Title: Economics, Complexity and the Disenchantment of the Social World
Abstract: Even though he is widely considered to be the founding father of the economic
discipline, Adam Smith would have a hard time finding a job at an
economics department or getting his ideas published in any of the major
economics journals, had he lived today. One of the central reasons for
this is that neoclassical economics, which dominates the discipline today,
and economics at the time of the great political economists such as Adam
Smith and David Ricardo are differentiated by one single characteristic
more than any other: their use of mathematics1 (Schabas, 1989). While
today’s economics is best characterized as a thoroughly mathematical
science, the writings of the classical economists were almost entirely discursive
(Lawson, 2012; Hodgson, 2013).
This mathematical condition of modern economics has quite
recently become the subject of heated debate and strong criticism in light
of the economic crisis that has hit us in 2008 and still lingers on today.
Many (i.e., Friedman, 1999, p. 137; Krugman, 2009a, 2009b) have argued
that, caught up in more and more complex models, economics itself had
become detached from its appropriate subject matter: real world economic
problems. The economic science failed to make sense of our reality, and
instead got lost in a different reality of their own making consisting of
models and equations.
Such criticisms regarding the role of mathematics in economics
and its inability to capture our economic reality are not, however, just
something of the past seven years. Even though the role of mathematics
has evolved to one of absolute dominance since the end of the 19th
century, many have voiced criticisms towards this development. And the
list of those critical of the mathematization of economics does not just
name quirky heterodox economists at the margins of the discipline but
also includes some of the most famous and important economists of the
19th and 20th century.
In this paper I will take a closer look at some of the concerns
and warnings about the role of mathematics in economics put forward
by Alfred Marshall, Friedrich Hayek and John Maynard Keynes. Specifically
these economists have been selected because each of them has had
a significant and constituting influence on the economic discipline, and
because taken together they represent a substantial part of the diversity
of the economic discipline at their time and today (i.e. Keynes’ argument
for the occasional government intervention versus Hayek’s laissez-faire
economy).2 This paper will focus on the concerns they voiced regarding
mathematics in economics, which were born out of their shared conviction
of the complexity of economic reality. They argue that the world is too
complex and varied for mathematics to be able to capture it, and that this
thus poses limits to its use. They do not deny that mathematics can be useful
but one must know its place and restrictions. In this respect they stand
in sharp contrast to economic thinkers such as William Stanley Jevons,
Irving Fisher, Paul Samuelson, Kenneth Arrow and Gerard Debreu, some
of the founders of neoclassical mathematical economics, who believed that
it was in fact possible to capture economic reality in mathematics and that
it should therefore be adopted as the main engine of enquiry in economic
science.
Publication Year: 2015
Publication Date: 2015-12-18
Language: en
Type: article
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