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Markets, Unemployment and Economic Policy
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In this volume more than 40 leading economists pay tribute to, and critically evaluate, Geoff Harcourt's work. Contributors include Tony Atkinson, Tony Lawson, Edward Nell and Ian Steedman.
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1
HORSES FOR COURSES
INTRODUCTION
All economists adopt a methodological stance of some kind. These stances are manifest not only in implicit research criteria but also in the advice they offer each other and many of the questions they ask. Familiar examples of the sort of questions and advice that I have in mind include: âWhatâs your model?â; âHave you tested it?â; âDonât think about it, just do itâ; âAvoid discussions about the use of mathematicsâ; âBe rigorousâ; âDoes it have microfoundations?â; âDoes it have a (unique) solution (equilibrium)?â; âDoes it support interventionist (laissez-faire) policy conclusions?â And while various expressions of this sort are regularly employed by Geoff Harcourt, there is one recommendation that I have heard (or noticed?) him use rather more often than any other. It takes the form of the slogan âhorses for coursesâ. Its usage in the scientific-methodological context is not unique to Geoff; but, perhaps because I have had the opportunity to interact with him so frequently, I associate it with Geoff before anyone else. In fact, although many who hear this slogan usually give it an immediate nod of approval (which is an interesting phenomenon in itself) I cannot think of any other person who so regularly employs it.1
But if the slogan, as a methodological criterion or stipulation, does have a good deal of immediate intuitive appeal, it also requires some unpacking. As far as I am aware there is nowhere this has already been done. My objective here, then, is to suggest a specific interpretation. Once this has been achieved it is obviously of interest to check whether such an apparently general or abstract slogan carries methodological bite. I conclude that it does by examining its implications with regard to an issue which Geoff has himself recently addressed and which is currently as significant as any facing the discipline: the usefulness to economics of mathematical methods.
HORSES FOR COURSES
How then are we to interpret âhorses for coursesâ in the context of scientific practice? Of course there are many possible translations, and Geoff sometimes interprets the slogan in different ways. The exercise which follows must be seen as rather exploratory. My aim is to provide a translation which at least preserves those aspects which seem both essential to it and likely explanations of its apparent immediate intuitive appeal. This appears to be the minimal requirement of any translation that can be sustained.
In the light of these considerations there are several aspects of the slogan that warrant attention. The first is that it is a stipulation. After all, the statement is not of the form âany old horse will doâ, i.e., whatever the course. It follows that whatever the precise form in which it translates into the scientific context, it does so as a directive or criterion of some sort. This is obviously desirable if repeating the slogan is to make any difference to anything.
A second and fundamental feature is that there is some matching going on, and it is a matching of some form of agency or action to its conditions of action. The directive is basically that for a given course, a horse ought to be selected according to its suitability in the light of existing conditions (length of course, firmness of terrain, existence, number and/or height of fences, etc.); or for a given horse, the owner or âracerâ ought to select a course such that the perceived conditions give the horse a comparative advantage. In short, horse is matched to course, or vice versa.
The most obvious way for this feature to be carried over into the scientific context is as the requirement that scientific investigatory practice and the feature of reality to be investigated be in some sense tailored to one another. This clearly necessitates obtaining insights into the nature of the objects of enquiry, as well as an awareness of the metaphysical presuppositions of given methods and procedures. In short, this feature of the stipulation necessitates an attention to ontology, and presupposes a realist orientation.2 It represents an explicit negation of the epistemic fallacy, i.e. of the erroneous belief that ontology can be reduced to epistemology, that questions about being can be rephrased as questions about knowledge (of being). It distinguishes method from its object.
This second aspect of the âhorses for coursesâ slogan is, I think, its most essential one. Certainly it is the most essential feature of the interpretation that I am suggesting here. But there is also a (slightly distinct) third feature that warrants emphasis, one which perhaps contributes most to its immediate appeal. This feature is signalled by the apparent ability of the slogan to express much through little â by way of three words, to be precise. This latter result is achieved because the analogy drawn implicitly relates to a (familiar) whole situation: the race course and all that surrounds it. Most obviously, an essential aspect of horse-racing is the goal of winning, which typically means choosing (or riding or owning) the horse which in any given race comes first.3 In other words, the slogan in question appears to convey, as an additional essential aspect of it, something about the objective or purpose of the event, as well as a method or strategy. And in the scientific context, especially if a realist orientation is implied, this presumably translates to the goal of illuminating (revealing, explaining, understanding) some feature of reality. Object and method of enquiry are âmatchedâ to one another under the intent of illuminating the former.4
Thus, I suspect that Geoff is rather lax and gets it not quite right when sometimes (albeit only sometimes) he suggests that the slogan translates into something like âhow you do it depends upon what the purpose isâ (e.g. Harcourt 1996: 6). This interpretation (which is barely a stipulation anyway) matches procedures of action to purposes rather than to conditions of action, and thereby neglects that an additional and apparently essential feature of the slogan, and a likely major explanation of its intuitive appeal, is precisely that the purpose is already implicated: to âpickâ the horse which comes first.5
In short, I suggest that the most compelling translation of âhorses for coursesâ in the scientific context pertains to the (usual) situation where the accepted goal is to illuminate (reveal/explain/understand) some feature of reality, and takes the form of the directive that where given methods, techniques or procedures are to be employed, the objects chosen for analysis be of such a nature that the methods appear capable of illuminating them; or where definite aspects of reality are to be illuminated, the methods and procedures followed be fashioned to insights available concerning the nature of such material.
THE USE OF MATHEMATICS IN ECONOMICS
Can this methodological horses for courses (henceforth MHC) directive actually make any difference to anything? This is an important question, because there is obviously no isomorphic relation between a theory of ontology and any set of methods or procedures. Although the noted epistemic fallacy is avoided, the stipulation remains at a high level of generality.6 Despite this, it is easy enough to provide an initial indication that MHC can bear important implications by considering one of Geoffâs own papers. Although many economists express definite, often strongly held, views on the use of mathematics in economics, Geoff is one of the few to have written an entire paper on the topic (Harcourt, 1995 [1993]). In this paper Geoff, amongst other things, surveys a range of prominent assessments on the usefulness of mathematical formalism to economics. The problem, though, is how to choose between them. Towards the end of his paper Geoff acknowledges that he has presented an array of different views, but without making any definite selection. He writes: âSo where does this leave us? Clearly, to take a weighted average of such divergent views would be a cop out.â Geoff, though, does not really take the issue further,7 other than acknowledging that âmathematics can be a good servant but, even more, a bad masterâ (1995: 19). My aim here is to reinforce Geoffâs latter intuition by explicitly bringing to bear the version of âhorses for coursesâ argued for above. Certainly this strategy supports implications that are reasonably clear-cut.
CRITERIA OF METHOD SELECTION
Amongst the âdivergent viewsâ explicitly examined and quoted by Geoff,8 both the assessments of the usefulness of mathematical formalism for economics and the criteria (or implicit stipulations) employed in making these assessments are discernable in statements taken from Marshall, Keynes, Samuelson, Boulding, Debreu, Koopmans, Mirrlees, Chichilinsky, Hahn and Stone. In consequence, it is possible to divide this group into those who do, and those who do not, accept MHC as interpreted here in making such assessments. In fact only three of those listed explicitly and unambiguously emphasize a need to match method to the nature of the object of study in order to illuminate the latter â namely Marshall, Keynes and Boulding. The others draw on criteria or objectives which are either too generally stated to be interpreted here (such as âscientific advancementâ), or rely upon specific criteria and objectives that are noticeably different.
Thus Samuelson makes an unelaborated reference to âadvancing the scienceâ and also invokes the avoidance of âdepravedâ types of âmental gymnasticsâ;9 Debreu emphasizes procedures which permit sounder judgements of relevance, the ability to give âready answersâ to new questions through reinterpreting âprimitive conceptsâ, deeper understandings of problems formulated, rigour, the intellectual need of economists for rigour, simplicity and generality, the facilitation of efficient communication and thinking;10 Koopmans emphasizes the efficiency of establishing logical links between premises and conclusions, explicitness of assumptions, a reasoning process that is not intruded upon by âassociations clinging to wordsâ;11 Mirrlees mentions âexplicitness of assumptions, attention to detail, and rigourâ (Mirrlees, 1978: 15â17, quoted in Harcourt, 1995: 15); Chichilinsky singles out clarity, a strong foundation, and âdesired [mathematical] advance in areas which are of great importance for intellectuals and for those whose lives depend on itâ12 (1990: 16); Hahn emphasizes understanding, honesty, modesty, excitement, beauty, the avoidance of being âenslaved by slogans and shibboleths of practical men and womenâ (Hahn, 1985: 28, quoted in Harcourt, 1995: 15), a need to establish precise definitions of problems and necessary conditions for definite results; while Stone draws attention to the nature of current practices in a number of social sciences, efficiency in analysing and comparing theories of complex systems, the reduction of generality in models, a need to gain insight into subjects where concepts are vague and information is imprecise, and an interest in understanding reasoning processes behind effective (as opposed to ineffective) decisions.13
In all these cases (whatever the accuracy of the claims put forward14) the suitability or relevance of methods and procedures to the specific nature of the material that is to be investigated is never explicitly invoked in formulating a criterion. The âmatchingâ of one with the other is not an issue. Only for Marshall, Keynes and Boulding is this an explicit consideration.
MAKING A SELECTION
But so what? What do we learn from subdividing the contributions referred to by Geoff in this manner? The answer is simply that a systematically different conclusion is reached concerning the relevance of mathematical formalism to economics according to whether or not MHC as interpreted here is invoked. Specifically, while those who fail to question explicitly whether formalistic methods are capable of illuminating social material, infer that the application of mathematical formalism to all areas of economics can only be beneficial, those who employ the criterion draw more or less the opposite conclusion.
Thus, while the former group express only positive views on the use of mathematical methods in economics, Boulding finds, for example, that âmathematicians themselves set up standards of generality and elegance in their expositions which are a bar to understandingâ (Boulding 1948, 1971: 236, quoted in Harcourt 1995: 12); Marshall concludes that âthe application of exact mathematical methods to [the few facts which can be expressed in numbers] is nearly always a waste of time, while in the majority of cases it is positively misleading; ⌠the world would be further on its way if it had never been done at allâ (Pigou 1925: 422, quoted in Harcourt 1995: 6); and Keynes writes of âsymbolic pseudo-mathematical methods of formalising a system of economic analysisâ concluding that âtoo large a proportion of recent âmathematicalâ economics are mere concoctions which allow the author to lose sight of the complexities and inter-dependencies of the real world in a maze of pretentious and unhelpful symbolsâ (Keynes 1936, 1973: 297, 298, quoted in Harcourt 1995: 9).
In short, if we decide to choose between the âdivergent viewsâ brought to our attention by Geoff using his own âhorses for coursesâ stipulation as a criterion, then the conclusion seems clear. Ceteris paribus, support should be given to those who conclude in favour of severely restricting the use of mathematical formalisms of the sort that are regularly found in economics. It is this, is it not, that Geoff is really telling us?
METHODOLOGICAL âHORSES FOR COURSESâ MORE DIRECTLY APPLIED
Even so, it must be admitted that no direct argument for or against mathematical economics has actually been made here. Any conclusion against the use of specific mathematical methods is conditional upon the soundness of MHC as well as the legitimacy of the arguments made by Keynes, Marshall and Boulding in support of their noted conclusions. Of course, I suspect that few would really want to reject the (realist) MHC criterion explicitly, even if many regularly overlook it. Moreover, the observation that âassessments of leading economists on the validity of extending the use of certain formalisms in economics turn upon whether or not the MHC criterion is invokedâ is a partial regularity that prima facie suggests that something systematic is going on. A (conjoint) hypothesis which can straightforwardly account for it, certainly, is that (i) the statements selected by Geoff adequately capture the assessments of the various authors; and (ii) these authors have reasoned correctly, so that while the mathematical formalisms in question have numerous attractive aspects, they are not particularly appropriate to the understanding of social reality.
All the same, a direct argument still needs to be made;15 the case for limiting the use of formalism in economics so far rests merely on the authority of the cited critics. Let me, then, examine more closely at least one of the arguments of one of the âantagonistsâ. I focus on Keynes, with whose writings I am more familiar. As Geoff is a major figure in the post-Keynesian tradition, this seems the appropriate example to consider anyway. The question I want to pursue is whether Keynesâ reasoning for resisting the encroachment of formalism of the sort found in economics stands up to inspection. For reasons of space I restrict my...
Table of contents
- Cover
- Author
- Title
- Copyright
- Contents
- List of Contributors
- Foreword
- Geoff Harcourt: A Tribute
- Introduction
- 1 Horses For Courses
- 2 Abstraction, Idealization And Economic Theory
- 3 Markets, Madness and Many Middle Ways
- 4 Efficient Redistribution in a Globally Competitive Economy
- 5 The Fears of Economists
- 6 Uk Privatization
- 7 Inequity and Access To Private Education
- 8 The Accountant In a Turbulent Age
- 9 The Economic Rate of Return and The Accountant
- 10 Corporate Finance and Capital Accumulation
- 11 How Free Should Trade be Now?
- 12 The Competitive Weaknesses of the Uk Economy
- 13 Post-Stalinist System Reform In China and Russia
- 14 Socialism
- 15 Understanding Effective Demand
- 16 The Effects of Changes in Aggregate Income Shares on Aggregate Demand
- 17 Macroeconomics and the Distribution of Income
- 18 Provisional Equilibrium and Macroeconomic Theory
- 19 Equilibrium, Path Dependence and Hysteresis in Post-Keynesian Models
- 20 Exploring âThe Original Kalecki Model Tâ
- 21 The T-F-M Approach to Production Analysis and The Analysis of Structural Change
- 22 Limits To Relative Price Movements
- 23 The Myths of Free Banking
- 24 Defining and Measuring Unemployment in The United Kingdom
- 25 High Youth Wages Can Generate General and Persistent Unemployment
- 26 Labour Markets And Competition As An Evolutionary Process
- 27 The Labour Market of Fear
- 28 Workersâ Rights and Economic Flexibility
- 29 Changes in The Notions of Unemployment and What That Means For The Poor
- 30 Unemployment Prospects For Modern Capitalism
- 31 The Stock Market and The Corporate Sector
- 32 Expanding Employment In The Global Economy
- 33 What Are The Constraints On The Pursuit of Keynesian Macroeconomic Policies?
- 34 Post-Keynesian Economic Policies For âWorld Prosperityâ
- 35 Corporate Restructuring In Europe and The Regulation Of Competition
- 36 When Workers Save Nothing and Capitalists Consume Everything
- 37 Growth and Employment
- 38 Economic Growth and The Balance-Of-Payments Constraint Revisited
- 39 Economic Policy In Post-Apartheid South Africa
- Geoff Harcourt: a bibliography
- Index