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Scientific epistemology is a serious business in economics—as it is in any science. Not surprisingly, therefore, discussions about value-ladeness tend to focus on theoretical and methodological issues within the discipline, while the question of the social consequences of science is approached with more reservation. And for many good reasons, one may say, because it is not entirely up to scientists how will the scientific product be disseminated and interpreted in society, or how will it be used by policy makers. Or, that’s not the job of the scientist, one could reason, to determine and be ready for all possible applicative scenarios.

Since the last few decades, research practices have undergone a far-reaching transformation at the interface between science, policy and society. It involves an increased engagement of science in problem solving and policy advice, and the enhancing role of participatory research methods in problem-based approaches. The social consequences of science become therefore more readily visible, opening up new perspectives on debates about facts and values dichotomy, or the relationship between knowledge, truth, and values (cf. Kitcher, 2001). One way of looking at the transformation of scientific practices focuses on the criteria of scientific rationality with regard to scientific knowledge and the very process of knowledge production, echoing a Weberian contrast between instrumental and axiological rationality of social action (Weber 1968). Specifically, the scientific rationality criteria have been extended in the process from purely (i) internal rationality, that can be defined as a conventional scientific rationality approach focused on disciplinary epistemology and methodology, to (ii) external rationality that pertains to axiological, ethical, and societal elements of knowledge and its production (Kiepas, 2006). 

There are many reasons for including external rationality in scientific practices. For one thing, all applied sciences can be considered as value-laden in virtue of their goal-oriented values (Pullin, 2002). Furthermore, many contemporary problems, as subjects of research, are radically complex. They are laden with systemic uncertainties, meaning that “the problem is concerned not only with the discovery of a particular fact (as in traditional research), but with the comprehension or management of a reality that has irreducible complexities or uncertainties” (see more in Funtowicz & Ravetz, 1994, p. 1882). They also pose future incalculable risks in an unprecedented scope. For example, in the context of complex, adaptive problems such as climate change, uncertainty in science follows (Brown, 2013). Scientific uncertainty regarding the severity and scope of the problem fuels general disagreement about the appropriate actions to undertake. Attempts to accurately assess all the possible climate change impacts and to exhaustingly assign an economic value to alternative courses of action are bound to fail (Jamieson, 2010). That being the case, the policy-relevance of standard economic analysis as the sole knowledge-base for environmental decision making is limited.

In case of economics, the shift in approaches to rationality can be seen in debates about reflexivity in economics, bounded rationality, or performativity of economic models, to name a few topics. But for the most part, ethical- and value-neutrality continue to feature much of economic research, such as in standard normative theories of decision making under uncertainty and risk. The burgeoning of economics as a separate discipline, accompanied by distancing from philosophy, build up strong methodological foundations to prevent any extra-scientific elements to interfere in its analysis (cf. Hausman, 1992).

The classic conceptualisation of uncertainty and risk in economics is very specific and differs from the above-mentioned, sociologically incrusted understanding. Following the paradigmatic distinction formulated by Knight (1921), uncertainty refers to situations of radical uncertainty that cannot be expressed as sets of probabilities, whereas risk is related to situations in which actions do not lead with certitude to specific outcomes, but the alternative outcomes and their probabilities can be discerned. 

The categories of uncertainty and risk, as considered here, lend themselves to complexity of many policy issues, and are associated with the transformation of postmodern societies due to technology, consequences of globalisation, and environmental crises that follow (Beck, 1992; Giddens, 1990). These circumstances, “external” to standard methodological practices, motivate the extension of scientific rationality criteria and rethinking the role of science by researchers themselves. An example of this transformative process is the so-called advocacy science for environmental justice. It represents a socially engaged, multidisciplinary research approach that emerged in response to environmental toxicity movements, and developed an alternative epidemiological paradigm based on participatory research methods (see, e.g., Ottinger & Cohen, 2011).

With regard to the interface between science, policy, and society and the extra-scientific aspects of uncertainty and risk, one can note that the assessment and acceptance of risk are not purely a matter of data analysis or applying the “right” indicators. The perception and interpretation of uncertainty and risk are influenced by a mixture of social, political, and scientific processes that interact with each other. Consider the relationship between environmental pollution and risk. While pollution appears to be solely as a matter of scientific measures, the question of what is an acceptable level of pollution and its risk for a given society, and whether there are cases of unacceptable risks, involves our pre-conceptions and assumptions about what constitutes a good quality of life, wellbeing, and sustainable development (cf. Evernden, 1999).

Why would an individual economist care about the science-policy interface, or about considering extra-scientific elements of her research practice? There are several reasons to seriously reflect on this question. For one thing, transparency about the value content of specific research programs may translate into more careful and accountable approach to complex problems of public policy and the remedying capacity of science and technological progress. Furthermore, Söderbaum (2000) argues that economics should be more properly approached as political economics to make clear the fact that each scientist, as the discipline itself, has an ideological orientation (in the sense of means-ends philosophy) that plays out in the problem-framing, and reflects on the performative features of economic expertise. To the latter point, the analyst’s conclusion that reduces the extra-monetary aspects of a given problem to monetary ones is not without policy consequences; it suggests certain framings and solution-imageries to economic agents and decision makers. Besides, academia itself is not free of subjective interests and rent seeking. But—I haste to add—this does not undermine the value of scientific expertise per se. Neither does it suggest that citizens and policy makers are passive or unreflective recipients of scientific knowledge. It rather suggests a double-edge approach to science that recognises the subjective, cultural, and societal components in scientific practices on the one hand, and the aspiration of scientific community to reach objectivity (understood broadly as a normative objective) on the other hand. Although scientific practices are saturated with theoretical pre-conceptions and cultural perspectives, it does not immediately follow that science has nothing to do with truth and objectivity (a subject that deserves a separate discussion). 

The double-edge approach to science calls for more explicit discussions about the social consequences of science and scientific literacy in society:

  • Concerns about the role of science and scientific expertise in society may facilitate disciplinary reflexivity. It may also feed into methodological approaches. In case of economics, instead of focusing only on expanding the standard framework of economic analysis onto new subjects, concerns about the social consequences of science create a platform for a more direct consideration of methodological alternatives. Especially for contexts in which standard economic tools of analysis display some limits (e.g., cost-benefit analysis in sustainable development planning), alternative approaches that directly accommodate non-monetary impacts and justice concerns are needed (Brown et al., 2017). 
  • According to a political scientist Frank Fischer, in face of technical and social complexity that characterises most of policy issues, citizens and politicians need to display a good level of competence (2009, 1). In this context, an urgent question arises: how to democratise science on the one hand, and how to prevent populism and the spread of fake facts to take the provenience of science (as a source of information about the world) on the other hand? While the aspiration of science to be the absolute truth holder has been widely challenged, it does not immediately follow that there is nothing to scientific knowledge that would make it somehow different from other forms of knowledge. No differentiation at all can give way to anti-science of dangerous kind, in which “facts” are matters of preferences or interests. A caveat here is in order: such differentiation does not imply that scientific knowledge is inherently better than any other form of knowledge.

Certainly there are many challenges to balancing the double-edge approach to science both within and outside of the scientific community, as there are multiple philosophical framings of the role and status of scientific expertise in society. To be continued!

References

Beck, U. (1992). Risk Society: Towards a New Modernity. London: Sage.

Brown, J. Söderbaum, P. & Dereniowska, M. (2017). Positional Analysis for Sustainable Development: Reconsidering Policy, Economics and Accounting. London: Routledge. 

Evernden, N. (1992). The Social Creation of Nature. Baltimore and London: The John Hopkins University Press.

Hasuman, D. M. (1992). The Inexact and Separate Science of Economics. New York: Cambridge University Press.

Fischer, Frank (2009). Democracy & Expertise. Reorienting Policy Inquiry. Oxford: Oxford University Press.

Funtowicz, S. O. & Ravetz, J. R. (1994). Uncertainty, Complexity and Post-normal Science. Environmental Toxicology and Chemistry 13(2), 1881-1885. 

Jamieson, D. (2010). Ethics, Public Policy, and Global Warming. In S. M. Gardiner, S. Caney, D. Jamieson & Henry Shoue (Eds), Climate Ethics. Essential Readings (pp. 77-86). Oxford: Oxford University Press.

Kiepas, A. (2006). Ethics as the Eco-development Factor in Science and Technology. Problems of Eco-development 1(2), 77–86.

Kitcher, P. (2001). Science, Truth, and Democracy. Oxford University Press, Oxford, New York. 

Knight, F. H. (1921). Risk, Uncertainty and Profit. Chicago: University of Chicago Press.

Ottinger, G. & Cohen, B. R. (Eds). (2011). Technoscience and Environmental Justice. Expert Cultures in Grassroots Movement. Cambridge: the MIT Press.

Pullin, A. S. (2002). Conservation Biology. Cambridge & New York; Cambridge University Press. 

Söderbaum, P. (2000). Ecological Economics. A Political Economics Approach to Environment and Development. London: Earthscan/Routledge.

Weber, M. (1968). Economy and Society. New York: Bedminster Press.

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My paper is a survey of the huge amount of solid empirical evidence against the utility maximization hypothesis that is at the core of all microeconomics currently being taught today in Economics textbooks at universities all over the world. It is obviously important, because if what it says is true, the entire field of microeconomics needs to be re-constructed from scratch. Nonetheless, it was summarily rejected by a large number of top journals, before being eventually published by Jack Reardon as: ” The Empirical Evidence Against Neoclassical Utility Theory: A Review of the Literature,”  in International Journal of Pluralism and Economics Education, Vol. 3, No. 4, 2012, pp. 366-414.   Speaking metaphorically, my paper documents the solid evidence that the earth is a round sphere in world where educational institutions teach the widely held belief that the earth is flat. Readers of RWER blog will recall that when challenged on the failure of macroeconomics after the Global Financial Crisis, economists retreated to the position that while macro theory may be in a bad shape, at least Microeconomics is solidly grounded. My paper blows this claim out of the water. As a result, nothing is left of Micro and Micro, and of economics as whole. This supports my earlier claim that a Radical Paradigm Shift is required to make progress — patching up existing theories cannot work.

None of the several leading journals that I sent the paper to made any comments about any mistakes in my arguments. There were two main reasons which were stated for rejections. One was that the paper was “not appropriate” for the journal. This seems ridiculous; how can a paper which challenges the foundations of the subject be “inappropriate” (however, an explanation will be provided later). Two was that the results of the paper were well-known. I also sent the paper for comments to many leading economists. Kenneth Arrow, who was once a teacher of mine at Stanford, responded as follows “Thank you for the very complete and well-argued critique of the utility-maximization theory. Of course, the remaining question is, what should take the place of that theory?”.  This is just to document that the paper itself provides solid and irrefutable evidence against modern microeconomic theory. Given that the vast majority of economists continue to teach microeconomics based on utility maximization, and that this theory is widely believed by students of economics throughout the world, it would seem of great importance to document the empirical evidence against it and use it as a springboard for developing alternative theories, more consistent with empirical observations of human behavior. However, none of the mainstream journals displayed any interest in publishing this paper.

This leads to a puzzle, which requires some thought. As famous theoretical physicist Richard Feynman put it: “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.”  The experimental result — corresponding to the empirical evidence — is all important in physics, which is why there has been tremendous progress in physics. On the other hand, the economists display no interest in empirical evidence at all. This indifference of economists to empirical evidence which contradicts their theories has been noted by many; see previous post on “Quotes Critical of Economics” for the full quote briefly cited here:

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The methodology and ideology of modern economics are built into the frameworks of educational methods, and absorbed by students without any explicit discussion. In particular, the logical positivist philosophy is a deadly poison which I ingested during my Ph.D. training at the Economics Dept in Stanford in the late 1970s. It took me years and years to undo these effects. Positivism uses clever arguments to make you deny what you feel in your bones to be true, and make you believe what your heart says must be false — for example our supposed knowledge of subjective probabilities of unknown events. The roots of the problem go back to the famous Cartesian argument that “I think therefore I am”. Although it is clever piece of logic, it has a deadly effect. I know that I am alive because I can feel the blood flowing in my veins, the tingling of my skin, and a thousand other bodily sensations. “I feel therefore I am”. Denying this experience as a valid source of knowledge reduces me to a brain floating in a vat, which is exactly what logical positivism entails. In fact, despite Descartes, it is impossible to REASON our way to certainty. We can only create an illusion of certainty. Descartes’ argument is deeply flawed, and illustrates the weakness of human reason. When we formulate the concept of “I”, isn’t existence automatically part of this? Did I not exist when I was a baby, and was unable to formulate these thoughts? Do I blink out of existence when I go to sleep? This and many other difficulties make this argument incoherent. Modern economics is much like this. It starts by making assumptions which are dramatically in conflict with everything we know about human behavior (and firm behavior) and applies mathematical reasoning to situations where it cannot be applied, quantifying the unquantifiable and coming to completely absurd and ridiculous conclusions. NONETHELESS, speaking from personal experience, the brainwashing is powerful and effective. It is a slow and painful process to undo. I have often thought about launching a “Positivists Anonymous” club, to help others attempting the same transition, of unlearning positivism. For those who want a little help, I recommend my article on Logical Positivism and Islamic Economics. This provides a detailed analysis of the flaws of positivism, and also why, despite these flaws, it came to be widely accepted.

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Something for PhD Students and early-career researchers thirsty of pluralistic education:

 

CALL FOR APPLICATIONS

Poznań Summer School in Heterodox Economics

3rd edition

12.09.2018-16.09.2018

Poznań University of Economics and Business

 

The School is intended for PhD Students and early-career researchers interested in heterodox approaches to studying complex economic phenomena. We provide an international learning environment for those interested in deepening their knowledge in heterodox economics or considering applying it to their own research area. Over five days, participants will have an opportunity of attending lectures, presenting their findings and ideas, as well as discussing them with highly competent faculty. They will also take part in workshops and seminars that will improve their analytical skills.

 

Confirmed speakers:

– MACIEJ GRODZICKI (Jagiellonian University, PL),

– PAOLO RAMAZZOTTI (University of Macerata, IT),

– LOUIS-PHILIPPE ROCHON (Laurentian University, CA),

– MARC LAVOIE (University of Ottawa, CA, University of Paris 13, FR),

– HANNA SZYMBORSKA (The Open University, UK)

– ANNA ZACHOROWSKA-MAZURKIEWICZ (Jagiellonian University, PL).

 

The School is organized by the Poznań University of Economics and Business in cooperation with Wydawnictwo Ekonomiczne “Heterodox”.

The event is supported by the European Association for Evolutionary Political Economy, the Review of Political Economy and the Forum for Social Economics.

 

For more information, please contact the Organizing Committee through email: heterodox.school@projekty.ue.poznan.pl or facebook.

Ongoing Recruitment – please send us an email to check if places are still available.

 

Please send your application to: heterodox.school@projekty.ue.poznan.pl

School fee: 120 euro/500 zł

Fees include lunches and coffee breaks. Budget accommodation can be provided by organizers upon request.

Deadline for payment: 15 August 2018.

 

The Organizing Committe:

Krzysztof Czarnecki (Poznań University of Economics and Business),

Marcin Czachor (Wydawnictwo Ekonomiczne „Heterodox” – Publishing House „Heterodox”),

Anna Piekarska (Praktyka Teoretyczna; Wydawnictwo Ekonomiczne „Heterodox” – Publishing House „Heterodox”)

Agnieszka Ziomek (Poznań University of Economics and Business).

Whereas conventional economics takes the nature of man as fixed and exogenous, Islamic teachings consider humans to simultaneously possess the potential for being better than angels and also for being worse than animals. Given this dual nature of man, the focus of Islamic teachings is to invite towards the good, and to discourage and prevent the evil. The focus is to try to transform human beings so that they become kind, compassionate, cooperative and generous, instead of acting on their base instincts of greed and competition. For more details in this connection, see Spirituality and Development.

The following ABSTRACT of proposed paper submitted for consideration for the 12th ICIEF at Ummul-Qura University, 10-11 Feb 2019, Mecca, Saudi Arabia outlines a methodology for working on transformation of human beings towards the good.

ABSTRACT:

All social sciences consist of three distinct dimensions. The first is a positive description of human realities. The second is a normative description of an ideal state of affairs. The third is a prescription of what needs to be done to transform the current state to the ideal state. Conventional economics describes humans as being homo economicus, motivated solely by the desire to maximize pleasures obtained by consumption (of goods and services). The ideal state of affairs is for all people to be able to satisfy all desires, but this is not possible due to scarcity. The transformative strategy is economic growth – we increase the amount of production in order to be able to remove scarcity and achieve plenitude. The pursuit of economic growth at all costs, prescribed by conventional economic theory, has caused massive economic injustice, and put the future of mankind in peril, by destroying planetary resources and human communities in the mad rush for growth.

Islam differs from conventional economics in all three dimensions. The description of human beings is substantially more complex, and closer to realities of human behavior. Humans have a wide variety of different goals, and they have conflicting desires and motivations. The human heart is a battleground between the forces of good and evil. The human being has been give the capabilities for excellence in both directions, for the greatest good as well as the greatest evil. The ideal state to strive for has been described theoretically in the Quran and Hadeeth, and the perfect model for behavior has been sent to us in the form of our Prophet Mohammad SAW. The strategy for transformation of human beings is Tazkiya, or purification of the heart from idle desires.
Conventional economic theory takes the nature and desires of man as exogenously given, and works on producing goods to satisfy all desires. Islam works on changing the hearts of men to purify them of the greed and competition for worldly goods, and replace these by the higher norms of cooperation and generosity. True richness is the contentment of the heart, which comes from abundance thinking, rather than worrying about scarcity. The Prophet Mohammad SAW created a revolution in history, transforming ignorant and backwards Arabs to become leaders of the world, and to launch a civilization which enlightened the world for a thousand years. Today, the central strategy of an Islamic approach to economics must similarly be to work on the hearts of men, instead of on the production of wealth.

OUTLINE of Proposed Paper:

Conventional Economics is wrong in all three dimensions.

As a DESCRIPTION of human behavior, homo economicus fails miserably.  As behavioral economists have discovered, actual human behavior is dramatically different from the predictions made by economists — see “Behavioral Versus Neoclassical Economics” or “Homo Economicus: Cold, Calculating, and Callous” for the contrast between reality and economic theory.

As a normative theory, the idea that everyone should seek to maximize the pleasure obtained from a lifetime of consumption is dramatically flawed. Seeking material comforts only brings short-term pleasure, but does not lead to long term happiness. See my earlier post on The Coca-Cola Theory of Happiness — even though a drink of coca cola may bring a lot of pleasure to a hot and thirsty man, keeping the referigator stocked with cold drinks will not bring him a lifetime of happiness. Deeper study shows that long term welfare and happiness is strongly dependent on cultivation of gratitude, compassion, and other characteristics and qualities encouraged by Islamic teachings.

As a transformative theory, the idea that growth will remove scarcity is exceedingly foolish. As we fulfill desires, they increase. Furthermore, people seek to have higher standards than their neighbors, in order to feel happy. This creates a rat race where everybody spends huge amounts of time and effort trying to achieve higher standards of living, but nobody feels happier as a result — the Easterlin Paradox: Can Money Buy Happiness?.  Islam teaches us if we give someone a valley full of gold, he will desire another one. Nothing will fill the belly of man except the dust of the grave. Islam offers the solution that we should NOT fulfill our idle desires, and control our Nafs. Instead, we should learn contentment of the heart, which is the true wealth.

Islamic Economics Offers a Superior Alternative in All Three Dimensions

As a descriptive theory, Islam provides us with a rich description of the complexities of human behavior. The human heart is a battleground between good and evil, and the human being has the capacity to be higher than the angles and also the capacity to be worse than the beasts. This matches with experimental evidence and also with our personal observations — human beings display cooperation and generosity, along with the selfishness and greed assumed by economics. Islam provides a far more accurate match to the observations of behavioral and experimental economics, giving us a better descriptive theory.

As a normative theory, Islam is far superior to conventional economics. Economics suggest that the sole purpose of life is maximization of pleasure obtained from the utiltiy of consumption. Islam teaches us that this pursuit of material goods and worldly pleasure is attractive to the hearts of men, but this is an illusion. Real satisfaction comes from higher pursuits, and cultivation of character traits like gratitude towards Allah for His countless gifts and blessings. The path to everlasting pleasure, both in this world and the next involves learning Tawakkul or Trust in God, cultivating Contentment, and learning Taqwa.

As a transformative theory, Islamics demonstrated their power by catapulting the backwards and ignorant Arabs to world leadership positions, and by launching a civilization that educated the world for a thousand years. These teachings still retain their power to change our hearts and to change the world — see Our Prophet SAW as a Guide for Revolutionary Change or Modern Miracles of Mohammad SAW. Unfortunately, as prophesied, Islam has become a stranger to the Muslims. Today the Muslims no longer believe in the power of Islam to create a revolution — instead, they think that we must rely on Western teachings in order to make progress. For a more detailed explanation, see The Modern Mu’tazila

To conclude — in all three dimensions, modern economics is seriously wrong, while in all three dimensions, Islamic economics provides a dramatically superior alternative. Sad to say, Muslims have been so impressed with the West that they have accepted Western economic theory as superior. Whenever they saw a conflict between Western economics and the Quran, they re-interpreted the Quran instead of rejecting the Western theories. As a result, they have been trying to create an Islamic economic based on Western foundational principles of scarcity, greed, and competition — see “The Crisis in Islamic Economics“. What we need to do instead is to build directly on Islamic foundations based on the abundance of the provision by Allah leading to generosity and cooperation. For further explanations, see The Spiritual Obstacle to Genuine Islamic Economics, and Questioning All of Economic Theory?

This post provides a summary of my first lecture, and links to the entire course of 30 lecture, on an Islamic Approach to Microeconomics. The first half of the course is based on Hill and Myatt Anti-Textbook of Micro. Teachers who wish to develop alternatives to conventional courses should find this material useful.

An Islamic WorldView

In Fall 2017, I taught the standard Ph.D. first semester course on Micro-Economics using an Islamic Approach. The first lecture, summarized below, explains why an Islamic approach makes a huge difference to the study of Micro. The whole set of 30 lectures for the entire course, together with slides, references, notes, and supporting materials (link: Advanced Microeconomics)    is freely available for ANY teacher who would like use and adopt this approach for their own courses in Microeconomics. I would be happy to provide any necessary support to teachers would like to try this novel experiment. I can promise that the students will very much enjoy this approach, because it speaks directly to the heart, and can easily be understood — in contrast to conventional micro, which just involves memorizing math, and learning things about human behavior which are patently false. [shortlink: bit.do/aziam]

90min English Video-Lecture on YouTube. 2500…

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Core (the acronym for Curriculum Open Access Resources in Economics) is a project led by professor Wendy Carlin from UCL, UK, that aims to improve the content and delivery of the economics curriculum around the world. Other remarkable economists have been and are part of this project such as Diane Coyle and Samuel Bowles.

According to the website of the project, www.core-econ.org CORE is:

“a) a global community of learners, teachers and researchers;

  1. b) a problem- motivated and interactive way to learn economics;
  2. c) bringing recent developments into the classroom;
  3. d) giving everyone the tools to understand the economics of the world around   them”.

As Mearman et al (2016: 5) explain: “CORE is a large undergraduate year one course called ‘The Economy’, which itself comprises nineteen modules on a range of topics. CORE is neither a Massive Online Course (MOOC) nor a course in the traditional sense, but an online resource, a frame to be elaborated”. According to the same authors, CORE represents both an ‘improvement’ and a ‘missed opportunity’. On the one hand, CORE employs historical and experimental data and draws on the history of economics or new branches of economics such as theory of games, covering thus a variety of topics. On the other hand, the course is rife with concepts and elements unsupported by evidence, such as utility maximization that constitute fundamental components of CORE (Mearman et al 2016).

The reactions to CORE, both from the media and the academic world, have been mixed. Whilst Birdi (2014) claims that CORE represents a transformation of economics, others consider the shift brought by CORE as insufficient and inadequate (e.g. Post Crash Economics Society (PCES) 2014; Morgan 2014; Mearman et al 2016). The extensive use of data to explain economic phenomena is recognized by Giugliano in Financial Times (2015) (https://www.ft.com/content/fc2eb464-d93d-11e4-b907-00144feab7de), who also acknowledges voices that echo the lack of radicalism in the CORE project (e.g. Rethinking Economics). John Cassidy (2017) in the New Yorker states: “The CORE approach isn’t particularly radical (students looking for expositions of Marxian economics or Modern Monetary Theory will have to look elsewhere)”.

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