Skip to content

What economists think about knowledge

July 2, 2012

I don’t normally bother with other people’s blogposts when they’re so far removed from my own worldview that there’s limited benefit from any engagement. The blogosphere isn’t a marketplace of ideas — it’s an arena for pushing our own pet thoughts, and i’m not conceited enough to think that i’ll change many other people’s minds. But as it happened just as I was writing about economics and its view of knowledge a doctoral candidate at American University called Daniel Kuehn wrote a short piece about why economists shouldn’t do epistemology, which is the study of knowledge. He thinks it’s circular and therefore pointless because it is knowledge about knowledge.

How would one know if one’s got it? How can you even go about getting it if you don’t know what knowledge is in the first place? How would you know about the quality of your knowledge of knowledge? Epistemology is an awfully silly endeavor, if you think about it.

As the first commenter points out, lots of philosophers think about our relationship to knowledge: Plato, Descartes, Kant, Popper, whoever. The term epistemology originated in the early 19th century with a Scottish philosopher called James Frederick Ferrier.

Kuehn, however, thinks they were wasting their time. I wrote on his blog: “In economics it’s certainly acceptable to do epistemology — a non-circular definition might be “thinking about knowledge”. In fact I think that much more epistemological discussion should take place. Why? So much of what passes for economic knowledge has turned out to be questionable, largely as a result of the global economic crisis. Many economists are beginning to understand the difficulties with the knowledge that the mainstream of the discipline has produced (the prominent economists who’ve partially or fully recanted include Stiglitz, Krugman, DeLong, Wolf, Buiter, etc. etc.) It seems sensible to do things like thinking about how we achieved our knowledge and how to make the process of knowledge-generation better in future. This is part of healthy scientific endeavour. We should do much more methodology, too.”

Kuehn replies:

This is fine as far as it goes, but as I’ve noted to other people this sort of thing isn’t really getting into epistemology at all. This is economists thinking a little harder than they did before about methodology. And that’s fine. But there is no new foundational knowledge to ground our claims as true knowledge from any of this soul searching. Nobody in economics or any other science is ever in pursuit of this foundational truth. Nobody cares about that, and the absence of a foundational proposition or “basic belief” hasn’t seemed to do science all that much harm, and that’s my point. It’s not clear there is one. It’s not clear we could know it if there was one. It’s not clear we’d know we had it if there was one and we had it.

If we’re not grounding knowledge in these “basic beliefs” – if our talk is in this way untethered (and we’re not concerned with doing anything about it), then what this untethered talk really is is methodology. And that’s a fine thing to talk about.

The passage is worth quoting because his discussion is self-contradictory. It is epistemology. He’s talking about the possibility or otherwise of knowing about knowledge.

He seems to be under the mistaken impression that epistemology is conducted so as to establish more secure foundations of economic knowledge. That’s overcomplicating matters. It’s just a case of standing back and making observations about what knowledge is, how we can get it and how much can be known about a particular thing.

It’s also weird to suggest that: “Nobody in economics or any other science is ever in pursuit of this foundational truth.” Yes, they profoundly are. In philosophy there’s even a term known as foundationalism, which is the idea that the world is has an independent underlying character which has nothing to do with our conception of it. It holds that science is constructed on logic and sense experience.

Scientists, including many economists, of course routinely make statements about what the world is like, and they’re pretty confident — albeit maybe with a chink of provisionality — about their findings, not to mention their methods. Volcanoes erupt magma. Chlorophyll is a green pigment. Economists usually say things like all other things being equal, a higher price will lead to an increase in supply (although i’d say that sort of statement is much less certain than the other two). A typical view of macroeconomics comes at the beginning of my undergraduate textbook by Greg Mankiw: “Macroeconomists are the scientists who try to explain the workings of the macroeconomy as a whole… as you will see, we do know quite a lot about how the economy works.”

Kuehn’s view is only even worth bothering with because it’s typical of the way economists tend to think about their discipline, which is as a reasonably coherent system that has come close to a true assessment of what the world’s actually like and is gradually accruing new discoveries. They don’t seem to think there’s much need to think deeply about how to do economics or the way it conceives of its own forms of knowledge because they imagine things are broadly on the right track. This view probably originated in written form with Irving Fisher. Fisher’s view, endorsed by Bank of England governor Mervyn King, is that: “students of the social sciences, especially sociology and economics, have spent too much time in discussing what they call methodology.” More recently Frank Hahn said that economists should “give no thought at all to ‘methodology'” (before himself giving lots of thought to methodology). I remember a professor in my department, upon learning that I was studying economic methodology, suggesting that it wasn’t worthwhile and that methodologists should pay rather than be funded for the privilege of  studying their subject, since it’s just a luxury.

Kuehn is unusually open to methodology, which is unusual among economists, but he doesn’t seem to realise that epistemology and methodology are closely linked. You’re probably going to say things about knowledge if you are going to make statements about method.

It would be arrogant to preach to the many thousands of accomplished economists about what they should be doing. But as I mentioned above, profound questions arose preceding, during and after the global economic crisis about the things that economics professes to know about the economy and the way that it sets about achieving that knowledge. Few mainstream economists saw the crisis coming. Their ways of doing economics couldn’t even really cope with big snafus. Many of the big hitters have begun to rethink some of their most basic views, and new disciplines – behavioural, experimental, neuroeconomics, econophysics – have sprung into existence.

I’m not suggesting that economists should spend all their time in smoky cafes blethering about the nature of reality. They should get on with the job like most scientists do. But economics degrees should involve a bit of methodology or epistemology, unlike now. Economists might at least spend a fraction of their time — especially at the current juncture — reflecting on whether the discipline really is on the right track.

Maybe i’m being harsh on a student who’s yet to learn. But the problem is that many economists don’t learn. It’s awfully silly, if you think about it.

16 Comments leave one →
  1. dkuehn permalink
    July 2, 2012 8:27 pm

    re: “Kuehn’s view is only even worth bothering with because it’s typical of the way economists tend to think about their discipline, which is as a reasonably coherent system that has come close to a true assessment of what the world’s actually like and is gradually accruing new discoveries. They don’t seem to think there’s much need to think deeply about how to do economics or the way it conceives of its own forms of knowledge because they imagine things are broadly on the right track.”

    I can’t even guess why you write this. Of course I think that we need to think deeply about how to do economics, and I also think we need to think about the way it conceives its own forms of knowledge (and, it’s true, I think we are broadly on the right track).

    All those guys you list as doing this – Stiglitz, Krugman, DeLong – these are the guys that I chiefly identify with and defend.

    But this thing you describe isn’t epistemology. It’s just trying to present ideas more clearly and it’s thinking about methodology. Nobody is querying the nature of knowledge. Nobody is trying to establish basic beliefs or foundational knowledge the way that epistemologists try to approach thinking about knowledge.

    In other words, you’re taking a casual use of the term “knowledge” as in “my knowledge of the world includes the fact that the sky is blue”, and trying to use it in the same way that epistemology treats knowledge.

    • July 3, 2012 9:27 am

      I’d really only point to you to what I said earlier — that so many giants of philosophy did epistemology that it’s moot whether or not we should do it (and we are doing it, albeit in a shallow sense, merely by talking about the possibility of doing it). More specifically, it’s quite clear that different schools of thought have different ways of thinking about knowledge. The more mainstream neoclassical economists tend to imagine that the truth is out there and that economists are progressively uncovering it. Samuelson’s operationalism, a version of logical positivism, amounts to the idea of finding testable theorems with a view to refuting them, and in this it relates to Popperian falsificationism. Economic knowledge is like a substance which we gradually discover, and of which we can obtain true knowledge. Logical positivism is of course vulnerable to Bertrand Russell’s charge that it’s not a proposition that can be tested!

      Actually a great many people “query the nature of knowledge”. Philosophers of social science such as constructivists tend to think of reality as socially contingent — it depends on our relation to it. The way we conceptualise and talk about economic reality affects its actual nature. Kuhn, an epistemologist, doesn’t think it useful to talk of the gradual accretion of knowledge. He talks of incommensurate paradigms. Knowledge generated within a previous paradigm doesn’t make full sense from a new paradigm.

      Many post-Keynesianians also often tend to doubt the absolute foundations of economic knowledge and don’t think knowledge is necessarily ‘out there’, to be discovered like a new physical law can be discovered. In the long run we’re all dead. Critical realists (Tony Lawson et al.), who are often also Keynesians, tend to think that the underlying structures of knowledge have objective existence but that our ability to access it is limited.

      Hayek in his famous essay “The Use of Knowledge in Society” argued that individual knowledge was inherently tacit and that it could only be realised in the marketplace. A central planner can’t predict what consumers will want.

      These are mostly questions of the theory of knowledge, and i’d say they are fairly interesting and relevant, particularly at the current time when doubt hangs over the conventional economic project. In my view economics has been over-confident about its (often implicit) statements about what knowledge is, and a dose of modesty would do it good.

    • isomorphismes permalink
      July 7, 2012 11:18 am

      Dan, where do you get your definition of what epistemology is?

      • July 8, 2012 1:00 pm

        Philosophy generally! I quite like chaps like Kuhn, Feyarabend, Bourdieu, Lawson. I’d never look at a page like this 😉

      • isomorphismes permalink
        July 10, 2012 9:53 pm

        So the first paragraph of that says Epistemology is about the scope and limitations of knowledge, rather than “knowledge about knowledge”.

        How could knowing the scope and limitations of our models (or data) not be of paramount importance in economics?

        For example if the scope of a certain class of models is limited to describing societies with a particular culture or institutions, then the Washington Consensus is wrong.

      • isomorphismes permalink
        July 10, 2012 9:57 pm

        Oops, I confused Dan with Daniel. I think Daniel Kuhn’s “Philosophy sux & is dumb!” (quoth Hawking) is wrong but Dan=Emergent Economics, is right.

  2. July 7, 2012 10:09 am

    “It would be arrogant to preach to the many thousands of accomplished economists about what they should be doing.”

    • July 7, 2012 10:10 am

      Whoops. That should be follow by:

      *looks around sheepishly*

      • isomorphismes permalink
        July 7, 2012 11:32 am


      • isomorphismes permalink
        July 7, 2012 11:33 am

        Of course, we should reject the suggestion that “the financial crisis proved economists wrong”. Read Nash or Aumann decades earlier. Every or at least many top economists said the field was in a sorry state long before 1998.

        Anyway I’m not sure the “Econ failed because 2008-present” is even a valid critique, since most economists don’t concern themselves with banking or finance, let alone MBS.

        A quip from I forget where: “Economics is the science where the questions never change, only the answers” (some Harvard economist)

      • July 8, 2012 1:01 pm
      • July 8, 2012 1:02 pm

        Unlearningecon: yeah, me too 🙂

      • isomorphismes permalink
        July 10, 2012 9:58 pm

        s/Aumann/Rubinstein/. Another error on my part

  3. isomorphismes permalink
    July 7, 2012 11:16 am

    You are right.

  4. July 8, 2012 1:22 pm

    Iso, I think ‘modern macro simply cannot model the crisis we’ve experienced adequately’ is a valid criticism.

    • isomorphismes permalink
      July 10, 2012 10:02 pm

      It depends what you mean by “valid”. It may be correct (define “modern macro”) but I don’t think it’s the right criticism to make. In terms of “What needs to be improved”

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