The Knowns and Unknowns of Economics

What is the impetus for the study of economics? It is a highly personal and sometimes irrational answer. Just like the existence and meaning of the agents within the economy, it is a deeply philosophical question -- but one that just like those agents searching for the meaning of life, we economists should be searching, deliberating, conferring within ourselves and each other for the answer of what is it that we wish to achieve. A non-trivial working definition could be to advance practical policy to increase the standard of living and wealth on net and as fairly as possible for future generations as compared to their predecessors.

In 1917 John Dewey stated in regards to philosophy it should - “develop ideas relevant to the actual crisis of life, ideas influential in dealing with them and tested by the assistance they afford.” on the same page economics should aim to move towards this reality.

Notwithstanding the answer, most outcomes benefit from greater knowledge of the economy: the how and why of its machinations. The title of this paper is derived from an early dispute within economics, the “Methodenstreit”. The outcome of which we live with today, however both Menger and Scholler weren't as dogmatic as history portrays as, whilst proselytising their method and approach to get to the “truth”/ “Economic Purity”, both recognized that the other's work was important.

Whichever side of the divide you believe, the main goal of both authors was to get to some form of workable and practicable knowledge. This is what the true debate should be upon, after the resolution of what the goal of economics is, what is there to know and how do we know it within economics?

Economics in any definition you choose involves some degree of human activity. Humans as can be observed are living contradictions: irrational and rational, emotional and robotic, self interested and community minded. Economic agents have the capacity to learn and to change habits, they also can have habits so ingrained into heuristics that nudges don't work. Practically, you cannot forecast decisions on such a creature with absolute certainty. Beyond that is the radical and terrosisng uncertainty of the future. We all know that we don't know the complete future and never will, that's why insurance is even a market that exists. For the knowledge of the future changes its course. This is not to assume chaos that economics is a Sisyphean endeavour, but a necessary point to start an agonising reappraisal of what we can know.

So what can we know? Well nothing and more than can be imagined, simultaneously. Using the dualism of Menger and Scholler, both abstractions and deductions are of practical use in hand with the empirical positive and institutional statements. However as the economy becomes more complex and the limitations of humanity become more apparent alongside the radical uncertainty, getting concrete evidence is of more importance than the mathematisation or exploration for academic pleasure of the subject, to pivot from Neoclassical abstractions to one based in the here and now. By using neoclassical as a tool to teach but by no means that of being instructive of reality. For no meaningful doctrine coming from deduction or abstractions is mutually exclusive to be in reality from findings sought by empiricism.

Thus the duality can aid and be the brushes with which we learn and interact with the evolving tapestry of the economy. However this view requires an abandonment of “a priori'' and “forecasts” certainties. For both the deductionists and inductionists. Creating a forecast on the future, by necessity changes the underlying original state for that forecast. The conditions that created the forecast were those where no forecast is present. The presence in either knowledge of, or even the existence of such a fact will alter evenly minutely the outcome. We are mapping a desert, not realising there are shifting sands all around and that the evolution of insights needs the profession of the artist, historian and philosopher. The nuance and intellectual integrity to negate and forsake ourselves, move back and diminish our aspersions and our vain attempt to project the future with absolute certainty. To provide insights but to do so cautiously and with the greatest emphasis on not knowing.

​This does leave us with a backward looking study, but the understanding of the past is the best tool to use as a tool to aid in the conversion to the goal that is decided upon for economics. This is also not to remove intervention as a tool or to say that we should not think of the future. The weight and certainty that is currently proclaimed by all schools of thought, needs to be abolished. Our pride is our hubris in achieving our goals. For if any one school of thought has or does proclaim intellectual dominance, a simple question is all that is needed to respond with - “where is the utopia?” Typically the epigone interjects to say that an outside influence halted them or that they never got full endorsement, is the response. A non trivial escalation is - “ Ha, so with your critical and penetrating thoughts, that would solve all economic problems, you could not convince smart well meaning people of your cause, does that not speak to the quality of the idea, if you could not convert even a simple majority to enact the necessary change?” - All such thoughts and schools of thought are made by man, who is feeble, prone to error and irrationality, no economist has undergone apotheosis and as such their words are not axioms but intriguing insights. Typically dedicated to solving the immediate problems or intellectual gaps created by previous generations, just like that generation before was focused on the pressing problem that the previous generation to them forewent - thus the study is iterative and not absolutist. But that can only ever be seen as progress if we realise why and how past generations operated and within ourselves of the value judgement on the work and ascribing if it brings us closer to the goal that we as a discipline want.

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