistake the Greek axiomatic & logical methodology for science, in the early twentieth century. Modern economic theories of consumers, firms, and equilibria are based entirely on axioms, logic, and thought experiments, which often directly contradict observations of real world consumers, firms, or markets. In effect, economists rejected in toto the Islamic contributions, and went back to their Greek ancestors. Just as the Greeks were singularly un-successful in understanding nature, so economists have been singularly unsuccessful in studying economic systems.  It was not prejudice against Islam that led economists to reject science in favor of Greek methodology; the substantially more complex reasons will be discussed in later columns.

Above 700 words published in Express Tribune on 15th May 2016 with title: “Confusing Greek Methodology”. Additional clarification and evidence for the main thesis given below.

Greek methodology gives primacy to axioms over observations. Scientific theories are generated in response to observational evidence, as an attempt to match the evidence. Consider for example, neoclassical utility theory, which describes consumer behavior. Economic methodology gives primacy to an axiomatic description of human behavior. The axioms dominate empirical evidence. Contradictions with observed behavior are ignored as irrelevant. Theory dictates the you maximize utility, and whatever you do or say does not count as evidence against the theory.  At the heart of the scientific method is an attempt to create theories which explain observations. Thus Prospect Theory, which attempts to match observed behavior of humans in situations of uncertainty, is a scientific theory. Any theory which has the goal of trying to match observed patterns of empirical evidence is scientific — the issue of whether the theory is right or wrong does not matter for this purpose. Scientific methodology involves trying the match the empirical evidence. It is manifestly clear that economic theory does not do this. Empirical observation of human behavior is massively in conflict with the economic axiomatic utility theory, as demonstrated in Empirical Evidence Against Neoclassical Utility Theory: A Survey of the Literature. A scientific response to observations of conflict between empirical evidence and theory would be to attempt to modify the theory to match the evidence. That was the position taken by Kenneth Arrow – he appreciated my “well argued and thorough critique” and said that the remaining question is, “what should take the place of this theory?” However, leading journals to which I sent this paper, which destroys the central pillar on which conventional economic theory rests, rejected it, saying that it was “too insulting to economists”. Here is a delicious quote from a referee report (who got it exactly right!):

This is one example of what I believe to be a theme running through the paper which is “economists are blinkered idiots who are willfully ignoring the way in which people behave when they build their models, and therefore say all sorts of stupid things”

… Well, some of my best friends are economists… and they are quite smart! Similarly, Aristotle was also extremely smart. BUT the axiomatic deductive methodology blinds you to observational evidence. The only use of observations is in framing the axioms. After that logical deductions are CERTAIN, and cannot conflict with facts. After proving the Pythoagorean Theorem, you are perfectly JUSTIFIED in ignoring someone who claim to have drawn a triangle which violates it. Observation reports of something which contradicts a logical deduction is simply not admissible.

This adherence to Greek Axiomatic-Deductive methodology systematically blinds economists to all empirical evidence in conflict with economic laws. The theory of the firm is based purely on axiomatics, without any observations of actual firm behavior. Equilibria are deduced by logic, without any reference to reality. Real world observations of consumers, firms, and markets are deeply and directly in conflict with supply and demand, profit maximization, equilibrium, and other economic theories. No attempt is made to make theories conform to empirical evidence. The theoretical physicist Richard Feynman put it best: “It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If it doesn’t agree with the experiment, it’s wrong.” This is the founding principle of science, but it has no relation to the methodology of modern economic theory, which is firmly set in the “ostrich” mode of ignoring all conflicting empirical evidence.

Posts on Diverse Topics:My author page on LinkedIn. Other works: Index . More material on Science & Scientific MethodologyNext post  4/4: The Keynesian Revolution and the Monetarist Counter-Revolution



















2 thoughts on “Economists Confuse Greek Method with Science

  1. Excellent post.

    Popper came to the mistaken conclusion that the defining characteristic of scientific theories is that empirical evidence can falsify, or disprove, them, but they are impossible to prove.

    The defining characteristic of scientific theories is that observations may be able to verify or disprove various elements within the theory. This said, verification does not imply completeness of the theory as an adequate descriptor of even the phenomena it purports to describe. Scientific theories are open to change.

    Modern micro dates from Hicks-Allen. Theirs was a strictly positivist approach, as was that of Milton Friedman. But it is vital to understand that ‘labeling’ an undefined ambiguity –“utility” — fails to create an axiom. So, just what it it that economists say that they are ‘deducing from’?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.