“The economics profession took this legacy and produced their own sundry hybrids — it comes out in a variety of forms that are not “true blue” positivism in a pure Mach / Carnap form, but the legacy is still there, and is still at the “hard core” of economic “science”. I see it every day.”

That is a very interesting claim. I usually hear the opposite – that economist didn’t include enough positivism and relies too much on “introversion” and “internal deduction”.

“Hayek is an empiricist (but not a naive Millian or econometric “empiricist”) who argues in favor of causal explanation — identifying the most important causal element in entrepreneurial learning”

The important question then is – where did the causal explanations come from – are they from empirical “facts” or are they from introspective theorising.

I am not saying either side is better – and in reality both complement ideas. But I don’t see this as any criticism of current economic research – you simply seem to be saying the Hayek did what academic economists actually do now …

“I reject the idea that the aim of economics is to explain behavior — as did Hayek.”

“Hayek invented the building blocks of modern neuroscience as part of the effort to explain human behavior (see Joaquin Fuster).”

The entire comment seems to contradict itself here.

“The job of economics in Hayek’s view (and my own) is to explain patterns of order (and disorder) in social phenomena of the overall market.”

Agreed – that is indeed the role. And understanding behaviour is an important part of doing this – otherwise you are just hand waving.

Hi Greg,

Once again it is Matt not Mark,

Also – I realise that the demand for testing to happen eventually is Popperian. But as I said, that is my ultimate goal – I want to test what can be tested.

In the social sciences some things can’t be tested yet – so we are forced to use inferior forms of inference.

I wouldn’t call this sort of thinking “antiquated philosophy” unless you have an agreeable alternative.

I’d argue that the legacy of Mach -> Schumpter -> Samuelson is still with us, as is the legacy of Popper & Mill & Carnap -> Friedman & Lipsey, etc.

The economics profession took this legacy and produced their own sundry hybrids — it comes out in a variety of forms that are not “true blue” positivism in a pure Mach / Carnap form, but the legacy is still there, and is still at the “hard core” of economic “science”. I see it every day.

Note well that Hayek is not an “Austrian” if you mean it in the sense of Misesian praxiology, something Hayek explicitly rejected.

Hayek is an empiricist (but not a naive Millian or econometric “empiricist”) who argues in favor of causal explanation — identifying the most important causal element in entrepreneurial learning (as well as elsewhere). Hayek is an empiricist who believes in open ended non-Millian causal elements the way Charles Darwin is an empiricist who provided causal explanations that don’t fit into the math functional “scientific” world view of Mill or econometrics.

Mark writes:

“Are you criticising hte 1950’s positivist revolution in economics? If that is the case you are in agreement with most of the current economic discipline. Economists NEVER really became positivists – for economists it was always about blaming failure on auxilery hypothesis and never touching the core. Austrian economists are no different on this account.”

I’m all in favor of this development:

“The thing is now, neurology is making our priors testable – we can now nearly take on some of the fundamental value judgments that separate types of economic analysis with data. The discipline is going to change greatly as a result of this – and hopefully in a positive way.”

I reject the idea that the aim of economics is to explain behavior — as did Hayek. Hayek isn’t Robbins or Mises. Hayek invented the building blocks of modern neuroscience as part of the effort to explain human behavior (see Joaquin Fuster), and he developed ideas similar to Wittgenstein on rule imitation as another part of that explanation, as well as other things.

The job of economics in Hayek’s view (and my own) is to explain patterns of order (and disorder) in social phenomena of the overall market.

Mark writes:

“I find it difficult when people tell me it is “the one” or the primary explanation of human behaviour”

Mark — The fact that people learn and their understanding of things changes isn’t a “hypothesis” it’s foundational, it’s an understanding of what it is to be human — there isn’t anything more primary, and 1950s era philosophy of science of the kind indicated in your remarks below certainly isn’t.

Mark writes:

“Ultimately if we want to compare hypothesis we need something testable.”

This demand to compare “hypothesis” is straight out of Karl Popper, and was passed from Popper directly to Milton Friedman and others. So is the demand for “testing”. It’s 1950s era philosophy of science, and it isn’t a necessary part of economics, just as it isn’t a necessary part of Darwinian biology. You’re doing 1950s era philosophy of science here, you aren’t doing economics.

@Greg Ransom

What model of “causation” are you saying is criticised – the studies and papers in economics are incredibly broad. I’m talking about the general concept behind the discipline – it is one of trying to explain what has happened more than anything else.

@Greg Ransom

Again you are doing me a disservice here – zillions of us on this blog have complained that single agent “GE” models are really methodological individualistic. There are conditions where they are, but we have all sorts of aggregation problems here that have to be worked out.

Robinson and Sraffa were two economists that realised this a long time ago – and actually tried to come up with measurable alternatives. Again why I think mentioning them is essential …

@Greg Ransom

Indeed it is quiet difficult to see what I do on a daily basis – I think unless you are following me around this isn’t really something that can be observed is it 🙂

@Greg Ransom

I do know that Hayek used entreprenuers as a mechanism for changes in relative prices. However, saying that it “cant be tested” is a bit strong.

Ultimately if we want to compare hypothesis we need something testable. In the social sciences it is incredibly hard – but we all need to build up our “social models” to the point where we can test them.

Now, this is one of the reasons I do not want to rule Austrain style economics out – I think it is a discipline that needs further development, I think it is a discipline that in some key ways is completely consistent with neo-classical economics, and I think it is a discipline that has some value even though it is difficult to test.

However I find it difficult when people tell me it is “the one” or the primary explanation of human behaviour – I do not find it complete enough for that, and I think many of the major lessons (although not all) of the subject have been injected in economic study in some way.

“Economists don’t get it because they are essentially 1950s philosophers of science, with a false understanding of real science, and a false understanding of how economics explains”

Are you criticising hte 1950’s positivist revolution in economics? If that is the case you are in agreement with most of the current economic discipline. Economists NEVER really became positivists – for economists it was always about blaming failure on auxilery hypothesis and never touching the core. Austrian economists are no different on this account.

The thing is now, neurology is making our priors testable – we can now nearly take on some of the fundamental value judgments that separate types of economic analysis with data. The discipline is going to change greatly as a result of this – and hopefully in a positive way.

As Hayek pointed out in his essay “The Facts of The Social Sciences” entrepreneurial learning in the context of changing relative prices and changing local conditions is the central causal / explanatory element in all of economics — AND IT CAN’T BE “TESTED” by econometrics. It’s a simple fact of economic life.

Hayek discusses this fact and how economics explains thing also in his book _The Pure Theory of Capital_ and elsewhere.

Economists don’t get it because they are essentially 1950s philosophers of science, with a false understanding of real science, and a false understanding of how economics explains. That is my view — and Hayek’s.

“testing causal explanations is still difficult – because data is so sparse. Economists really do the best they can with a relatively bad hand … “

Matt, were is the evidence that you’ve looked? I don’t see any.

“I still haven’t seen any evidence I find convincing”