The Gold Bug Song

Here’s a song I wrote about gold bugs when I was supposed to be doing work today. Yes, I know the quality is pretty crap and I should probably stick to my day job. But regardless.

The Chomsky-Foucault Debate: Science Versus Its Nameless Rival

In response to my previous post a commenter on a private group I’m engaged with said that I must have fallen on the side of Michel Foucault in the famous Foucault-Chomsky debate. This is most certainly true and perhaps this is a good opportunity to lay out some thoughts on that debate.

Right off the bat I should state that I am not at all interested in the politics of the debate. Both men are revolutionary anarchists of some stripe or other and I have no sympathy for their cause. Instead what I am interested in are the two opposing philosophical viewpoints that are being expounded by the two men buried in the political rhetoric.

The first question to ask about the debate is: from what position does each debater speak? I do not mean this in terms of physical space. That would be a stupid question. I mean from what position of authority. Chomsky clearly speaks from the position of Enlightenment. As a linguist who invented generative grammar he is generally regarded as a scientist and this confers on what Chomsky says a certain amount of authority. It is assumed that behind Chomsky’s words there is a Truth called Science.

Foucault, on the other hand, occupies a far more unusual position. He started his career as a psychologist which is a somewhat soft science that is recognised to be filled with ambiguity. But when he came to think that psychological categories were rather arbitrary and then carried this critique to all categories in the human sciences he lost even the scientific status conferred on the psychologist. What position of authority Foucault argues from is therefore rather unclear. Indeed, the Collège de France had to invent a new position for him in 1970 entitled “Professor of the History of Systems of Thought”. (One finds it hard to imagine such a thing happening in Chomsky’s homeland).

From the outset then the two men wear, as it were, rather different insignias. Chomsky wears a lab-coat, with all the authority that wields; Foucault a somewhat ad hoc professorship that was invented only a year before the debate took place. These considerations will be extremely important in what follows.

The debate, which was largely political given the mood of the time, had two key points of interest both of which can be found in the short clip at the beginning of this post. They both fell toward the end of the debate where the two men were discussing the nature of justice. Both were talking in terms of anarchist politics. Foucault was making the point that what we consider Justice is but a particular form of justice that is bound up with the class nature of our society. Chomsky, as we shall see, disagrees with this.

Before we analyse what each actually had to say on the matter I ask the reader once again to detach this from questions of politics. What Chomsky and Foucault are really talking about is whether there is such a thing as a timeless, a priori sort of truth or whether all particular historical manifestations of truth are relativistic and must be understood given their era and their context. With that in mind let us turn to what Chomsky says in this regard:

I think there is some sort of an absolute basis — if you press me too hard I’ll be in trouble, because I can’t sketch it out-ultimately residing in fundamental human qualities, in terms of which a “real” notion of justice is grounded.

First of all let me be clear, again in case this gets tied up with politics. Politically I actually do agree with Chomsky here. I in no way think that our current systems of justice are institutions of class oppression plain and simple. But I think this for entirely different reasons that Chomsky would simply not even begin to understand because he rejects the view that such systems are indeed historically arbitrary in many ways and in order to ground them we really must turn back to the institution of language (this is what Foucault misses, by the way). This leads Chomsky to engage in mysticism and it is a mysticism that is not usually recognised because, as we said earlier, Chomsky stands behind the altar of Science and this gives his words a weight that they otherwise would not possess.

But look carefully at what he is saying: he is saying that there is an “absolute” basis on which justice can rest but that he cannot sketch it out. That is mysticism or at the very least a sort of circular metaphysical argument. But I would say that if you pushed Chomsky or others who believe similar things about the a priori nature of Reason hard enough you’ll find such mysticism at the heart of most of their theories.

Foucault, on the other hand, takes a very concrete approach. Because it is so tied up with the politics I will highlight the relevant lines:

No, but I don’t want to answer in so little time. I would simply say this, that finally this problem of human nature, when put simply in theoretical terms, hasn’t led to an argument between us; ultimately we understand each other very well on these theoretical problems. On the other hand, when we discussed the problem of human nature and political problems, then differences arose between us. And contrary to what you think, you can’t prevent me from believing that these notions of human nature, of justice, of the realisation of the essence of human beings, are all notions and concepts which have been formed within our civilisation, within our type of knowledge and our form of philosophy, and that as a result form part of our class system; and one can’t, however regrettable it may be, put forward these notions to describe or justify a fight which should-and shall in principle — overthrow the very fundaments of our society. This is an extrapolation for which I can’t find the historical justification.

Foucault appeals to the actual history of these matters where he finds a whole multitude and slew of different truths, all of which ultimately rest on some sort of authority. To give a concrete example of such a contingent and tactical truth let us turn to the sphere of psychopathology. The Foucault-Chomsky debate took place in 1971. At that time the Diagnostic and Statistical Manual of Mental Disorders — at that time the DSM-II — classified homosexuality as a mental disorder. This was only removed in 1974.

Again, I would like to move the focus away from the politics here. Whatever we think of homosexuality being included as a mental disorder let us approach this neutrally. Today most of us would recognise that the removal of homosexuality from the DSM was the beginning of a larger cultural shift regarding how we viewed sexuality in general and homosexuality in particular. Yet, prior to 1974 homosexuality was essentially given the same status in our official categories of knowledge as cancer or schizophrenia: it was a disease thought to have a biological basis that caused pathological behaviors in individuals. Further it was implied that those afflicted with it needed to be cured in some way. That is, they needed to have supposedly “scientific” principles applied to their disorder to, in a very real sense, re-order it.

If this was part of a cultural shift then that leads to the conclusion that those categories that we allow scientific status in our society are actually just sort of congealed manifestations of tradition and custom. This, indeed, is what Foucault found over and over again in his archival work. The idea that there were some timeless principles underlying these, as Foucault said in the debate, simply didn’t have “historical justification”.

This strongly suggests that — contrary to what Chomsky who, wrapped in scientific garb, appeals to mystical principles which he himself admits that he cannot substantiate — rather Reason itself is completely constrained and bound by our customs and our traditions. Reason is then not an a priori at all, but rather a sort of secondary faculty which serves in the interest of a more primary faculty which I would broadly call the forces of custom and tradition as they are contained and sealed within language itself.

One last point on this, as since it is on the question of language we end and Chomsky is generally seen as the founder of modern linguistics such a point might be worth making. Chomsky’s generative grammar is often seen to have superseded the older Saussurean structural linguistics. Where Saussure and his followers — Foucault being one — focused on the interrelation between signifiers, Chomsky and his followers sought out Universal principles of grammar.

Without getting into the weeds on whether these principles are indeed Universal, we should point out that Chomsky did not somehow prove Saussure wrong. What he did was he shifted the focus of the debate. He basically said “Yes, structural linguistics is all well and good. But it’s not really scientifically interesting anymore as it cannot tell us about the generation of grammar (and let’s all say: it has elements that don’t look all that scientific, right guys?). Rather we should look at the generative principles of grammar. That is Science”. By doing this Chomsky buried all the questions that Saussure’s theories might have raised — questions such as those raised by Foucault in his historical work.

This, as I have pointed out time and again on this blog, is the essence of the Enlightenment project: to solidify itself as the one and only truth (despite the ironic fact that these truths constantly change while the mystical authority behind them remains the same) and to bury any cultural project that questions this particular form of organising our knowledge and our institutions of knowledge. It does not suppress these potential forms of knowledge orgnaisation by burning their adherents at the stake but rather by ensuring that they do not retain the same status as the scientific community and thus, it is hoped, they will fall into obscurity to some degree. It is thus that many arguments can be dismissed, not through debate or reasoned argument, but simply by an appeal toward something — something mystical, perhaps — called “Science”.

That is where we are today and that is arguably where we have been for some centuries now. It also looks unlikely that this will change any time soon.

Google Books NGram Viewer

Google Books have a new tool that lets you search the incidence in the appearance of words in their massive archive, This, I think, is one of the most important historical tools to be made free for public use in a long time. Thank you Google!

To demonstrate how we can substantiate certain historical claims using this tool allow me to substantiate my claims that the philosophers George Berkeley and Johann Georg Hamann who were skeptical of the claims of Enlightenment were suppressed in the English-speaking world in favor of their pro-Enlightenment rivals David Hume and Immanual Kant.

Kant and His Categories Versus Mises and His Praxeology

You won’t see me dealing with the Austrian School of economics much on this blog. I wrote a long essay on them before and I think it says almost as much as needs to be said; namely, that the Austrians are just neoclassicals who substituted Faith for mathematics in their search for economic truth.

Insofar as practical differences between the Austrians and the neoclassicals it is simply a matter of ideology and extremity — not to mention a characteristic incoherence and general sense of confusion on the Austrian side. Take their business-cycle theory, for example. It is actually a Wicksellian business-cycle theory pushed to extremes. The Austrians claim that there is a natural rate of interest and that if the money-rate of interest (the central bank rate, basically) diverges from this inflation and deflation will result. Well, that’s basically the mainstream theory today used by most central banks who use a New Keynesian model with a Taylor Rule attached that essentially contains an implicit idea of a natural rate. The central banks then try to line their target rate of interest up with the so-called natural rate. (My criticisms of the New Keynesian position also apply to the Austrian position in this regard, by the way).

The Austrians are theoretically orthodox. The only reason they fall outside the mainstream is because they tend to be political extremists and — I’m going to dare to say it — they are usually not very thorough or fastidious thinkers. You can be a first-rate Austrian where otherwise you would be a second-rate neoclassical.

Today, however, I want to deal with a point regarding Austrian theory that Lord Keynes raised on his blog yesterday as it touches on a philosophical issue that I think is very important in economics more generally. This is the relationship between Mises theories of what he calls human action and Kant’s theory of a prioris and categories. First of all, let’s just let Kant himself get a word in on his a prioris and categories:

The a priori conditions of a possible experience in general are at the same time conditions of the possibility of objects of experience. Now I maintain that the categories, above cited, are nothing but the conditions of thought in a possible experience, just as space and time are the conditions of intuition for that same experience. They are fundamental concepts by which we think objects in general for appearances, and have therefore a priori objective validity.

A prioris and categories for Kant then are the conditions of the basis of our experience. A category in the Kantian system has the same status as our lived experience of time and space in that it is needed in order to comprehend reality (this is important, we will return to this in a moment). Now, what Mises is trying to do in his Human Action and his doctrines of so-called Praxeology is to derive something similar to Kant’s categories but which rather than form a basis for understanding the conditions that allow thought to be possible, they set out the conditions that allow action to be possible.

If that sounds a bit weird that shouldn’t surprise you. It should sound weird. Because it is weird. Deeply weird. Saying that the experience of time and space are necessary for our intuition is very different from saying that we can crystallise out conditions on which our actions rely. The former, as we shall see, is problematic. The latter is downright madness.

Kant’s was an epistemological project. The idea was to try to figure out the base-determinants of our thinking. Mises’ was more so a neurosis; an obsessive search for justifying the “correct” manner in which people should act. Actually, we can call such a project by its name: it was an attempt to form a rigid and codified doctrine of ethics and morals. I hesitate to call this moral philosophy because that’s not what it was at all. Moral philosophy tries to hit at Universal principles by which to evaluate Particular choices we must make. What Mises was doing was more so laying out a guide to life. Again, we can and should call this what it was: Mises was trying to write a Bible.

But back to Kant for a moment. What was fundamentally wrong with his project? Simple: it was too rigid. The question of time and space is interesting in this regard. Kant’s ideas about time and space, relying as they did on Newtonian physics, were basically overturned by Einstein and his relativity theory. Kant enthusiasts claim that it is unfair to criticise him on this; after all, they say, how could he have known? Well, actually the philosophical issues that Einstein’s theory raised were already there in George Berkeley’s De Motu. Naturally, Berkeley was (and is) usually ignored in these debates as parts of his theories were picked up and vulgarised by David Hume who then suppressed all the really interesting questions that these questions raised.

What does this tell us about the weakness of Kant’s approach? Again, it is all about its rigidity. Although we can break this down in a Berkeleyian manner and show that such rigid systems ultimately rely on what Berkeley called “occult qualities” — that is, overly abstract terms — it was, as I have shown before, Hamann that really nailed down the meta-problem with Kant and his ilk: it was their use of language that produced the rigidity. In trying to treat human language, which is the only real a priori that exists, as an overly precise tool it quickly becomes hard and fragile and loses all expressive power. It loses, in a very real way, its flexibility; and that is what is the key problem with Kant’s theory: it is in large part inflexible, trying always to subsume the New under its musty old categories and a prioris.

Now we can again return to Mises. If Kant’s project was doomed from the outset due to inflexibility what does this tell us about Mises’ project? Simple. It was complete and utter nonsense. Trying to stuff peoples’ actions and their reasons for doing various things into a tiny box of concepts is not only suffocating, it is borderline delusional. What Mises was really engaged in was the setting up of language traps that he then had people fall into. He tries to section off or limit the basis on which people can act and then purges everything else from his worldview. If an action doesn’t fit in with Mises schema it simply disappears.

Mises’ project was quite manifestly the product of a sick mind but it can tell us something about more mainstream theories. Neoclassical microeconomic theories, for example, seek to do something similar in a slightly less inflexible and dogmatic way, as I have pointed out elsewhere. And for this reason they too are doomed to fail. Human beings are infinitely mutable and changeable. There are very, very few constants under the sun when it comes to human behavior (the incest taboo being a notable exception) and the moment any constancy or regularity is found and articulated it is likely already on the way out.

Human beings are also extremely reflexive. Tell them that they act in one way and they’ll almost immediately start acting in the opposite way. This is not surprising given that the one doing the telling is just another human being and so the act of telling just an attempt to establish a relationship of authority — which is what Kant, Mises and the neoclassicals were and are ultimately trying to do. Human beings have a very ambivalent relationship toward authority and so the establishment of such relationships can only last so long before the system is shaken up. So our theories need to be flexible if they want to survive. And when I say “survive” I do not mean survive as a mosquito might in a glob of amber but rather survive in the sense that they can continue to grow and develop together with the events they seek to capture.

Infinite Time: Why the Long-Run in Economics is Metaphysics

Matias Vernengo has a very interesting post on the long-run and the short-run in economics. As he says, the long-run and short-run are just thought experiments (he calls them “methodological tools”). So, the long-run is an imagined period when all adjustments had taken place with which the economy is pregnant with at any given time, while the short-run is the “imperfect” period of gestation where these adjustments are taking place.

Vernengo then correctly points out that when economists actually designate periods of time — 3 months, 6 years and so on — to these periods they get into an awful mess. I totally agree. But I would go one further: the long-period is not just a thought experiment; in actuality is a metaphysical idea. Joan Robinson, who took the same position I think, used to in her later writings call it “the mysterious long-period”.

Not only does the long-period not exist and will never exist, but it is not even a real concept and any application of it to real historical time will always result in nonsensical statements. This is because historical time is non-ergodic and so as forces of adjustment move through time they cause changes that alter the course of the trajectory of the economy. In conclusion, talking about the long-period is really just a metaphysical thought experiment and the moment it can be seen to have any influence in a discussion of any real-world situation it can be known with confidence that the discussion has gone completely awry.

Is Paul Krugman the Left’s Milton Friedman and Should We Argue With Him?

In response to my previous post on Paul Krugman I got two negative responses; they are the two negative responses I always get when I criticise Krugman.

One is from what I call the Krugtrons. These are the people who seem to hold Krugman up as a sort of infallible deity. They remind me of the libertarians who worship Ron Paul (Paulbots) or those on the left who adulate over Obama so much that they defend him on policy stances that would drive them crazy if a Republican were doing them (Obamanoids). The Krugtrons typically attack you personally, pick up on minor errors or engage in obfuscatory arguments to prove that either you’ve misunderstand the Words of the Krugman. It’s a bore but I’m used to it and I couldn’t really care less.

The other criticism is from those on the left who might actually agree that Krugman is wrong but nevertheless think that anti-austerians should have some sort of United Front against the austerity-brigade. This argument I’m far more partial toward even though I ultimately disagree with it. I disagree with it because I think that arguing against Krugman makes no difference to the politics of austerity. Indeed, no matter how many people agree or disagree with Krugman the politics of austerity will not change. Nor will Krugman himself with his columns in the New York Times change these policies (I’m not aware that Krugman has any policy influence, frankly).

No, I think that it is far more important for economists of the anti-austerity type to trash out their differences and have a real debate. I think its instructive to look to the figure of Milton Friedman in this regard as Friedman is the economist who, more than any other, changed the economic landscape from the center-left Neo-Keynesian orthodoxy of the post-war period to the center-right, neoliberal orthodoxy of the post-Bretton Woods era.

There are other parallels too. Friedman and his monetarism was, as I have written about before, the acceptable face of a far more radical program of economics; that is, the Austrian school of von Mises and von Hayek. Some might say that Krugman is the acceptable face of ideas — such as those about income distribution, private  debt and fiscal policy — that have long been the bastion of the heterodox Keynesian economists.

Krugman, however, is no Milton Friedman. And I say this for a number of reasons.

First of all, Krugman is not an innovator like Friedman was. Whatever you think of the doctrines of the monetarists — and I think very lowly of them — it was a whole new paradigm. The manner in which Friedman used the weaknesses of the old Neo-Keynesian orthodoxy against itself were quite ingenious. Krugman, by comparison, is nothing more than a tinkerer. He has no new paradigm that might capture peoples’ imaginations (I would argue that the only ones that possess this are the MMT economists).

Secondly, and more importantly for the criticisms I received for my piece, Krugman does not engage with those that largely agree with his policy stances but want a far more radical rethinking of economics; that is, Post-Keynesian economists. Friedman did engage with those who largely agreed with his policies but wanted a more radical rethinking of economics and he did this through the Mont Pelerin thought collective.

Milton Friedman was then a much more skilled leader-figure. He had a whole new paradigm that he flogged both in the popular press daily and to policymakers. While at the same time he formed a United Front at home not by exclusion, but by inclusion; by engaging others in debate (and probably profiting from this himself in many ways). Where Friedman was a naturally unifying figure, Krugman is a naturally divisive figure. By not acknowledging others who broadly agree with him he sows the seeds of frustration and discontent. And, at the end of the day, the whole thing becomes about Krugman himself rather than about the development of a new set of ideas.

Karl Marx’s Conspiracy Theories

Yesterday I was debating the author of the post I criticised which used what I think to be Marx’s faulty argument regarding the Irish famine and my attention was brought to a footnote that I had missed when I read the section on the famine the Das Kapital. The footnote, had I come across it would have greatly strengthened my original argument.

In my previous post I wrote that Marx’s interpretation bordered on conspiracy theory. Well, now I can go one further: Marx’s argument did not border on conspiracy theory; it was a conspiracy theory. In order to see this we must first read the footnote and then analyse it.

How the famine and its consequences have been deliberately made the most of, both by the individual landlords and by the English legislature, to forcibly carry out the agricultural revolution and to thin the population of Ireland down to the proportion satisfactory to the landlords, I shall show more fully in Vol. III. of this work, in the section on landed property.

Read that carefully. Marx is making an absolutely bizarre argument. According to him, the individual landlords and the English legislature are using the famine to “forcibly carry out” an agricultural revolution and “thin the population of Ireland down to the proportion satisfactory to the landlords”. If that sounds like a conspiracy theory that’s because it is.

Marx is attributing active agency to both the individual landlords and the English legislature. He is accusing both of them of some sort of plot — likely in a smoky backroom of the British parliament — to use the famine as a means to bring the population under control. He even suggests that they have a target of some sort (“thin the population of Ireland down to the proportion satisfactory to the landlords“). Indeed, I showed this passage to an historian friend of mine who specialises on Ireland in this period and he jokingly quipped “I wonder if they came up with a number”.

This is conspiracy theory pure and simple. How did Marx know that this was going on? He certainly doesn’t seem to have had access to any records or documents that proved this conspiracy. And I’m confident that if such records existed Irish historians would have found them by now in the archives — indeed, such records might still today cause a minor diplomatic incident between Ireland and Britain.

No, Marx just made this up. Just like conspiracy theorists do. He read a bunch of extremist thinkers on population reduction and thought “well, if they say that about population reduction then the elites must be doing this”. This is exactly what conspiracy theorists like Alex Jones do today. They read academic works by extremists in the sphere of biology and conclude that governments are putting fluoride in the water as part of population control measures. The themes are even the same: population reduction; monopolistic capitalists seizing property using the government etc.

I’ll bet that there are lots of passages like this in Marx’s work and that people miss them (myself included) because they assume that Marx is talking in theoretical generalities when he makes claims about Capitalism-in-the-abstract. But it is clear from the above passages that he is not just talking about theoretical generalities when he discusses certain real historical events; he is talking conspiracy theories.

Marx may or may not have been a good economist and philosopher; that is up in the air. The more I read on both topics the more I am convinced that Marx’s contributions are vastly exaggerated; but I am at least open-minded that there might be something of worth there. His historical accounts of particular events, however, are highly misleading and appear to have elements in them that, were they said in public today, would be laughed at.

Round and Round We Go: Krugman-Magoo Strikes Again!

Here we go again. Paul Krugman has made another, erm, innovative discovery. Apparently, Krugman has just discovered that when government deficits rise interest rates may not rise at all, indeed there may be a tendency for them to fall. Think you’ve heard this before? Well, that wouldn’t be particularly surprising if, I don’t know, you have internet access because that is the Modern Monetary Theory (MMT) argument.

Krugman then goes on to say that this proves macroeconomics wrong but as Matias Vernengo writes:

[Krugman] gets everything right, including the bold claim that mainstream macro (the only one he acknowledges, even though he knows better) is all wrong.

I don’t know exactly what Vernengo meant by his bracketed comment, so I don’t want to put words in his mouth, but for me this raises an interesting question and one that I have been wondering for some time: is Krugman a plagiarist or is he completely and utterly myopic to the point of Mr. Magoo-esque comedy?

Okay, let’s lay out the evidence. Over the past few years Krugman has been taking some positions that Post-Keynesian economists have taken for decades; literally decades. Consider that Krugman recently began to hint that income distribution might be entirely detached from what neoclassicals consider fundamentals. As I highlighted in the piece linked, Krugman gets it all wrong but he is certainly moving in what might be considered a heterodox direction. But its the occasional MMT-style comments that Krugman makes every now and then that really have me wondering what’s up with Krugman — this latest being only one of many.

“But shouldn’t we just be glad that Krugman ‘gets it’?” some might ask. No. Absolutely not. If Krugman is not citing his sources properly then he is not a real scholar. Scholars must cite their sources lest they become megalomaniacal idea-gobbling charlatans who care more about their popular image than the work they do. Think Lyndon LaRouche and his bizarre perversions of elements of Western philosophy or L Ron Hubbard and his, erm, discovery of “Dianetics”. In cases such as these not only are the ideas stolen but they are also degraded and bastardised.

Well, let’s lay out the case against Krugman to see if we can provide a judgement. Okay, so we know that Krugman is familiar with heterodox and Post-Keynesian work. The evidence for this is extensive; one could consider this awful review of John Kenneth Galbraith’s work from way back in 1996 (there is also a more recent photo where Krugman is sitting down with The New Industrial State on his desk, which I cannot find at this moment in time) or one could point to the fact that he himself claims to have read Hyman Minsky’s Stabilizing an Unstable Economy which contains discussions of endogenous money and Kaleckian income distribution dynamics. Or one could point to the fact that he is clearly aware of the MMT argument (who isn’t at this stage?).

So, there’s your evidence. I think that it’s pretty conclusive: Krugman has exposed at least his eyes to such work. The question is to what extent it penetrated his mind. Here I will lay out the only three possibilities I can think of. (Alternative possibilities are welcome in the comments section.)

(1) All the ideas contained in the work that Krugman seems to have read actually did penetrate his mind fully. Krugman is thus to be thought of as a highly competent scholar but, ultimately, a fraud. He would then be using these ideas to buttress his own standing in the media and the profession by coming to the same conclusions as heterodox economists, but then pretending to arrive at them in slightly different ways making himself appear highly original and innovative. This is the “Econburgler” argument.

(2) Same as the above, but Krugman is afraid that actually saying that he is a heterodox economist will ruin his standing. By this reading, Krugman is the humble savior of heterodoxy. He is trying to secretly package their ideas and send them, like a parcel-bomb, straight into the lair of the mainstream without their even knowing it. This is the “White Knight” argument.

(3) Krugman cannot actually read the stuff he claims to read properly or he hasn’t read it at all. By this reading, Krugman just scans books like The New Industrial State and Stabilizing an Unstable Economy with perhaps some of the material slipping somewhere into his subconscious where it might re-emerge some months later as a Krugman-original. This is the “Krugman-Magoo” argument.

So, the court has been, as it were, in session for long enough. What is my judgement on the matter? Well, I’m of the mindset that you should never imagine a conspiracy exists where we can assume simple human incompetence. For that reason I’m going with the Krugman-Magoo argument. It seems to me that Krugman, having such a large and devoted following on the liberal-left due in part to his admirable opposition to the Iraq War and his opposition to austerity, has a bit of an ego on him. Combine this with a typical neoclassical level of acumen for scholarship and I think you get the Krugman-Magoo result.

The upside to this: if heterodox economists keep barraging Krugman with new ideas many are likely to filter into his subconscious and emerge some months later. The downside: don’t expect any acknowledgement from the ever myopic Krugman-Magoo.

 

Update: A commenter has pointed out that Vernengo and I misread Krugman’s original post. He did not say that macroeconomics is wrong. Well, he did but he was being sarcastic. I came at this from Vernengo’s post so the misreading spread — which is obviously on my shoulders.

The same commenter thinks that this slight misreading, of an ironic remark, debunks this post. It does not. Krugman still argues that when a recession hits and the deficit increases, the central bank steps in and holds down interest rates. You can read this here:

The recession of 1990-91 (driven by the S&L crisis and a burst bubble in commercial real estate) drove up the deficit, and also led to Fed easing.

This is not in line with Krugman’s previous arguments where he has said that the LM-curve is upward-sloping and that only in a liquidity trap can the government spend without driving up interest rates. Unless he has redefined “liquidity trap” to mean “any recession” then 1990-91 is not a liquidity trap and yet the government can still, according to late-July 2013 Krugman, spend without driving up rates. Despite my misreading of his ironic statement, Krugman-Magoo remains a wet fish, flopping around in the mud of his own lack of clarity on these issues.

Metacritique of Dogmatic Reason: Johann Georg Hamann

Lord Keynes of the Social Democracy for the 21st Century blog has been making my life difficult recently. He’s been making me leave rather curt replies to what appear to be his knee-jerk criticisms of Freud — which I don’t enjoy doing because he’s one of the sharpest and most philosophically sophisticated economic bloggers around.

Now today, after having got none of my work done, he’s written a piece on epistemology which once again leaves out the only viewpoint which I think worthwhile. How on earth am I to not reply? Yet in doing so, I must outline an entire tradition of philosophy which, I would argue, has been ruthlessly repressed in the Anglophone world. So much so that I fear very few will even have heard the names I’m going to utter.

Okay, so Lord Keynes says that “in essence there are four positions held since the late 18th century on” epistemology and then goes on to lay out that of Quine, the empiricists, Kant and Kripke. They all revolve, in some way or another, around Kant’s distinction between synthetic a priori, analytic a priori, synthetic a posteriori and analytic a posteriori judgements. I am not going to explain these here as Lord Keynes has done a fine job in the linked post.

So, what is the viewpoint I feel that is left out? Well, we could go to the post-structuralists for answers but no, I think it more productive to show that the position I want to elaborate has been there from the very beginning; from the moment Kant wrote his Critique of Pure Reason. And so I will instead focus on Johann Georg Hamann who wrote the Metacritique on the Purism of Reason in 1784.

Some biographical detail first. Hamann was a funny sort. He largely remained outside of official circles of philosophy in his time. Yet, he was recognised as one of the leading philosophical thinkers in Germany when he was alive. He was good friends with Kant who, despite Hamann’s fierce opposition to his system, listened carefully to his criticisms (which I don’t think he understood) and even tried to co-author with him on occasion.  Kant’s ear was probably open because Hamann is the one that translated Hume’s major work into German which then went on to influence Kant to write his Critique. In a sense Hamann pushed Kant to write his great work, yet Kant never really understood what Hamann was saying.

Outside of the Anglophone world Hamann is fairly well-known. Goethe and Kierkegaard thought him to be the finest thinker of his time — a judgment I think correct. But within the Anglophone world the only major figure who engaged with him was Isaiah Berlin in his book on Counter-Enlightenment. Berlin’s book, I think, served as a warning to everyone else in the Anglophone world to avoid him as one might avoid an impure object (not unlike Freud today…). I say this in all seriousness. The Anglophone intellectual world since the early 20th century strikes me as one mired in crude systems of bullying and taboo — neoclassical economics is only the most extreme manifestation of this.

Anyway, what did Hamann have to say about epistemology? Hamann’s criticism of Kantian epistemology is tied up with his more general criticism of what he considered to be Kant’s dogmatic adherence to Reason. Hamann traced this leap to David Hume and the book he had translated for Kant. Hume, as Hamann correctly noted at the beginning of his Metacritique, had basically taken over his philosophical revolution for the Irish philosopher George Berkeley. This revolution, to boil it down, consisted in saying that all general ideas were really only particular ones repeated many times over.

We must understand this point for two reasons. First of all, because Kant then sought, through the use of “Pure Reason”, to try once again to discover general ideas. This is what all this synthetic a priori talk is really all about (and it is, to tie this back to Lord Keynes’ post, what von Mises would try to do with his praexology nonsense). Secondly, we must understand this because Berkeley had made this argument in a very different context. Berkeley, you see, thought that the scope of Reason was severely limited and that custom and tradition played a major role in thought. This was also the position of Hamann who, speaking of what the likes of Hume and Kant were trying to do, disapprovingly wrote:

The first purification of reason consisted in the partly misunderstood, partly failed attempt to make reason independent of all tradition and custom and belief in them. (Pp207)

Let us just survey the scenery here because it is so often forgotten. Berkeley made an argument about epistemological principles but he did so based on his idea that Reason was subordinate to custom and tradition. Hume then picked this argument up and ignored everything else Berkeley said, choosing instead to simply worship Reason. Kant then picked up this argument via Hume and tried to solidify this worship of Reason into epistemological principles that do not even need reference to immedaite experience, thus making Reason a dogmatic Absolute completely unfettered from custom and tradition. Or as Hamann writes in his typically beguiling prose:

The second [purification of reason] is even more transcendent and comes to nothing less than independence from experience and its everyday induction. After a search of two thousand years for who knows what beyond experience, reason not only suddenly despairs of the progressive course of its predecessors but also defiantly promises impatient contemporaries delivery, and this in a short time, of that general and infallible philosopher’s stone, indispensable for Catholicism and despotism. Religion will submit its sanctity to it right away, and law-giving its majesty, especially at the final close of a critical century when empiricism on both sides, struck blind, makes its own nakedness daily more suspect and ridiculous. (Pp207-208)

Did anyone ever try to refute Berkeley’s original arguments on custom and tradition? Of course not. Hume and Kant were quite crude thinkers in that they didn’t realise that they were engaged in the construction of a new form of custom that was to become increasingly dominant in the world: Enlightenment; the worship of Reason. And one doesn’t successfully help found a dogma by pointing out its arbitrariness! Better to allow your followers to wipe out your opponents (and your progenitors) by ignoring them!

(For the Post-Keynesians interested in philosophy, by the way, please take note… this might sound awkwardly familiar.)

Anyway, the ultimate criteria on which this new dogma rested, according to Hamann, was on the use of language. In Kant, Hamann found a use of language that would become extremely popular as the Enlightenment captured ever more minds. He wrote, for example, that “a good many analytic judgments indeed imply a gnostic hatred of matter or else a mystic love of form” and that synthetic judgements tended to display “nothing more than an old, cold prejudice for mathematics” (Pp209-210)

Again, I do hope that the Post-Keynesians have their ears pricked up here. Because a certain economist from the first half of the twentieth would often repeat very similar criticisms of both economics and of science in general.

But back to Hamann and his “metacritique” of epistemology. Hamann says that what such forms of thinking do is enact such a violence on our use of language that it becomes very nearly meaningless babble. He writes that “it works the honest decency of language into such a meaningless, rutting, unstable, indefinite something = x that nothing is left but a windy sough, a magic shadow play, at most, as the wise Helvetius says, the talisman and rosary of a transcendental superstitious belief in entia rationis [a being with no existence outside of the mind], their empty sacks and slogans.” (Pp210).

What Hamann is complaining about is something that any critical economist should be aware of: the ability of a narrowly precise method to do such damage to its adherents abilities to even understand the language that they use that it gains complete and total control over them. Hamann saw this, all those years ago, as inherent not in the mathematical tendencies of neoclassical economics; but in what he considered the mathematical tendencies of Enlightenment itself.

With that, I will lay out a passage which I think lays out what I might jokingly refer to as Hamann’s own epistemology. One which, I should add, I adhere to completely.

Sounds and letters are therefore pure forms a priori, in which nothing belonging to the sensation or concept of an object is found; they are the true, aesthetic elements of all human knowledge and reason. The oldest language was music, and along with the palpable rhythm of the pulse and of the breath in the nostrils, it was the original bodily image of all temporal measures and intervals. The oldest writing was painting and drawing, and therefore was occupied as early as then with the economy of space, its limitation and determination by figures. (Pp212)

There is your a priori. It is in the beating of your heart and the movement of your lungs. No, that does not mean that it is biological determined or some other such nonsense. For biology is but a form of knowledge and all knowledge passes through a single filter: that of language; of sounds and letters. Language dominates Reason and is not subject to it. And language, if one cares to pick up an etymological dictionary, is handed down to us via custom and tradition. There is no escaping it. Not even by falling on one’s knees and worshiping at the temple of Science and Reason.

Even the Statisticians Are Highly Dubious of Applying Their Methods in Economics!

Lars Syll just ran a rather amusing quote from a handbook on mathematical statistics in which the author — a mathematical statistician — lays out all the cop-out arguments used by those who apply these methods in a dubious manner in the social sciences. I looked up the original book and I think that it might be worthwhile outlining another quote which is, in a sense, even more damning to those who try to use these methods in socials sciences and, most especially, in economics.

Such things [i.e. techniques which can help get over certain fundamental problems with statistical modelling] work only if there is some relatively localized breakdown in the modelling assumptions — a technical problem which has a technical fix. There is no way to infer the “right” model from the data unless there is strong prior theory to limit the universe of possible models. (More technically, diagnostic and specification tests usually have good power only against restricted classes of alternatives.) That kind of theory is rarely available in the social sciences.

Ouch! That’s something a lot of folks in the economics and financial community don’t want to hear! Not only is the author of a major statistical textbook saying that these methods are probably not so suitable for social sciences as some might have you believe, but he is also saying that ultimately the model is needed prior to the statistical investigation. Someone by the name of John Maynard Keynes made this very point a long, long time ago in his On a Method of Statistical Business-Cycle Research: A Comment. There he wrote:

It will be remembered that the seventy translators of the Septuagint were shut up in seventy separate rooms with the Hebrew text and brought out with them, when they emerged, seventy identical translations. Would the same miracle be vouchsafed if seventy multiple correlators were shut up with the same statistical material? And anyhow, I suppose, if each had a different economist perched on his a priori, that would make a difference to the outcome.

Keynes was not, I think, just saying that you needed a theory prior to an econometric test — many econometricians would admit that much (although some would not). He was also saying that an economic theory could not be proved or disproved by such a test. This is because, among other reasons, an economic theory may be valid in one historical period and invalid in another. Thus if an econometric test is run on a twenty year time series and a given causal theory only really applies to the first year of that time series, the test will show the theory to be wrong. Or, take another example: an econometric test is run on a twenty year time series when such a causal theory applies but then in the twenty-first year this causal theory breaks down.

Such is the nature of the non-ergodic material that economists must deal with, as Keynes knew well.