Hi everyone – or, at least, whoever is left out there. As you probably know, this blog has been shut down since October 2014 and I have pretty much fallen off the face of the planet. Actually I’ve been working in investment where I’ve found a job that allows me to pursue non-mainstream economic research.
Some of you may recall that I was writing a book during the last days of this blog. I’m happy to say that this book is now fully completed and has been accepted for publication by Palgrave Macmillan. The provisional publication date for the book will be October 2016 and the price will be around £19.50. The book’s title will be: ‘The Reformation in Economics: A Deconstruction and Reconstruction of Economic Theory’.
The book will not be a rehash of material that is available on this blog. I consciously avoided this as I thought that it would be rather boring. So the book is all brand new material. Some of the ideas were thrown around on this blog in more primitive form but I have tried to develop them properly in the book.
The idea for the book is to go right back to first principles. The more I engaged with economic theory the more I found two things.
First of all, much economic theory is in fact ideology. By ‘ideology’ I do not mean something resembling a political ideology – I do not mean ‘socialism’ versus ‘libertarianism’ or ‘left-wing’ versus ‘right-wing’ or anything like that. Rather I mean a manner of structuring how we view the world around us – how we frame things to ourselves and how we understand what is and what is not possible to accomplish. A good example of an ideology is the idea that the world is flat and that if you sail out beyond a certain point you will be devoured by monsters. These sorts of ideas provide a sort of semi-conscious map that we use to engage with the world that has no basis in rationalistic or scientific inquiry.
Secondly, most of the problems with economic theory are actually buried in its very foundations. In the book I argue that much of economic theory is not actually aimed at being applied to the real world and that most economists have never actually thought through how their theory applies to reality. A physicist, for example, will typically have some real-world object that they are trying to understand – say, a ball falling from a building – and they know exactly how to fit their abstract theory onto the phenomenon that they are studying. I do not think that the vast majority economists have a clear conception of the real-world object that they are trying to approach and I do not think that they have the faintest clue of how they should apply their theory to the real-world. In this they typically fall back on institutionalised norms such as econometric testing which they do not really understand.
The aim of the first half of book is to interrogate these foundations – this is the act of deconstruction alluded to in the title. When we interrogate these foundations much of mainstream economic theory is shown to be entirely irrelevant – nothing more than a series of floating symbols that have no parallel existence in the real world. By understanding this this we also form a clear conception of what a good theory that is actually oriented to the real-world would look like.
The second half of the book attempts a reconstruction of what I call ‘stripped-down macroeconomics’. The first half of the book argues that any theoretical edifice that is overly precise or unwieldy will not function when applied to the real world. For this reason, economic theory is much better served by using very simple and clearly understood ideas. These ideas are then thought to serve as schemata – that is, “an organized pattern of thought or behavior that organizes categories of information and the relationships among them” – which can be mapped onto empirical material in order to gain an understanding of the world around us.
There is much else in the book that is dealt with along the way: critiques of the ISLM model; an examination of the different conceptions of equilibrium applied in economic theory; a critique of the EMH view of financial markets; reflections on the use of mathematics in economics; and much more. Although the book attempts to tackle the foundations of economic theory I had no interest in turning it into a dry, abstract tome full of needlessly big words and short on examples.
Anyway, I will be doing some media for the book in the coming weeks and months. I will update this blog post whenever new media appears. If you are interested in following this I would suggest that you should just check back here from time to time. Of course, when the book comes out I will also provide links to purchase it on this blog. I have also included the table of contents for the book.
- Philip Pilkington on Determinism and the Reformation in Economics. An interview with Frank Conway on the Economic Rockstar podcast.
- INET YSI Seminar Based on a Draft Version of Chapter 4 ‘Methodology, Modelling and Bias’.
The Reformation in Economics: A Deconstruction and Reconstruction of Economic Theory
By Philip Pilkington
Section I: Ideology and Foundations
- Economics: Ideology or Rationalistic Inquiry?
- The Limiting Principle: A Short History of Ideology in 20th Century Economics
- Deconstructing Marginalist Microeconomics
- Methodology, Modelling and Bias
- Differing Conceptions of Equilibrium
Section II: Stripped-Down Macroeconomics
- Theories of Money and Prices
- Profits, Prices, Distribution and Demand
- Finance and Investment
Section III: Approaching the Real-World
- Uncertainty and Probability
- Non-Dogmatic Approaches to the Economics of Trade
Conclusion and Appendices
- Philosophical and Psychological Appendices
- Determinism and Free Will in Economics
- Between Personal Responsibility and Poor Theory
- Economic Modelling: A Psychologistic Explanation
Good to hear from you again, Philip. I was beginning to suspect alien abduction. I’m looking forward to your book
I do believe he *was* abducted………………. by the “buy side” 😉
That’s really great news on the book, Philip. I can’t wait to read a book-length demolition of mainstream economics in that inimitable and sometimes hilarious takedowns of mainstream economics. To this day, any time I hear the words “asymmetric information” makes me recall your comments about the absurdity of a so-called “science” awarding a Nobel Prize to something so trivial as to be comic.
If you can, please post a contents page.
Good idea! Done.
There is a dire need for this kind of thinking and writing. Economics should become an exact science because with taking the right axioms, making suitable assumption, finding formal definitions of variables and good style analyses, it resembles the kinds of structures of the systems used by engineers. My recent book follows this approach and I hope this new one will follow a similar kind of thinking process. (See Consequential Macroeconomics” for what I wrote on the subject, an e-copy is available when you write to me chesterdh@hotmail and explain where your interest lays.)
And its model is model on working paper SSRN 2600103
About bloody time Philip – !!!!
Disheveled Marsupial… gone dark on social media for awhile so hope your doing well…
Blimey! That was a long time between drinks. Look forward to reading it – will there be an eBook version available?
Yes. There will be.
Could i have the name of your blog,and look forward to the book!
Congrats man…I really think, just judging from your table of contents and description, that you’ve done a great service at laying out the primary problems and alternatives. Good job!
Cheers. No nihilism. I promise. 😉
They always tell you not to judge a book by its cover (or its title/table of contents) but that’s just bs…I can always tell a good or bad book by the “cover” and yours looks pretty damn good. The fact that you arent afraid of philosophy should tell one everything they need to know. You’ve done a great service HET econ, and good scholarship.
It’s always hard for us old guys to share successfully the little bit we’ve learned through hard experience. So here it goes:
Steve Keen is right. I say this because I spent most of my youth working on non linear mechanics of fluids. Einstein dumped fluid mechanics because it was too hard to make progress. Moved over to electrodynamics. Good move.
The problem with the mechanics of fluids is the inherent non linearity in the governing equations. If you stay and struggle enough, you learn it’s a fools errand to try to dominate. Rather, you learn to submit to and even admire the amazing power of constraints (coupled equations) interacting through simple non linearities to produce mind blowing complexity. Let me just say, speaking as a been there done that old guy, very simple systems of governing equations can exhibit profound complexity especially when you toss in a little non linearity.
The history of classical physics is illustrative. Essentially all physics progress was/is driven by incorporating non linearity into the equations of math physics after the turn of the century(20th that is).
Quantum theory: broken wide open by the wave equation being approximately solved by perturbation method, a way of dealing with non linearity.
Soliton wave theory: Ok. A dead end but really enticing in the beginning.
Chaos theory: arrogant abrogation of others work but essentially right. Classic example of hubris and overreach resulting in tragic suppression of essential truths.
And now Steve Keen: right but unequipped to discourse on the power of nonlinear systems to capture the reality that surrounds us.
Want to write a good book? Study the history of linear methods; linear algebra, matrix methods, ODE and PDE, the triumph of linear methods, then their collapse in the 20th century. The rise of non linear analysis; fractals, perturbation method, stability theory, computational dynamics, chaos, and now, it’s cutting edge implications for macroeconomics and public policy per Steve Keen. Ours won’t be the first civilization to fall because we were bad at math.
You might like this blog (over my head, and I hope it’s OK to link to another blog here): https://informationtransfereconomics.blogspot.com.au
Exciting! My own very cursory study also landed on Post-Keynesian as the most logical. Your analogy with physics breaks down somewhat though, especially when you get into quantum, or string theory. Chemistry has better parallels; plus you can still tie in thermodynamics and equilibrium, both overused in Economics.
Please tell me you noticed that the life sciences don’t reduce to physics. Because nothing true was ever said about humans (even in the aggregate) using Newton as a guide instead of Darwin.
There are few useful analogies between physics and economics. Economic systems have no conservation laws, the bedrock of physics. But the tools of modern math physics are universally applicable and powerful beyond belief. The computer you read this on is directly a result of the triumph of non linear analysis applied to quantum mechanics. For some weird reason we are slow to adopt these tools for macroeconomic theory. Using powerful math tools is not analogising. Using the quadratic equation to find roots of polynomials has nothing to do with meaning we assign to the variables.
In other fields, new math tools are quickly embraced, because the
progress this often enables is swift. For some reason doing this in macroeconomics is like pulling teeth. Very frustrating.
No one is allowed into the fraternity until they demonstrate their math prowess. That line about “getting people to see the truth when their salary depends on believing the false”… Money has nothing on self-esteem. Getting people to believe that what they are good at is not valuable? Maybe we’re just doomed to economic wrongness forever.
Or maybe I’m wrong and Jane Goodall is stupid for not using the quadratic equation.
Again. Ours won’t be the first civilization to fall because we were bad at math.
I think what Thornton is banging on about is – individuals – as an a priori are problematic, per say, your equivocation of computers and applied maths wrt humans e.g. human brains evolved over billions of years from the very beginning of life its self… computers did not.
I thought neoclassical showed the folly of such as it enabled regulatory forbearance to be hand waved away, not that human agency was not always the driver behind it.
Disheveled Marsupial… just remember we can’t time travel forward… eh….
Awesome. Looking forward to it.
The contents look fantastic. One guaranteed sale! Looks like you’re going to have a good deal to say about “equilibrium” and “marginalism”, two of my all time bugbears, although the great economic historian Samuel Hollander once said of criticisms of “marginalism” that one should be careful not to throw the baby out with the bathwater.
I very much hope you give a detailed explanation of what a liquidity trap is, and at the same time giving a good kicking to the silly gibberish that Krugman and co claim is a liquidity trap.
Are you still on twitter or any other social media platform? Any news on the book?
Hi. No I’m not. The book will be out on December 16th and will have a foreword from Robert Skidelsky which I am quite excited about.