Friday, 5 February 2016

THE PROBLEM OF ECONOMIC SCIENCE




The “problem” of economic science is that it does not address a real problem because it seeks to reduce the real problem of human pro-duction to a mathematical problem. But a mathematical problem, unlike the production of human needs, which is pure activity, is not a real problem because the “solution” to a mathematical problem is already implicit in the terms of the “problem”! In a mathematical problem, the solution is already contained analytically, it is implied by, the terms of the problem. A mathematical problem yields only a formal identity of equations whereby the “terms” on the left hand side “equal exactly” those on the right hand side so that the terms on both sides are emptied of any “real” content or substance, of any “practical value”, in time and in space, in history. A mathematical equation does not tell us anything at all: it is a pure language game con-fined to its de-fini-tions (Lt. finis, limit).

Already in pre-Socratic Greece, the verb “proballein” referred to “the posing of an enigma” (cf. G. Colli, La Nascita della Filosofia, p.78ff). In other words, a problem is the resolution of an enigma. Yet, because of its “enigmatic” and therefore contradictory nature, an enigma can be solved only “practically”, never “logically” or “mathematically”, in the sense that an enigma is a contradiction whose resolution can never be predicted precisely or even imprecisely but is real in the sense that it is capable of sur-prising us.

Aristotle defined an enigma as a contradiction with practical consequences – a contradiction that did not just rest destructively on its logical horns (one contradictory statement annuls its opposite) but would eventually resolve itself into something new:

“The concept of the enigma is to explain [to say something practical about] real things [reality] by connecting impossible things [contradictory statements about them]” (v. Poetics, ch.22 and Rhetoric).

Consequently, an enigma is a problem that requires a practical (not a logical or mathematical), solution or a resolution where the antagonism of the parties sustaining contradictory theses is resolved through a decision based on the democratic participation of these parties to the dialogue, to the discussion.

(One existing English translation only barely renders Aristotle’s meaning:

“For the idea [i.e. the meaning] of an enigma is this: the conjoining of things impossible with the inherent properties of a thing”.

This translation has the demerit of hiding the all-important connection Aristotle sees between enigma and dialectics and therefore also the connection between active dialogue and political participation as against abstract written exposition [a lecture or an address, “literature”] or logical presentation, as in mathematical “language”.)

The posing of an enigma, the connection of impossible or contradictory events, of course, is the entire foundation and rationale of dia-lectical reasoning.

The problem of economic science is that it seeks to resolve mathematically the rational contradictions that express a real practico-political object, that is, human antagonism over production. (Cf. G. Colli: “L’enigma infatti, umanizzandosi, assume una figura agonistica, e d’altra parte la dialettica sorge dall’agonismo,” Nascita..., p.78.) By reducing or seeking to reduce all reality to simple mathematical id-entities (identical entities), economic science removes the problem or enigma of its own enterprise – the real material contradictions in human productive activity whose practical solution requires political resolution or resolve or decision-making. And therefore economic “science” also seeks to remove the discursive, agonistic and thus also the political participatory element of discussion over economic reality. Almost universally, the Western concept of “science”, by presenting scientific activity as “truth” or “scientific laws” and technologies or techniques as Technology, involves this removal of political decision-making from human activity, especially in the sphere of the material production of human needs.

Our review of Menger’s work thus far has revealed how the father of the Austrian School of Economics sought with appreciable intellectual honesty to ground his economic science into the real world of the pro-duction of human needs and wants – how he sought to reconcile economic science with history and anthropology. His noble attempt foundered, however, because of the formalism of his assumptions, because of his attempt to reduce history to a set of deterministic and ultimately mathematical formulae – something that the social engineers - Heinrich Gossen, Stanley Jevons and Leon Walras - did in explicit mathematical language but abandoning thereby the paradoxes of economic science that Menger’s considerable humanistic intellect had nobly preserved. (It is well-known how all three of these founders of marginal utility and neoclassical economics belonged to engineering circles who actively sought the betterment of working-class condition: cf. Jevons’s The State of Labor and Walras’s self-avowed socialist convictions.) The result, far from a resolution of “the problem” of economics, was the intellectual and political disaster we call “general equilibrium analysis” of which game theory is a subset.

The real value of Menger’s work – just like that of many of his Austrian successors, Schumpeter especially, but even Hayek – lies in his explicit or implicit refusal to renounce the search for real materialist foundations in economic inquiry. On this rests the greater claim of the Austrian School to politico-economic relevance than that of all other branches of Neoclassical economic theory.

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