https://orcid.org/0000-0002-4805-3350
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ABSTRACT
Economic theory has two inter-related, desiderata — valid argumentation, and scientific explanations of relevant realities. This paper explores whether these objectives can be achieved with a widely-deployed form of Neoclassical economics. Applying arguments drawn from logic to this type of theorizing produces far-reaching conclusions.
Acknowledgements
I thank Sebastian Sequoiah-Grayson and Lane Blume for very helpful comments, as well as the anonymous referee.
Disclosure Statement
No potential conflict of interest was reported by the author(s).
Notes
1 In contrast to economics students, philosophy students will be very familiar with these relations. Those acquainted with deductive logic will find this aspect of the discussion elementary, but perhaps not the conclusions.
2 Some accounts suggest that consistent mathematics is a special case of inconsistent mathematics, so suggesting further GTSCR links.
3 ‘Keynesian’ here refers to orthodox reinterpretations of Keynes (Citation1973b). On the widely accepted yet mistaken idea that Samuelson introduced the Neoclassical Synthesis in the 1955 edition of his textbook, see O’Donnell (Citation2019).
4 Many logic texts discuss these relations; for example, Fogelin and Sinnott-Armstrong (Citation1997, pp. 200–201) and Copi, Cohen, and McMahon (Citation2014, pp. 180–181, 620–621).
5 See Keynes (Citation1973a, p. 64; also pp. 40–43 (where probabilities are contraries within their series), 45–54, 63–66, 419), and (Citation1907, ch.5). On Keynes as a logician, see O’Donnell (Citation1989, pp. 28–49, 173–176; Citation1991; and Citation2021b).
6 For more detailed discussion, see O’Donnell (Citation2021a).
7 For further remarks and references concerning Simon, Leibenstein and Keynes, see O’Donnell (Citation2021a).
8 See Mill (Citation1874, pp. 145, 150–151).
9 See Snowdon and Vane (Citation1999) for its Introduction and interviews with prominent figures, including Tobin, Mankiw, Modigliani and Solow.
10 See, for example, Gali (Citation2015, pp. 1–6, 10–13) and Walsh (Citation2017, Introduction).
11 For earlier examples of SN, see Blanchard (Citation2000, pp. 1042–1043) and Krugman (Citation2009, pp. 183–184).
12 While Walrasian theory deploys a fictitious auctioneer, New Classical theory relies on an accurate mathematical forecasting model assumed to be possessed by all agents.
13 The pragmatic-pure distinction used here parallels the ADPN-NCPN or ‘saltwater-freshwater’ divide.
14 For example, A1 = all agents are completely selfish (as in PN), to which is added A2 = some agents consider others in decision-making (a Behavioral axiom) = ∼A1.
15 Woodford (Citation2003, pp. 9–12) views his theory as belonging to a ‘new neoclassical synthesis’.
16 For relevant remarks supporting these propositions, see chiefly Woodford (Citation1998, pp. 173–178, 185, 197, 199–202, 214–218), but also Woodford (Citation2003, pp. 1, 31–32, 37, 49, 55). The latter notably defines a cashless economy as one in which ‘there are no monetary frictions whatsoever’. For extended critiques of his model, see Rogers (Citation2006, Citation2011, Citation2013).
17 On fallacies, see Fogelin and Sinnott-Armstrong (Citation1997, chs. 11–12) or Copi, Cohen, and McMahon (Citation2014, ch. 4).
18 For Marshall’s position, see Groenewegen (Citation1995, p. 413); for Keynes’s, see O’Donnell (Citation1989, ch. 9).
19 Subsequent papers will closely examine PN’s logical foundations.
20 See, for example, Hahn (Citation1980, especially pp. 123, 129–131, 135–137).
21 On trivial errors, see below.
22 A very small number of reasoning-errors may be logically valid but non-explanatory. One is the ‘fallacy of affirming the consequent’ (the premisses assume what is to be proved). These can occur in economics (usually implicitly, as in PN is the true economic theory, therefore PN is the true economic theory), but apparently play no roles in SN theorizing. Should some reasoning mistakes occur in SN that are inconvertible to contradictions, my claim requires modification, say from ‘all’ to ‘most’.
23 See, for example, Fogelin and Sinnott-Armstrong (Citation1997, ch. 8) or Copi, Cohen, and McMahon (Citation2014, ch. 10).
24 See also Kuhn (Citation1970, chs 2, 9, 10, Postscript) and Chalmers (Citation2013, ch. 8).
25 It also cannot show what is ‘really going on’ due to its internal contradictions.
26 See, for example, Leplin (Citation1982).
27 Parts of Colander et al. (Citation2008) take a similar position.
28 The theorem applies equally to any non-orthodox economic theorizing using the same principles.
29 How economic theorizing can avoid this impossibility theorem will be discussed in a subsequent paper.
30 Links plainly exist here to Kuhnian and Lakatosian themes in the philosophy of science.
31 To rework the old joke, searching under the lamp-post because that is where one has mathematical sight will not reveal the location of the keys needed for scientific theorizing.
32 The vital thing is to ensure that the contradictions are genuine, not merely suppositions.