On the Central Importance of a Meta-Theory for Economics.

This post was meant to provide a framework for further elaboration of the idea of ET1% — the Economic Theory of the top 1% — as one ingredient of a Meta-Theory of Economics. However, covering necessary preliminary background already took up more than a thousand words, so this project has been deferred for a later post. The goal of this post is to explain why we need to focus on Meta-Theoretical aspects of social science, rather than whether or not economic theories are true or false. The perspective emerges from my understanding of the Methodology of Polanyi’s “The Great Transformation” [which was recently ranked as the 2nd most important book of the 20th Century in a Poll of RWER Blog Readers]

As the name indicates a Meta-Theory for Economics is a theory about economic theories. As we are all aware, economic theories evolve, change and mutate. Multiple rival conflicting and contradictory theories co-exist within the mainstream. Outside the mainstream, there are people (like myself) who claim that all of mainstream theories are fundamentally and deeply flawed.

A meta-theory studies the process by which new theories emerge. Some of the central questions for a meta-theory would be:

  • What are the circumstances which lead to the creation of new economic theories?
  • Who are the agents who create new economic theories?
  • Why are new economic theories created?
  • What leads some theories to become popular and widely accepted?
  • What leads other theories to be rejected, or neglected and ignored?

Those who refuse to think about meta-theories often commit themselves to an extremely simplistic meta-theory without realizing or explicitly acknowledging it. This simplest of meta-theories is based on the idea of “TRUTH”. According to this meta-theory, new theories are generated as part of a process of searching for the truth. A theory is adopted because it explains the observed phenomena well, and hence is likely to be true. Agents are motivated by the search for truth, and seek to improve the explanatory power of theories. New theories are created to bring wider range of phenomena within the scope of explanation. Theories which are able to explain a large range of observed phenomena become widely accepted and popular. Theories which conflict with observations are rejected and confined to the dustbin of history.

This meta-theory was actually dominant and widely believed prior to the publication of Kuhn’s Structure of Scientific Revolutions. For ease of reference, we will label this the Truth-Based Meta-Theory (TBMT). According to this theory, science progresses by discovering laws of nature – TRUTHS. Once a truth is acquired, it becomes part of our body of knowledge forever. Of course there are occasional mistakes and errors which are corrected in due course, but these do not affect the big picture. The big picture is that we gradually acquire more and more truths by the process of scientific discovery, expanding our circle of knowledge. In the (very) long run, we will acquire all possible truths which can be known by mankind.  This conception of science, labelled the “Heroic Model of Science” by Appleby et. al. attributes a transcendent truth to scientific theories: “heroic science was eternally true. Not just true in certain controlled circumstances, nor true enough for the time being, but true always and absolutely.” More detail on heroic science at the end of this post.

IMPLICATIONS of TBMT: If heterodox economists subscribe to TBMT, they will believe that theories which are proven false will be discarded. Thus they spend a lot of time trying to disprove conventional economics. Also according to TBMT, new theories which are proven true will be accepted. Thus heterodoxy will offer new theories and try to prove that these theories are true, in order to get them accepted.

Kuhnian Meta-Theory of Science (KMTS): Kuhn contested this standard story of what science is and how it progresses. He proposed an alternative picture, which he documented by providing many historical examples. He suggested that science has certain central paradigms – these are ways of looking at the world, defining terms, and framing problems. These are taught by example, and not subject to proof/empirical verification. Science proceeds by building on a paradigm, and using the provided framework, techniques and methods to explain observations of the real world. At any given time, there are observations which outside the scope of the paradigm, and also observations which are in conflict with the paradigm. Normal science, which corresponds closely to the TBMT model, consists of extending the paradigm to bring more observation under its scope, and also of resolving puzzles, contradiction, and confliction observations so as to strengthen the paradigm. However, every once in while, there is a scientific revolution. The old paradigm is overturned and supplanted by a new a different paradigm, which creates and entirely new way of looking at world.  Here are some key element of the Kuhnian Meta-Theory in the form of an outline – taken from Professor Frank Pajares:

  1. A scientific community cannot practice its trade without some set of received beliefs.
    1. These beliefs form the foundation of the “educational initiation that prepares and licenses the student for professional practice”.
    2. The nature of the “rigorous and rigid” preparation helps ensure that the received beliefs exert a “deep hold” on the student’s mind.
  2. Normal science “is predicated on the assumption that the scientific community knows what the world is like” —scientists take great pains to defend that assumption.
  3. To this end, “normal science often suppresses fundamental novelties because they are necessarily subversive of its basic commitments”.
  4. Students study these paradigms in order to become members of the particular scientific community in which they will later practice.
  5. Because the student largely learns from and is mentored by researchers “who learned the bases of their field from the same concrete models”, there is seldom disagreement over fundamentals.
  6. Men whose research is based on shared paradigms are committed to the same rules and standards for scientific practice .
  7. A shared commitment to a paradigm ensures that its practitioners engage in the paradigmatic observations that its own paradigm can do most to explain, i.e., investigate the kinds of research questions to which their own theories can most easily provide answers.

Although Kuhn was doubtful as to whether or not scientific paradigms existed in the social sciences, I think all of his criteria are fulfilled by conventional neoclassical economic theories. Let us consider some of the key differences between the Kuhnian Meta-Theory of Science and the Truth-Based Meta-Theory, because these have radical implications for the heterodoxy in terms of effective strategies for creating change. Note that, due to length considerations, I have only described Normal Science and how it progresses – I have not discussed the process by which scientific revolutions come about.

First note that KMTS emphasized the role of a community and received beliefs. These beliefs are passed from mentors to disciples and are not open to question. Kuhn’s idea that the scientific community is rigid, intolerant of radical innovations, dogmatic in its adherence to received beliefs, restrictive in defining research questions, and propagates itself by inducting disciples trained into the same mindset (rings a bell?) is violently and starkly in conflict with the “heroic model of science” as detailed by Appleby et. al.  in Telling the Truth about History – one of the most illuminating books I have ever read.  In fact, we have all imbibed “The Heroic Model of Science” since it is very much in the air, and forms the general background for our thinking without explicit mention or consideration. Many of the comments and posts on the RWER Blog are framed within the perspective of this model of science, taking it for granted as obviously true without explicit consideration of the issues at stake.

The main point of this post is to argue that we need to focus much more sharply on the right Meta-Theory. To begin with, it is necessary to articulate the “heroic model of science” upon which the TBMT is based, so as to bring it into the open, to allow explicit consideration of its hidden assumptions. This is necessary to move forward to a more realistic meta-theory for economics.

I would strong recommend readers to the Appleby book itself, but summarize briefly some key ideas of the Heroic Model of Science below:

Appleby et. al. in “Telling the Truth about History” write that the spectacular progress of Europe in eliminating poverty and creating general prosperity and enlightenment in many dimensions of life was correctly attributed to science.

Western science’s originating moment coincided with, as well as reinforced, commercial expansion, enlightened reform, and revolution. In gratitude for escaping medieval restraints—and forgetting or ignoring the miseries caused by early industrialization—Westerners gave science an aura of absolute validity.

Scientists were regarded as heroes of the new age. Befitting this idealization, heroic attributes and characteristics were super-imposed upon them.  Here is a relevant paragraph from the book:

The laws of science enabled rational human beings to escape time and hence history, or even to imagine that they could end history, by mirroring nature in their minds and finding a body of knowledge. In this account the intellectual self-confidence of the scientist was matched only by his heroism, a selfless courage to stand up against censors and ideologues. The rationality of science derived from the disinterested posture of its practitioners, their openness to all criticism (if based upon experimentation), and from their refusal to countenance belief, opinion, self-interest, or passion in the search for truth about nature. Eventually the rhetoric of heroic science made science so collective an enterprise, so much the result of selfless international discussion, that the person of the scientist, his allegiances, prejudices, and interests, bore no relation to what could be attributed solely to abstract science. [Thus the role of individuals, personalities, communities, etc. can safely be ignored; there are no personal biases in science, according to the heroic model]. 

Appleby et. al. conclude by saying that wars, and the role of science in creating the ability to kill millions, and indeed destroy the world many times over, led to a re-examination of the heroic model, and a closer examination of scientists.

4 thoughts on “On the Central Importance of a Meta-Theory for Economics.

  1. Meta theorizing is all very well but it fails to take us to the core of how macroeconomics actually works. What we badly need is a continuation of where Adam Smith and some of the other classical writers left off and not the subsequent and deliberate confusion of less than ideal simplifications, which began when John Bates Clark combined the capitalist and landlord functions.

    In my theoretical work “Consequential Macroeconomics” the difficulty is met of having to include the whole of the Big Picture with the need for sufficient detail, so that all the true economic functions of our social system can be properly represented. How I wish that somebody more profound than myself had written along these lines. Write to me at chesterdh@hotmail.com for a reviewers’ e-copy. Meta theoreticians should note that the methodology here meets many of their desirable criteria, so this is not just another theory.

    1. Here we go again. You cannot assert let alone prove a general principle from use of a particular example. It is not sufficiently logical. The whole of macroeconomics does not depend solely on money and banking. If you would bother to examine the model in my book or in my paper SSRN 2600130 you will better appreciate what macroeconomics is all about before you splurge half truths.

  2. El problema de fondo es que los economistas quieren seguir simplificando ficciones al margen de los hechos económicos. Creo que nunca comprendieron la construcción de un pensamiento científico tal cual como lo describe T. Kuhn a partir de la confrontación de paradigmas, incluso a partir de la práctica de la ciencia normal.

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