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Macroeconomics: Descartian rationalism run amuck?
Descartes, the rationalist, made an important point: that we must use our reason. He can therefore be considered to be a key member of the group of philosophers whose work forms part of the Enlightenment.
However, as I've discussed earlier, pure reason unhindered by reality can take us seriously astray. This is the great risk of deduction – that its success depends entirely on the quality of the first assumption.
The scientific method therefore has a major component of empiricism, making it more robust than rationalism. It is this point that John Locke, the empiricist founder of the philosophy of the practice of liberty (classical liberalism), made when he wrote:
“When mathematical men will build systems upon fancy and not upon demonstration, they are liable to mistakes as others.”
Locke was himself a keen scientist and worked closely with Robert Boyle, the founder of the Royal Society (the world's oldest academy for the advancement of science). Indeed, Locke kept a register of the weather at Oxford for Boyle's use, and conducted a variety of scientific experiments. Locke was also a close friend of Isaac Newton (ten years his junior), and had trained himself in medicine (even though his formal training was in philosophy), thus being able to successfully conduct small medical operations (and even save a life). It appears that Locke was so highly regarded as a scientist in his own right that he was elected Fellow of the Royal Society.
Therefore the “discipline” of “macro-economics”, which emerged after the fanciful imaginations of Keynes, would have seemed most absurd and irrelevant to Locke. There is no way to make any meaningful proposition about the “macro-economy” in the scientific sense.
We can talk meaningfully about economic growth, institutions, and individual behaviour, but not about the “macro-economy”. There is no society, hence no “macro-economy”.
Mises seems to have been opposed to the idea of empiricism in economics, preferring an intuitive way of analysis of human choice. But such “intuition” is a form of empiricism, based on personal experience. We can also readily test these intuitions through appropriate experimental design. Mises's ideas are therefore not incompatible with the scientific method.
The key is to promote not just rationalism, but empiricism. True, there some mathematical models can lead to testable implications and therefore advance knowledge. But pure mathematical macroeconomics, as often practised today, being totally devoid of empirical validity, is (to put it mildly, as Locke did) “liable to mistakes”. It is the Descartian method run amuck, a method that has become fanciful.
Read more at Sanjeev Sabhlok’s Occasional Blog-Economics
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