How Not to Explain Economics to Anthropologists - and to Some Economists

From Rex in “Savage Minds Backup” on “How to explain anthropology to a physicist"

HERE 

“Science works by proposing and disposing of hypotheses. Hypotheses come from a lot of places: previous research results, modeling, inspiration, and plain old intuition. Our intuition is a good source of scientific hypotheses because our species has evolved to possess an implicit model of the natural world that allows us to move, eat, balance, and so forth. Of course, this model is not perfect nor is it explicit. Which is why we need science. Nevertheless, it is a good source of hypotheses, and our intuitions about where things go when we throw them are an excellent place to begin elaborating, say, a classical mechanical account of projectile motion, regardless of where in the world you are when you throw something. This is because physical laws operate uniformly on earth, modulo extremely advanced concerns in quantum physics or the philosophy of science.”

Comments

I could not help thinking about how to explain the political economy of Adam Smith to a modern neo-classical economist let alone to an anthropologist, never mind the even more challenging difficulties of explaining it to a physicist.

Frankly, they just can’t get it.

Everybody being out of step except for the proverbial “Jock” (a well-worn phrase in the colloquial Scot’s culture of earlier generations) doesn’t quite capture the dilemma faced by many Smithian scholars, including those very few modern economists who have actually read Smith’s Works.

Smith turned his mind to scientific hypothesising in 1744 as a 21 year-old student at Oxford University, where he had some sort of life-changing experience causing him to drop out of his theology course leading to ordination into the Church of England in favour of the Juris course leading to the uncertain preferment of teaching.

All his life from 1744 Smith remained sceptical of Oxford’s academic culture where the faculty had “given up the pretence of teaching” and students largely were left to read alone and teach themselves, only obliged to attend prayers twice a day and a “lecture” once a week.

His life change took the form of his writing for his own satisfaction a long essay on the “History of Astronomy” (HOA), which he completed before 1758.  Thereafter he kept his essay in his bedroom bureau all his life and apparently told no one of its existence, including his close friend, David Hume, who first learnt of its existence in 1773, 22 years after they met in 1751. 

Moreover, his HOA, was saved from the destruction of almost all of his other essays, unfinished manuscripts and miscellaneous papers on his personal instructions a few days before he died in 1790. Therefore we may safely conclude that the HOA essay had special personal importance for Smith.

Most readers take the HOA at face value as a history of astronomy with some remarks at the beginning on “savage” and pagan ideas about natural events, many of them likely to frighten the ignorant into beliefs about malevolent invisible spirits, and gods tormenting those who annoy them, and generally ruling humans with lightning bolts and other disasters.

My own take on the HOA is that it signals when Smith ceased to believe in religious explanations for anything, except in the imaginations of the gullible, including the rigid beliefs of revealed religion.  In this latter, he was shocked to conclude that Calvinism shared the same basic theological "heresies" against human intelligence as the Catholic "superstitions" (while the Church of Scotland behaved better than Roman Catholics, and even better than the Church of England). 

While he had no problem with publically condemning the decadent ignorant superstitions of Roman Catholics – after all he was brought up in a Calvinist household by his religious mother whom he adored and could never hurt by revealing his changed views – he had a major problem of concealing his new philosophical conclusions from Calvinist zealots.  Hence, he went to the lengths he did to avoid saying or doing anything in public that would cause her embarrassment from any wilful behaviour on his part brought to her attention in the inevitable public controversies of doing so (his three predecessors as in the Chair of Moral Philosophy were each hauled before the zealots who dominated the Glasgow Presbytery).

Returning to the paragraph quoted from “Rex” above, I was struck by the sentence: “This is because physical laws operate uniformly on earth, modulo extremely advanced concerns in quantum physics or the philosophy of science.”

Yes, but what of social “laws”?  What of the dissimilarity of individual human behaviours?  Do these “operate uniformly on earth”?  Do people in the same family act “uniformly”, or in different generations, or in different cultures? 

We may expect a carbon atom to operate uniformly across the planet, or any other planet in this solar system or any other planet in any other solar system in the universe or any earlier or succeeding or preceding universe.   But of humans on this planet, now or earlier or in succeeding generations, can we assert or act upon the assumption of “uniformity”?  I don’t think so.

This means that observations may identify broad trends and possible or potential outcomes but the precision and endurance of possible conclusions that follow may not have the stability expected in physics across the universe.  Briefly, humans may and can “game” the system, either benevolently or selfishly, not necessarily immediately, but possibly later if not sooner.

This is not about denying the value of hypothesising, collecting data, and subjecting it to the usual statistical testing, and such like nor against experimenting with mathematical processes and such like.  I am against that science that comes to believe because something can be represented by maths that it is the real world.  

That Debreu “proved” that a general equilibrium solution can be “proved” is not proof of the proposition that therefore such a GE solution was possible in a real world economy. Worse, many modern economists believe with a frightening and sincere certainty that Adam Smith was near to saying so.  Fortunately for their lasting reputation, other modern economists, like Mark Blaug, robustly refuted such nonsense (Blaug unlike others had actually read and studied Adam Smith’s Works).

It remains my lasting disappointment that many anthropologists, whose work I read regularly, seem to have adopted the modern version of Adam Smith (on bargaining, self-interest, and even the invisible hand metaphor).  I do hope they do not look for mathematical “immutable” laws of human behaviour thinking that to do so is the route to “hard science”. 

I suggest that their reading of the first parts of Smith’s HOA might give them pause for thought.  The same goes for modern economists, though come to think of it some of them miss Smith’s point spectacularly (I am thinking here particularly of N. E. Aydinonat, 2008. The Invisible Hand in Economics: how economists explain unintended consequences, Oxford, Routledge).