The Programming Approach and the Demise of Economics
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The Programming Approach and the Demise of Economics

Volume I: A Revival of Myrdal, Frisch, Tinbergen, Johansen and Leontief

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The Programming Approach and the Demise of Economics

Volume I: A Revival of Myrdal, Frisch, Tinbergen, Johansen and Leontief

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About This Book

In this book – the first of three volumes – Franco Archibugi sets out to create an epistemology of economics, arguing for a radical overturning of the conventional analysis from a "positive" approach to a "programming" approach. This overturning leads to a reappraisal of the foundations of Economics itself, and to an improved integration of Economics as an autonomous discipline alongside Sociology, Political Science, Operational Research, Social Engineering and Physical or Spatial Planning.

The author interrogates how scientific the social sciences really are before proposing a new scientific paradigm for the social sciences, a political preference function and a general programming approach. The chapters revisit hitherto neglected economists like Gunnar Myrdal, Ragnar Frisch, Vassili Leontief, and Leif Johansen, using their theory to overturn the epistemological approach of the entire science of economics.

Volume II explores oppositions to the traditional and conventional teaching of economics, whilst Volume III presents a concrete and practical example of how to build a Planning Accounting Framework (PAF), as associated with Frisch's 'plan-frame' (explored in Volume II), to demonstrate the extent to which decisions and negotiations can be routed in the social sciences.

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Year
2019
ISBN
9783319780573
© The Author(s) 2019
F. ArchibugiThe Programming Approach and the Demise of Economicshttps://doi.org/10.1007/978-3-319-78057-3_1
Begin Abstract

1. How Scientific Are the Social Sciences?

Franco Archibugi1
(1)
Rome, Italy
Franco Archibugi
End Abstract

1.1 The Starting Point of the Reasoning

‘How scientific are the social sciences?’ was the title of a lecture given by Gunnar Myrdal at Harvard University in 1971.1
In order to provide a complete answer to the question, which has been approached in different contexts and in different ways, we should first clarify what we mean by ‘science’ and by ‘scientific’. However, Myrdal did not address this quintessentially philosophical feature of the question, nor do I intend to address it in this chapter or in this book.
I shall, however, review Myrdal’s arguments (1) on the differences between the approaches of the natural sciences and the social sciences, (2) on the probable reasons for these differences and (3) on the mistakes made by social scientists when they overlook these substantial differences and believe they can achieve or actually try to achieve the same type of results as their ‘naturalist’ colleagues.
Nevertheless, building on this basis I will endeavour to continue ‘beyond Myrdal’ in identifying a kind of original vice on the part of a good deal of the so-called social sciences: the vice of adopting, on the logical plane (and not on the philosophical plane, which, as mentioned earlier, is outside the remit of this book),2 an approach that I would call ‘positivistic ’ or ‘deterministic ’, because the methodological and systematic nature of its application has significantly reduced the validity of their analyses.

1.2 The Roots of the Deterministic Error

This error—which I will call ‘deterministic’—has placed the social sciences in an inferior position with respect to the natural sciences (in the aspects examined by Myrdal that we shall analyse later); however, even more seriously, it has impeded them from truly being put to the service of human progress (if I am allowed to be so emphatic and an Enlightenment follower).
In fact, as I will explain more thoroughly in this book, the social sciences should not have the vocation of discovering the (human or social) world, or what it is, or how it behaves per se (hence the label ‘deterministic’), but only to define what it could and should be or become (hence the possible label of ‘free will’ or ‘programmatic ’).3
If I were to choose a concise slogan for this alternative logical position, I would choose the XI theses on Ludwig Feuerbach by Karl Marx:4 ‘The philosophers have till now interpreted in different ways the world; now the question is to change it.’5
The social sciences have in fact the vocation of rendering the world itself better and more rational, that is of changing it operatively according to the wishes and intentions of the people, which are, in their turn, based on certain values. (I think this word, with respect to this argument, is quite equivocal; I would substitute it with that of objective(s). However, it is used recurrently in the economic literature that has occupied itself with the relation between is and ought to be, and I believe it is more opportune, at least for the moment.)
The thesis that I will propose—with Myrdal and others—is that the social sciences are able to contribute to the progress of humankind only if they assume more directly the role of sciences of action, rather than that of sciences of being.6
Regarding this point, Myrdal has been clear since ‘the start’:
It might be useful to recall at the start that social sciences have all received their impetus much more from the urge to improve society than from simple curiosity about its working. Social policy has been primary, social theory secondary. This holds true, of course, for the long ages from Aristotle onwards when the social sciences were still merged into the general speculation which we have later come to call moral philosophy. It also holds true for the period of the Enlightenment, when the social sciences made the decisive leap towards their modern development into full-fledged and gradually separate empirical discipline. Looking more closely, one sees that they still remained, and are till today, merely branches of the two dominant philosophies of Enlightenment: natural law and utilitarianism. It is an under-statement to say that at this early stage no clear distinctions between theory and policy are observed. In fact the absence of such methodological distinction is only a negative characterization of those philosophies: in the former philosophy there is an indirect identification of what is with what ought to be in the concept of ‘natural’; in the latter philosophy an indirect identification is implied in the assumption that ‘happiness’ or ‘utility’ both is and ought to be the sole rational motive for human action. Social values existed as facts and could be objectively ascertained. Social theory explained reality but, as values were real, at the same time defined rational social policy. (Source: Myrdal, ‘The relation between Social Theory and Social Policy’ (1957), in Value in social theory, Harper, Chapter 2, p. 9)
Thus did Myrdal declare his starting point in one of numerous writings on the subject of the relation between social theory and social policy.7
In fact, in these works he explains that it is only from this dependency—of social theory on programmatic political action; that is, only when what people search for (and research) depends on what people wish to be—that social theory, and all ‘social sciences’, can achieve, simultaneously, their ‘scientificity’ and their ‘functionality’. In other words, this is what happens when what people research depends only on what people wish to know.
This explains my argument that the ‘deterministic’ approach should be substituted (as I intend to explain throughout this book) by a ‘praxeological’ approach, or, as I prefer to call it, a programming or ‘planological’ approach. I have chosen here to use the term ‘programming approach’ in honour of the legacy of Frisch, upon which this book is based.8

1.3 The Anti-Positivist, but Misleading, Contribution of Ludwig von Mises to the ‘Praxeological’ Approach

At this point it is also fitting to recall the contribution to this specific argument (the reflection on the ‘praxeological’ approach, its nature and the overturning of the ‘positivistic ’ approach) made by another author, Ludvig von Mises,9 in arguably a more tenacious and longer-lasting form than Myrdal’s. In fact, in a surprising parallel to Myrdal, von Mises developed a resolute reflection against the positivistic approach in economics and in favour of its substitution with a ‘praxeological’ approach based on a logic related to action and not to theory.
Ludwig von Mises developed some important observations on this subject that are of great interest to the epistemology of the programming approach and that cannot be neglected in this book. Von Mises’s contribution, in regard to the thesis of this book, is developed according to two themes: the sharp separation between the logic of the knowledge of the natural environment (the ‘object’ of the natural sciences) and the necessity to maintain the sciences of man independent from it. In this respect, von Mises developed a strong criticism against the ‘ empiricist induction’, as he called it, that, in his opinion, leads to conclusions that are scientifically fallacious and senseless; the building of a ‘praxeological’ logic (much nearer to that of the ‘ programming approach’), of which we will examine the happy intuitions, but also the misleading conclusions due to the influence of complex and entangled misunderstandings, understatements and ambiguities about concepts and terms of which the Vienna Circle cultural movement was neither cause nor effect.
We will examine the first of these themes immediately, incorporating Myrdal’s position, to which von Mises’s arguments are a kind of counter-melody, at the same time.
The second theme will be critiqued in Vol. II, Chap. 1 after we have concluded an analysis of the legacy of Frisch and all the operational implications that characterise and qualify the programming approach.
Volume II, Chap. 1 is the first of the chapters introducing Vol. II with the reference to a sample of some reflections that seem to belong to (and in some cases anticipate) the same conclusions of this Trilogy.
I will also offer, in the same chapter, some suggestions relating to the misunderstandings and mistakes of the Misesian analysis. These suggestions, however, reach very different political conclusions. In fact, even though in some ways his analysis shares much of its logical basis with those that determine the overturning of the positivist approach in favour of a ‘praxeological’ approach, von Mises developed such analysis in a context so loaded with misunderstanding, understatement and ambiguity (in the use of concepts and terms) that he ended up very far from Myrdal’s conclusions and also from those of supporters of the programming approach.
For instance, according von Mises:
Epistemology deals with the mental phenomena of human life, with man as he thinks and acts. The main deficiency of traditional epistemological attempts is to be seen in their neglect of the praxeological aspects. The epistemologists dealt with thinking as if it were a separate field cut off from other manifestations of human endeavor. They dealt with the problems of logic and mathematics, but they failed to see the practical aspects of thinking. They ignored the praxeological a priori. (von Mises 1962, The ultimate foundations of economic science, Van Nostrand Co. pp. 2–3)
From this von Mises identifies the epistemological consequence that:
the characteristic feature of man is action. Man aims at changing some of the conditions of his environment in order to substitute a state of affairs that suits him better for another state that suits him less. All manifestations of life and behaviour with regard to which man differs from all other beings and things known to him are instances of action and can be dealt with only from what we may call an activistic point of view. The study of man, as far as it is not biology, begins and ends with the study of human action.
Action is purposive conduct. It is not simply behavior, but behavior begot by judgements of value, aimed at a definite end and guided by ideas concerning the suitability or unsuitability of definite means. It is impossible to deal with it without the categories of causality and finality. It is conscious behaviour. It is choosing. It is volition; it is a display of the will. (von Mises, ibidem, p. 34)
And again:
In denying the autonomy of the sciences of human action and their category of fĂŹnal causes, positivism enounces a metaphysical postulate that it cannot substantiate with any of the findings of the experimental methods of the natural sciences. (von Mises, ibidem, p. 37)
But this clean separation, repeatedly theorised and recommended, between sciences of the natural world and sciences of human action, based on epistemology and politically liberating, despite being an almost obsessive leitmotif of his work, from the beginning of his prolific production until his last works, did not lead to the serious construction of an alternative methodology of analysis, more open to a plurality of approaches. Von Mises, in fact, locked himself into a rigid defence of so-called ‘methodological individualism’.

1.4 The Scientific Impasse of the Missed Praxeological Approach

The absence of such an epistemological exchange between the natural sciences and the social sciences has cost the latter dearly. It has de...

Table of contents

  1. Cover
  2. Front Matter
  3. 1. How Scientific Are the Social Sciences?
  4. 2. Towards New Scientific Paradigms for the Social Sciences (According to Myrdal)
  5. 3. Planning and Planning Theory: The Difficult Legacy of Ragnar Frisch
  6. 4. Basic Requirements for the Programming Approach
  7. 5. The ‘Programming Approach’
  8. 6. The Political Preference Function
  9. 7. The Impact of the Programming Approach on Socio-Economic Modelling
  10. 8. The methodology of the ‘Central Planning’ for the implementation of the ‘Programming Approach’ (The great role of Jan Tinbergen)
  11. 9. The Pitfalls of Implicit Theorising and the Abuse of Indirect Statistical Inference: Leontief’s Criticism
  12. Back Matter