Tag Archives: epistemology


That economics is a value-laden science is not a new idea. Most of the prominent economic thinkers were also philosophers, wary of moral and philosophical content of scientific assumptions, models, and theories. That economics needs philosophy, and the separation between these two cannot be maintained any longer, is gaining recognition, and has become a subject of debates in the field of philosophy of economics that brings together (to various extends) philosophers, mainstream, and heterodox economists. For example, Daniel Hausman (1992) discusses that at an analytic level economists do successfully separate the philosophical and ethical content from economic analysis, albeit this separation is possible only at the analytic level. Karl Polanyi (1957), in his discussion on the entanglement of economic activities in the social totality, gives insights from a different perspective how considering the subject of economic study in social vacuum can in fact lead to thinking that scientific practice indeed has disentangled from society.

Today economists of both mainstream (e.g., Jean Tirole) and heterodox approaches more readily admit: economics is a moral and philosophical science. Yet the meaning and scope of the normative components of economics, the epistemic consequences of the social embeddedness of science, and the social consequences of economics are raising so far inconclusive debates. These issues constitute two-tiered dimensions of scientific rationality: external and internal ones. While the criteria of internal rationality (which constitute the standard approach to scientific rationality) refer to disciplinary epistemology and methodology, the criteria of external rationality involve the axiological, ethical, and societal elements of the process of knowledge production and the social consequences of science.

Interestingly, as Gustav Márquez (2016) points out, even in the field of philosophy of economics, the discussions are often focused on the elements of what I call here internal rationality. Márquez argues that the predominant focus on these issues characterize the mainstream philosophy of economics, while the more normatively-laden issues, such as a broader theoretical reorientation towards more responsive and socially engaged approaches (which I considered as aspects related to the external scientific rationality), are not so much a part of the dominant concerns and discourse.

Why would an external rationality matter? What is the meaning of the social consequences of economics as a science? And how the acknowledgment of the value-laden component of scientific practices plays out in research practices of the scientific community, and of an individual researcher? These questions are not easy to answer, as they involve several complex issues, such as what is the meaning of scientific truth, scientific objectivity, how to account for the normative components of science, or what are the grounds for our confidence in scientific methods and analysis—to name a few. While each of these questions opens a Pandora box by itself, my goal is to simply open up some of the ways these profound issues can be approached for a discussion. My guiding thought is that one of the elements that drastically shapes our take on these questions pertains to the context in which science and the process of knowledge production is considered.

My specific focus will be on the role of science in society and for policy making. In my next entries of the WEA Pedagogy Blog, I am going to consider several issues, problems, and controversies raised at the intersection of economics, society, and policy, with an eye towards their educational and pedagogical challenges. My objective is to problematize, hopefully for a broader discussion with the readers, the fact that the specific philosophical commitments (e.g. ontological and epistemological assumptions about the role of science, function of knowledge, scientific truth, etc.) bear impact on how the epistemic consequences of the value-ladedness of economics are framed, and on the acknowledgment and role assigned to the extra-scientific components of research practices.


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

Márquez, Gustavo. 2016. A Philosophical Framework for Rethinking Theoretical Economics and Philosophy of Economics. London: College Publications.

Polanyi, Karl, [1944] 1957. The Great Transformation. Boston: Beacon Press.


Friday, 26th Jan 2017: Lecture by Dr. Asad Zaman, VC PIDE to students at University of Cambridge, Center of Development Studies for Religion & Development paper. 40 minute video recording of lecture on you-tube. For related posts, see: An Islamic Approach to Humanities.

Part 1: “What Is Spirituality?”:  Modern Secular thought takes spirituality and religion to be diseases which affect weak minds not properly trained in the scientific method. Part I of this lecture explain why this view, which is based on positivist ideas, is seriously mistaken. OUTLINE of this lecture is given below

Separate Lecture Part 2:“What is Development” focusing on how spirituality affects how we think about development and how to achieve it.

  1. Standard Modern Answer
    1. Spirituality is a literary term, used to spice up poetry and novels.
    2. It is like Phlogiston, Unicorns, Ghosts, Souls, God
    3. It is one among many medieval beliefs, like flat Earth, which have been proven wrong.
  1. Why don’t we understand spirituality?
    1. Because we have been trained to think like Logical Positivists, EVEN though this philosophy has been proven wrong! Key wrong positivist beliefs:
    2. Unobservables do not matter for science
    3. Science explains the observable patterns. It may postulate things like atoms, gravity, but this is just for convenience. Existence of gravity is not part of scientific assertion.
    4. Kant: Thing-In-Itself is not knowable, not relevant for science. Wittgenstein: Wherof one cannot speak, thereof one must be silent. ALSO, The human body is best picture of the human soul (That is, observables matter, unobservables don’t)
    5. SCIENCE is the ONLY source of valid knowledge.

Read More


Max Weber wrote that “The fate of our times is characterized by rationalization and intellectualization, and, above all, by the ‘disenchantment of the world.’ Precisely the ultimate and most sublime values have retreated from public life …” The disenchantment of world leads to the modern view of the heart as merely a pump for circulation of blood.  The ancients had deeper understanding; as Pascal said “The heart has its reasons, which reason does not know. We feel it in a thousand things. It is the heart which experiences God, and not the reason. This, then, is faith: God felt by the heart, not by the reason.” Elevation of the head above the heart has led to a loss of wonder at the myriad mysteries of creation which surround us, and also caused deep damage to human lives in many dimensions. As our Poet Laureate Allama Iqbal emphasized: “At the dawn of Judgment, Gabriel told me, Never accept hearts which are enslaved by the mind.” Read More

In accordance with the pedagogical mission of this blog, and also in accordance with the desire to create a canonical heterodox text, which could serve as a focus point for a united opposition to orthodoxy, I am planning create a series of lessons, targeted at students with some minimal knowledge of conventional macro and micro. The first lession is given below:


This textbook takes a historical approach to macroeconomics. We will first teach the CLASSICAL ECONOMIC THEORY (CET), dominant before Keynesian economics. Then we will explain the events that created doubts about this theory. Then we will see how Keynes developed a new theory to explain these events. Then we will discuss further developments on this story, about how Keynesian economics was attacked, and something more or less equivalent to CET re-enthroned as the dominant economic paradigm. At all times, the economic theory will be related to actual historical events which were taking place, so that the relation between theory and practice becomes clear. Although we will try to provide the most elementary treatment possible, some familiarity with basic economic concepts will be very useful in following this textbook.

We will start by discussing one of the most basic laws of economics — price determination via equilibrium in supply and demand. This law tells us how prices are determined. As we will see later, this law is false. The student might ask: Why should we study this law, if it is false? To understand the behavior of the economic system, it is essential to understand how human beings react to the events around them. The theory of price as being determined by equilibrium between supply and demand is widely believed. Economists, policy makers, and others use this theory to understand what is happening in the world, and then take actions in accordance with this understanding. To understand how people who believe in these false theories behave, we must understand what these theories are. We will also try to understand how it happened that this false theory came to be widely believed.

The MAIN POINT here is that human beings take actions according to the theories that they believe in. To understand human behavior, we must understand the theories that guide this behavior. Whether the theory is true or false does not matter for this purpose. It is very important to note that in assigning this role to theories, we have already deviated drastically from the conventional methodology of economics. According to the conventional methodology embodied in CET, human beings act to maximize a utility function, regardless of what theories they believe in. Thus, according to conventional methodology, economic theories actually describe human behavior. We are operating at a meta-theoretical level; we consider economic theories as beliefs of some human beings, which guide their behavior. In terms of the framework that we are using here, we can describe conventional economic theory as follows [some of the terms are not defined precisely, because the precise specification does not matter for present purposes.]

Fundamental Axiom of CET: All human beings believe that the goal of life is to maximize lifetime utility of consumption, and they act to try to achieve this goal.

We will refer to people who satisfy this axiom as homo economicus. According to CET, human beings are robots who behave according to the law prescribed by the fundamental axiom. In contrast, our framework gives human beings choice and agency. People chose their beliefs, and can change these beliefs. They are free to act, according to the choices they make about their belief-systems.  We replace the fundamental axiom of CET by the idea that different people may have different goals in life, and they act to try to achieve these goals. The Zen Buddhists believe that desires to have and to not have are the source of suffering, and so the goal of life is to achieve indifference to consuming or not consuming. Muslims believe that moderation in consumption is best; excess consumption is harmful and prohibited, while abstaining from enjoying the gifts of God is also not recommended. Obviously, people with different beliefs would act very differently from homo economicus. More generally, people act in the world according to their belief systems. Thus we study belief systems in order to understand how people act, and not in order to decide whether the belief systems are true or false. Classical Economic Theory (CET) is a particular specialized belief system about the world which has a powerful grip on minds of an extremely powerful and influential group of people. Furthermore, this belief system is widely propagated via textbooks in university, as well as other media, so that various aspects and implications of CET have come to be widely believed. Therefore, it is important to study this belief system, because without knowing it, we would be unable to understand a lot of events which are happening in the world around us.

Published as: Zaman, A (2016)  “Positivist Misconceptions: An Obstacle to Understanding Pluralism” International Journal of Pluralism in Economics Education, Vol 7, No. 1, pp 93-96.

More articles on Logical Positivism and its disastrous impact on economics & human knowledge.

At the heart of the problems we face in the world today is a disastrously wrong theory of knowledge. The vast number of errors within this theory of knowledge have been deeply imbibed by the populace, and have become part of the background assumptions under which we operate. These assumptions are not even open to examination and challenge, because they are buried underground as foundations for our thought structures. I would like to examine some of these misconceptions and explain why these create insurmountable obstacles in the path to our quest for the truth.

A Central Enlightenment Myth: Facts and Logic are sufficient to lead us to the truth.

As a corollary, our opinions do not matter. Human beings, their thoughts, anxieties, concerns, as well as personalities, are all irrelevant in the quest for truth. Subjective elements cannot and should not be part of scientific theories. Also, science, scientific knowledge is all there is – genuine knowledge is impossible outside the realm of what is objective. In opposition to this idea, I would like to put forth the following:

The facts by themselves are never enough to lead to the truth.

Just one among many reasons for this is because causality is not observable, and causality is an essential component of the truth we are seeking. Given a sequence of events – for instance a revolution – we can only guess at causes, because there are multiple factors all of which happened simultaneously, and we cannot isolate the cause or causes from irrelevant observable factors. At the same time, understanding of reality requires isolation of the cause.

Many different ways of analysis all lead to the same conclusion. To learn about causality requires an analysis of “what might have been” – what would have occurred if a particular factor had been changed. This is unobservable by definition. According to standard positivist theories of meaning, such analyses are meaningless, because all references to unobservables are inherently meaningless. Note that this conflicts violently with our intuition that is it perfectly meaningful to contemplate what might have happened if Napoleon had won at Waterloo, and there can be sensible analyses as well as wrong analyses about this hypothetical unobservable. It is this type of analysis about unobservables that leads us to clues about causality, which always remain intelligent guesses, and can never be translated into certainties. Read More

My recent post on RWER Blog asks if there is a “CORE of heterodox economics” which we can all believe in? From the responses to my previous post on whether or not there was a core set of heterodox beliefs, it became clear to me that I have started in the wrong place. Before starting the task of constructing an alternative paradigm, we must clear away the debris of the ruins of the conventional paradigm. Frederic Lee & Steve Keen remarked in the introduction to their article on the “The incoherent emperor: a heterodox critique of neoclassical microeconomic theory” that heterodox economists often come to the defense of conventional economics, because they are ignorant of the vast range of devastating critiques against these theories. To create a revolution, we must change from lukewarm heterodoxy (a partial rejection combined with a partial acceptance of the errors of conventional theories) to a genuinely radical approach requiring a complete rejection. When the errors of the conventional approach become as obvious as the error in “2+2=5”. we will not waste time coming up with new proofs that this is a fallacious calculation.

I would like to put forth a few propositions which provide a clear demonstration of the errors of conventional economic theory. I am hoping that disagreements about these central propositions can be cleared away by discussion, so that we can create consensus about complete rejection of conventional economic theories. After this step is completed, we could move forward to thinking about how to construct alternative foundations.

Propositions: Methodological Mistakes

  1. Logical Positivism is a theory of knowledge. It describes scientific knowledge as being based on observations (facts) and logic. It also excludes huge chunks of human experiential knowledge (such as morality) from the domain of knowledge. As one its early and enthusiastic proponents A J Ayer put it, moral statements are as meaningless as a cry of pain.
  2. In the early twentieth century, foundations of economic theory were revised to put them in line with the ideas of logical positivists about science, in an effort to make economics a “science”. Cooter and Rappoport showed how Lionel Robbins’ definition of scarcity, in line with positivist ideas, drove out earlier definitions of economics based on “material welfare”.
  3. Logical Positivism had a spectacular crash. Even its most enthusiastic exponents admitted to having been wrong. HOWEVER, the foundations of economics (and econometrics) were never revisited. Thus the foundations continue to be based on ideas which have been proven wrong. In my paper Methodological Mistakes and Econometric Consequences, I have shown how positivist foundations for econometrics have led to a seriously defective methodology currently in use.
  4. In my paper on The Normative Foundations of Scarcity, I have explicitly shown that apparently objective concept of “scarcity” conceals within it at least three normative principles. Thus, contrary to a central claim of conventional economic theory, it is a normative theory, and not a positive one.

The above critique is deep and philosophical. There are more obvious and direct approaches to a complete rejection.

Proposition: Empirical Failures of Conventional Economics

  1. Economic theory of consumer behavior is completely wrong as a descriptive theory. The massive amount of evidence is gathered in my paper: Empirical Evidence Against Utility Theory: A Survey of the Literature.
  2. Economic theory of the firm is completely wrong as a description of firm behavior. A massive amount of evidence is gathered in “Debunking the Theory of the Firm” by Steve Keen and Russell Standish
  3. The economic theory of price determination via equilibrium between supply and demand is completely wrong. I have provided a simple example and explanation of its failure in my paper on “Conflict Between General Equilibrium and the Marshallian Cross”. This shows that partial equilibrium supply and demand analysis in one market is in conflict with general equilibrium results, so both cannot be right. Steve Keen and Russell Standish, and perhaps others as well, have gone much further, and provided an alternative theory of price determination.
  4. Once we see that consumer theory, producer theory, and equilibrium theory of price determination are all clearly and obviously wrong, does there remain any further issue to discuss about errors of conventional economic theory? Why should we waste time discussing theories which take all three of these basic building blocks for granted and then construct more complex arguments?

In practice, I have found that to create the courage of conviction required to launch a revolution, it is not enough to just provide a logical argument, or an empirical demonstration, of the fallacies of conventional economic theories. It is so hard to believe that highly intelligent people, capable of mastering the complexities of technical mathematics required for general equilibrium, could go so seriously astray. Thus, in order to make plausible the idea that massive amounts of effort are being poured into completely fallacious theories, one must study the story of the rise and fall of logical positivism. This is the key to understanding why current economic theories are so seriously defective, and also how we can avoid making the same errors which led to this disaster. Instead of answers, I pose the following questions which we must learn the answers to, in order to understand HOW an intellectual tradition became corrupted by logical positivism.

  1. What is the theory of logical positivism? More importantly, why did it become so wildly popular? How is it that some of the most intelligent people in the twentieth century came to believe in its central propositions? It must be the case that the defect in logical positivism is a subtle one, to take in so many innocents into its trap.
  2. Interestingly, a recent survey by Hands, cited in my paper on Normative Foundations of Scarcity, shows that most economists continue to believe in some the key propositions of logical positivism, even though it has been thoroughly refuted by philosophers. Here is the key to the failure of heterodoxy: most heterodox economists also continue to believe in some key propositions of logical positivism. As a consequence, it is impossible for them to construct a sound alternative to conventional economic theories.
  3. FOR STARTERS: we must learn WHY the argument for revealed preference, which deceived Samuelson, is wrong. As per standard positivist ideas, preferences are internal to the heart and unobservable; hence they cannot be used in scientific theories. So Samuelson came up with the idea of using the observable Choices – unobservable preferences are revealed by observable choices. Instead of unscientific arguments about unobservable preferences, we can make scientific arguments about observable choices. Samuelson’s Nobel Prize cites his contributions in making economics a scientific subject. Yet the basic argument is wrong; one cannot eliminate the unobservable preference from economic theories. Understanding this error, which Samuelson failed to do, is the first knot to unravel, in order to clear our minds and hearts of the logical positivist illusions.





Traditional epistemological theories have fostered an endless debate on dichotomies characterized by forms of objectivism, on the one hand, and forms of relativism/skepticism on the other. Currently, among the deep global social and cultural challenges, the crisis in epistemology is characterized by a radical questioning of the whole matrix within which such dichotomies have been drawn.

Taking into account the evolution of  economic science, the need for a  profound epistemological change turns out to be founded on the lasting intellectual failings of economics over the XX century: positivism,  methodological individualism, deductivism and mathematical modelling.

Considering this background, the contribution of classical pragmatism could be settled within  the revision of the epistemological foundations of scientific knowledge. Indeed, Charles Sanders Peirce rejected the Cartesian foundationalist approaches to ontology and epistemology and foster the revision of the ontology of human behavior and nature. Besides,  a  deeper reflection on the ‘fixation of belief’ turned out to shape the epistemological framework defended by him. Indeed, his contribution to epistemology clearly favors a fallibilist standpoint compatible with realism.

In other words, classical pragmatism rejects the theorization of knowledge under some anthropocentric foundational model of rationality, complete order and truth. Indeed, classical pragmatism places the focus on the idea of change. Peirce also addressed that values, truth, and knowledge are always being reconstructed because of the changing surrounding reality. Under his approach, the most important thing in the process of knowledge is “how to question what we know and how to reconstruct what we know to match the changing world”.

We wonder whether  classical pragamatism could contribute to substantive epistemological insights in order to face the contemporary methodological challenges in economic discourse. Indeed, we need to think about:

  • an ontology that is rooted in actual human experience and overwhelmed by the concept of reality and change,
  • the role of logic and mathematics in scientific knowledge,
  • the coexistence of laws and change in an evolutionary approach to reality,
  • the links between uncertainty and epistemological fallibilism.

Since  the need to improve the current economics curriculum is outstanding, thi attempt would certainly be fruitful.