Varieties of Scientific System:
Veblen to the Postmoderns
Economics, Carleton University
The University of Prince Edward Island
Thorstein Veblen was a proponent of "evolutionary science". So, whether and to what extent he was a "systematic social thinker" depends on the systematic character of his evolutionary science. I respond to this saying, because we have yet to reconcile the classic conjectures of Parmenides and Heraclitus, evolutionary science, a systematic account of radical change, is still something of an oxymoron. Let me explain.
Where Angels Fear to Tread
It is arrogant indeed to pretend to make true statements about the systematic character of any one's social science. The history of system in social science, essentially the history of theories about how the world is known to be what it is thought to be, is a cacophony of points and counter points, of misunderstandings and disagreements. And that is only the background chaos of the rupturing elaboration of social science as it has enlisted simple reduced forms of these disputed epistemic and philosophic systems to serve competing visions of the social good.
Still, a question is there to be answered.Attempts at social science have been systematic in different ways. Some have been systematic in their rules of procedure. Others have elaborated systematic,that is logically coherent, representations of society. Still others have been systematic in the consistency with which they have elaborated a concept of human kind into an account of social behavior. It would seem, then, that the nature and extent of system in the works of any particular social scientist or school of social scientists can best be explicated in the context of an account of the varieties of system making an appearance over the history of social science.
The Preconceptions of Veblen's Evolutionary Science
Veblen began as a student of philosophy, so perhaps it was Emmanuel Kant from whom he drew the basic elements of his ideas of science and evolution (Dorfman, 1949, 436-7); but a number of ideas of science and evolution pervaded the information environment of the late nineteenth century, and Veblen was sensitive to contemporary currents of opinion. During a short stay at Johns Hopkins he came into contact with the Pragmatists John Dewey and C.S. Peirce. From the latter he learned about the evolution of the idea of science itself (1). His doctrine of instincts, as in "the instinct of workmanship", and the "predatory instinct", owed much to another Pragmatist, William James. Whatever else, then, Veblen's debt to American Pragmatism is evident (White, 1973); and having roots in American Pragmatism, he also had roots in the Scottish Common Sense Philosophy (Flower and Murphey, 1977). We should understand him, then, in this context. It is his understanding, not ours, that is at stake, however, and he can speak for himself.
....."[Evolutionary science] is a theory of a process, of an unfolding
.....sequence. ... The modern scientist is unwilling to depart from the
.....test of causal relation or quantitative sequence. When he asks the
.....question, Why? He insists on an answer in terms of cause and effect.
.....He wants to reduce his solution of all problems to terms of the
.....conservation of energy or the persistence of quantity. This is his
.....last recourse. And this last recourse has in our time been made
.....available for the handling of schemes of development and theories of a
.....comprehensive process by the notion of a cumulative causation. ...
.....[T]he evolutionist leaders ... [refuse] to go back of the colorless
.....sequence of phenomena and seek higher ground for their ultimate
.....syntheses. ... [They have] shown how this colorless impersonal
.....sequence of cause and effect can be made use of for theory proper, by
.....virtue of its cumulative character. It is in the human material that
.....the continuity of development is to be looked for; and it is here,
.....therefore, that the motor forces of the process of economic
.....development must be studied if they are to be studied in action
.....at all. ... The change is always in the last resort a change in
.....habits of thought. ... In all this flux there is not a definitively
.....adequate or absolutely worthy end of action, so far as concerns the
.....science which sets out to formulate a theory of the process of
.....economic life. ... From what has been said, it appears that an
.....evolutionary economics must be the theory of a process of cultural
.....growth as determined by the economic interest, a theory of a
.....cumulative sequence of economic institutions stated in terms of the
.....process itself." (Veblen, 1898, pp. 58-61, 72, 75, 77).
In this context Veblen sought the processes of social evolution. In his view, emerging patterns of thought and action were by definition inconsistent with previously formed habits of thought and action. Agents with interests vested in obsolescent institutions were in conflict with those seeing their fortunes in emerging institutions. Further, behavior rooted in one instinct, such as that of "workmanship", was in conflict with behavior rooted in another instinct, such as that of "predation". And always the independent intention of instinctive action and reaction kept the process going. The task of the social scientist for Veblen, as it was for Peirce, was to persist in observation of the efficient causes in this process until some "theory of cumulative growth " became evident.
In Veblen's science there was no hiatus between intuition and conclusions drawn from observation. By confining his attention to efficient causality, he was able, like Kant, to place the metaphysical productions of intuition, such as Goodness, Truth, and Freedom, to one side. These may have been meaningful, even real, but they were not the products of science. The effect of intuition in human action, however, was at the core of his notion of evolution. When he labeled the natural law concept and the associationist psychology as "metaphysical" (Veblen, 1900) he is to be understood to be saying that they were not scientific in two different ways. The idea of natural law was simply metaphysical, and not scientific. The associationist psychology entailed an incorrect denial of the presence of metaphysical intuition, that is, knowledge "without previous education", in human agency.
From these psycho-epistemic foundations Veblen built his notion of evolution and evolutionary science. His was neither idealistic Hegelian evolution nor biological Darwinian evolution, nor any other of the variety of evolutions that permeated the mid-nineteenth-century information environment (Schumpter, 1954, pp. 435-446). In its uniqueness it provided him with a standard against which to judge Classical, Neoclassical, and Socialist economics (Veblen, 1961, pp. 82-278, 409-456). Before consideration of the character of system in those schools of thought, however, a further word is in order about the character of system in Veblen's economics.
There are at least three grounds for questioning the systematic, that is 'conceptually consistent', character of Veblen's pursuit of social science.
First, given his account of the evolutionary nature of social change, it seems inconsistent of him to have presumed that observation would result in "a theory of a process of cultural growth". This "seeming", however, stems from a confusion of different varieties of scientific system. In a certain variety of system, a theory is an explanation of a class of events, rather than a single event. It uses a logically consistent model based on fixed suppositions to "predict" specific outcomes in a number of cases. In the variety of system appropriate for explication of a radically indeterminate accumulation of unique events there can be no such theory. Veblen was systematic, that is, consistent, insofar as his positive contribution, as opposed to his criticism of others, was not a theory of this sort, but a set of historical accounts (Innis, 1924; Goodrich, 1958); that is, a set of analyses based on historical research. In this he was consistently Heraclitean. It is true, of course, that Veblen did postulate a concept of the nature of human kind and its behavior. Drawn from this concept his "theory of a process of cultural growth" was not the product of persistent empirical observation. It was an a priori product of Emmanuel Kant's metaphysics and William James's psychology; and therein lies a possible inconsistency, a possible want of system in Veblen's economics.
Second, it could be objected that Veblen's use of terms such as "predatory instinct" and "conscientious withdrawal of efficiency" imply value judgements that his rejection of a certain kind of teleology forbade. The objection will not stand. Any value judgements seen in Veblen's accounts in this regard are necessarily in the mind of the reader, and not necessarily in Veblen's. Besides, in the Kantian view, denial of the scientific character of moral law does not deny its existence, nor does it preclude a role for moral judgements in human agency.
Third, it could be objected that Velen's implicit belief that persistent observation would produce conformity of the mind to reality was inconsistent with his Kantian belief that the mind was active in the process of generating truth. That is, that there was something not from observation in the process of knowing -- something that the associationist psychology did not admit. Because, if there was, then there was something solipsistic in the mind conforming to reality. The mind would be making reality in its own image, and conformity of mind to reality would be to some extent a tautology. This, of course, is the objection that the Postmoderns would have to the adjective "systematic" in a description of Veblen's social science.
Classical, Neoclassical, and Socialist Economics
Utilitarian economics, Classical and Neoclassical, ascribed scientific significance to an ideal world governed by immutable natural law. At the same time it presumed human agents to be motivated by a simple pleasure-pain response system. There is no systematic connection between these things. Indeed, there is a logical hiatus between them, but the force of Jeremy Bentham's predication gave the impression that they belonged together (Schumpeter, 1954, pp. 428-429). For the Utilitarians, observation and intuition were divorced from one another, reducing human agency to passive reaction, and leaving physics and metaphysics to describe accessible but different realities. This compound of rationalism and idealism produced an account of determined and recurring elements in human agency driving society to a preordained natural equilibrium. Conditions were postulated. Human agents passively reacted in a predictable way, moving the economic system towards its equilibrium position. There was, then a logically consistent economic system that could be modeled, and about which theories could be conjectured. Karl Marx's socialist economics, having drawn on Hegelian dialectical idealism, was evolutionary in the sense that conditions in the model changed; and it presumed that the organization of productive activity generated an epiphenomenal information environment. Still, like its half sibling, Neoclassical economics, it was an illegitimate child of the extra marital union of idealism and rationalism that constituted the systemic flaw in Utilitarianism. It, too, tended to a Parmenidean equilibrium -- a communist utopia. J.B. Clark's Neoclassical economics clarified the unchanging parameters that determined the Classical system's equilibrium outcomes, and defined efficiency and price as consequences of the equation of marginal valuations. In short, Clark reenforced the Classical Economics agglomerate variety of scientific system.
The Logical Positivists
In a philosophic reaction to the official Kantian doctrine of the last decades of the Austrian Empire (Haller, 1991), Positivists produced a systematic scientific method intended to exclude any Kantian metaphysical concepts. According to the Positivists, only empirically measurable knowledge was "meaningful", that is, viable in scientific argumentation (Kraft, 1953; Joad, 1950). All theoretical statements were classified as either "synthetic" or "analytic". Synthetic statements included a sub-class of statements involving esthetic and ethical judgements. Such judgements were considered to be merely emotive sounds expressing subjective approval or disapproval. They were not empirically verifiable and therefore they were categorized as meaningless. Another class of synthetic statements, that is statements not true by definition (" Men prefer blonds.") could be empirically confirmed, at least in principle, and therefore they were thought to be meaningful. Statements involving only value judgements ("Blonds are better than brunettes.") could not be empirically confirmed, even in principle. Analytic statements were merely an expression of the logical relations between concepts (constructs, symbols) that followed from their definitions. Such statements were themselves tautologous insofar as they merely elaborated what was already contained in their definitions. Tautologies, however, were considered to be of two sorts. The first sort, to use Paul Samuelson's terminology (and to bring the discussion to bear on social science), was said to be of vacuous applicability. For example, the statement, "Utility is always maximized because people choose to do what they do.", is true by definition and, therefore, trivial. The second sort could be reduced to operationally meaningful propositions. The statement, "The rich have more than the poor.", is a tautology that prompts the empirically testable synthetic statement, "The rich save more than the poor.".
In this scheme of things any epistemic activity independent of observation, was denied significance, with two important exceptions: (1) the judgement that only measurable knowledge was scientifically meaningful, and (2) the production of a language and method of positive science by which meaningless, not measurable metaphysical statements could be removed. Therein lay both the systematic character of and the systemic problem in Logical Positivism. The rules of method in positive science, being analytical or synthetic and not operational, were themselves "meaningless".
For the Positivists observation was everything and intuition nothing, so that reason, method, logic, and continuity characterized what was thought to be an accessible real world. This defined their variety of scientific system in which discontinuity, belief, luck, creativity, and the consequences of mental activity independent of simple observation were banished to a world that was thought not worth accessing.
The Logical Positivists were systematic in a way that Veblen was not. Indeed, they were systematic to a fault insofar as their system blinded them to their inability to be systematically, that is consistently, simply observant. For example, in the Positivist method, testable synthetic statements are generated separately from the data that verifies or falsifies them. They do not emerge from simple observation, but are chosen from a number of possible theories elaborated before definitive testing takes place. Putting this another way, a number of different theories may be conjectured as explanations of a single set of observations. If more than one explains the observed phenomena, and this is often the case, empirical measurement is indecisive as to meaning. When theories are thus "under determined" (3) choice of theory has to be based on something other than observation, and the positive method is no longer systematic. That is to say it is no longer consistently empirical.
There was one element of system in the Positivist method that was internally consistent, but produced a problem that Veblen did not have to face. Veblen allowed for mental creativity both in the technical and institutional shaping of society, and in the thought processes interacting with that environment. Accordingly, for Veblen, neither social nor intellectual novelty needed to be logically connected to the past. In the view of the Positivists there were no illogical advances in science. Natura non facit saltum. Holding the term "cumulative" to this narrower Parmenidean meaning, the Positivists postulated no noncumulative leaps in meaningful knowledge. In fact, however, as Thomas Kuhn pointed out, science advanced by paradigmatic ruptures. Systematic Logical Positivism was belied by historical observation.
On these and other grounds, Postmoderns returned to the conjecture that the mind was independently active in the production of truth. When they did, however, they denied the power of the mind to overcome its own activity or the productions of its activity in order to access objective reality. Accordingly, the Postmoderns consistently (systematically) denied any objective reality to ideas such as Truth, Beauty, or Goodness; and they refused to recognize any substantial difference between science, history, literature, or any other textual material. For the Postmoderns observation was swamped by intuitions imported into the mind by way of psychological and physical instruments of knowing. "The medium [was] the message." Perceived reality, floating in an insubstantial dream of Kantian ideals, was thought to be unstable, value laden, and chaotically discontinuous -- in a word, Heraclitean.
But I digress into what was to be. Much had to happen in Economics before it unwittingly backed into the postmodern paradigm.
From Evolutionary Institutionalism to Positivist Neoclassicism
Economics had undergone systematic change by the time of Veblen's death in 1926, and it was to change even more in the Great Depression of the 1930s. The attack of the German (and Anglo-American) historical economists on what Veblen had dubbed Neoclassical Economics, had made its mark. By the time of Lionel Robbins (1932), Neoclassical Economics had been so cleansed of any dependence on presumed fact that it was, indeed, only analytical. Economic historians, more or less following the program of the historicists of the Methodenstreit (Schumpeter, 1954, pp. 807-824.), and Institutionalists, more or less following suggestions latent in Veblen's critique, practiced something like evolutionary social science. The economic historians (Charles Horton Cooley, Chester Wright, Harold Innis, and most of those who eventually formed the Economic History Association in 1941) softened the older historical economics, and set the tasks of economic history (Journal of Economic History, 1946, supplement) to be the production of quasi Veblenian accounts of economic factors in history. They chronicled the influence of geography, technology, institutions, and entrepreneurial creativity in the economic life of societies (Lane and Riemersma, 1953). The Institutionalists were even less a unified school (Dorfman, 1955; Rutherford, 1996). W.C. Mitchell, in particular, seems to have carried on the Peirsean Pragmaticist task of measurement in search of theory. In general, however, the Institutionalists described organizational constraints on economic behavior, rather than utility maximizing behavior within those constraints. They were more concerned with Veblenesque exposition of society's problems, than with apologizing for them, as they thought Neoclassical economists were. Dissatisfied with the contemporary organization of economic activity, many drifted off into the post war world of Keynesian macroeconomics, stabilization policy, and social welfare programs (Rutherford and Morgan, 1998).
The influence of Veblen was very much alive in the 1930s in the United States (Yonay, 1998), though systematic evolutionary science was not the order of the decade. A number of approaches were taken. In the sense in which Paul Feyerabend has used the phrase, it was a time of "anything goes", even though those pursuing any one approach had little tolerance for those pursuing any other. This "pluralism" ended with the late arrival in Economics of Positivism.
Following Paul Samuelson's 1947 manifesto, what has been called "mainstream economics" became "positive". Samuelson produced his Foundations of Economic Analysis, when the activities of the Vienna Circle were peaking, just before its dispersion in 1938. The war that followed delayed publication of The Foundations. Milton Friedman's Essays in Positive Economics appeared in 1953. The doctrine became explicit in C.E. Ferguson's intermediate microeconomic tex in the late 1950s, and in Richard Lipsey's introductory text in the late 1960s.
The positive approach in Economics was not American. It arrived from Europe with scholars -- economists, mathematicians, and philosophers -- most of whom fled from anti democratic, authoritarian regimes (Weintraub, 1983; Craver, 1986, Craver and Leijohnhufvud, 1987). Their fusion of economic theory, mathematics, and statistics, and their abhorrence totalitarianism transformed the empirical tradition in American Economics, giving it an aspiration to systematic theory, a particular systematic empirical method, and a conservative bias. Traditional American economics, as represented by the work of the National Bureau of Economic Research, founded under the direction of Veblen's student, Wesley Clare Mitchell, was "measurement without theory". The work of the Positivists, according to Tjalling Koopmans, was measurement directed by theory (Patinkin, 1981, pp. 66-70). In the Positivists' view, the vestiges of Veblen's evolutionary economics were not systematic, and just a little suspect.
Problems with the positive approach in Economics were associated with the "underdetermination" of theory, which the economists referred to as "the specification problem". The specification problem showed up in as basic an element in economic theory as the Law of Demand. Apart from analytic knowledge acquired outside of price and quantity data the law could not be empirically tested. Its "major value [was] as a means of organizing knowledge and thinking about a problem, and also as a guide to the qualitative answers about the direction of effects" (Friedman, 1962, p. 36). The problem appeared, for example, in attempts to judge the relative merits of Milton Friedman's Permanent Income Hypothesis and J.M. Keynes's Habit Hypothesis of consumer behavior:
.....Thus, while the P.I.H. and the Habit Hypothesis start out from quite
.....different philosophical view points - with the P.I.H. postulating a
.....cooly calculating consumer maximizing his utility over a horizon of
.....many periods, while the Habit Hypothesis has the consumer
.....responding with little apparent thought to the force of habit - they
.....reduce to the same mathematical formulation when it gets down to
.....the actual fitting of the statistics (Wannocott, 1974, p. 351).
Mainstream economics in its positivist phase was systematic twice, but not thrice, over. Its modeling of the social process had the system of nineteenth-century economics. Its method had the system of early-twentieth-century positivism. It was, however, not systematically objective. In fact, there were many value judgements involved in the practice of positive economics -- value judgements consonant with the Cold War information environment of the United States. Even economic historians who, mocking the "empty boxes" of Neoclassical theory, had come close to the ideal of evolutionary science, succumbed to the reigning anti socialist mentality.
In the climate of opinion generated by the Cold War, "historicism" was seen to be an intellectual disease caused by the virus "economic determinism", and was associated with the totalitarian enemies of the "open society" (Popper, 1943, pp. 262, 269, 270). So, in the late 1950s, when Robert Fogel called his colleagues away from what he termed "traditional history", towards "scientific history", he was saving them from heresy, and leading them into the democratic light of Logical Positivism. The New (quantitative) Economic History systematically drew its hypothesis from Neoclassical economics, and produced a conservative interpretation of history.
Resurgence of the Evolutionary View
A new evolutionary view grew out of the internal contradictions of Logical Positivism. The new view was systematically, that is, consistently, evolutionary, because it explicitly and famously denied the possibility of a universally and always true theory of human behavior. In its extreme forms it denied not only the possibility of objective theories about reality, it denied that the mind had any reliable access at all to objective reality.
The main Postmodern attack came in History, Literary Criticism, and Philosophy of Science, and was directed at the positivist paradigm as such. A new set of preconceptions, a new view of how we know what we know, came into fashion, as Postmodernism attempted to play a role that Positivism had played in its time (Rorty, 1982. 1998). Want of a certain kind of system in Postmodernism makes it impossible to systematically describe its doctrine. It may help, however, to divide the Postmoderns into philosophers and historians; though the philosophy of science and intellectual history tended to merge.
Two philosophers, Paul Feyerabend and Richard Rorty, provide examples of the position. Feyerabend's (1975, 1978) main attack was directed at the notion that "science" was different from and a more reliable form of discourse than any other. He depicted the systematic scientific method of the Positivists as an absurdity, and chronicled examples that showed that in the historical practice of science "anything goes". For Feyerabend, there really was no "science" of the sort in which the Positivists and Veblen believed. Rorty, a reborn Pragmatist, treated science, history, and literature as different but equally "truthful" forms of discourse. What these discourses asserted to be truths were true because they "hung together" with other knowledge and they were useful. For Feyerabend and Rorty all facts were "value laden", and the Positivists' "meaninglessness" applied to knowledge of physical reality as well as to metaphysical ideas. In the hands of such philosophers Postmodernism reduced the evolution of thought to a chaotic succession of associated sets of contestable working hypotheses. In the eyes of more traditional philosophers, such Postmodernism was degenerate, systematic "relativism" (Laudan, 1996).
The arrival of postmodern History is not easy to chronicle. By the late 1930s there were two kinds of intellectual history. The one, practiced by the "Progressive Historians", construed the ideas associated with certain classes of people to be an important driving force in historical change (Hofstadter, 1968). The other, associated with the work of Arthur O. Lovejoy (1940), redefined intellectual history as the history of ideas. By the late 1950s, this evident duality, along with the emergence of other influences on the writing of history, prompted intellectual historians self consciously to redefine their task. In the process they turned all history into historiography, and confused the history of ideas with the philosophy of science, literary criticism, epistemology, psychology, and sociology.
Support for the new view came from a number of directions. The sociology of knowledge (Stark, 1958) matured in time to underpin Maurice Mandelbaum's mid-1960s querying of Lovejoy's idea of the history of ideas (Mandelbaum, 1965). Mandelbaum established the distinction between internalist and externalist history as a correlative of the difference between idealism and materialism in the history of ideas. The internalist historian studied the logical unfolding of ideas. The externalist studied the non logical reformation of ideas by historical events. In 1966 Ferdinand Saussure's Course in General Linguistics was published in English, and by 1969 Michel Foucault's The Archaeology of Knowledge was available in English. From these sources came the notion that texts, documents, and histories, and the ideas contained therein did not have stable meanings. Like Saussures's words, they took meaning from their contexts, and their contexts changed discontinuously as information environments followed one another in chaotic fashion (Skinner, 1969).
All of this reassessment of knowledge took place during the Cold War Period of American history, particularly during the social upset that accompanied the Vietnam War. The latter was a catalyst in the rise of new approaches in Intellectual History; approaches that grew out of attention to the "small world of random and chaotic happenings". In that world neither positivism nor idealism could explain human behavior. In that world even the categories of natural science were artificial "constructs of the human mind" shaped by the social environment in which they appeared (Wood, 1977); and all systems of thought could be systematically deconstructed into sets of interested value judgements.
Postmodern Mainstream Economics
It is ironic that postmodern economics, growing out of the internal contradictions of Positivism, appeared first in the writings of those who least intended it. Milton Friedman's attempt to justify testing hypotheses drawn from an ideal Neoclassical economic system illustrates the process. Knowing that Neoclassical assumptions were not consistent with reality, he proceeded "as if" they were, and then judged the resulting hypothesis "valid"(useful?) on the basis of test results (Friedman, 1953, pp. 12-14). Friedman's position was substantially that of the latter day pragmatist, Richard Rorty. Neither the believed metaphysical nor the perceived physical world needed to correspond to reality for "science" to be "useful".
The same was true of the New Economic History. Where Friedman proceeded "as if" some model of the economy represented truth, thereby admitting that it did not, Fogel (1967, 1983) proceeded as if some known historical fact was not true. This negation of factuality compelled him to elaborate in the place of history a model of the economy, and then to proceed as if the model represented truth. Such a retreat from history to conjecture was less credible than Friedman's retreat from realistic theory, but the same slide into Postmodernism is there. Separation of theory from reality, together with positivist transmogrification of the principles of economics into axioms of mathematics (Blaug, 2003) led to the demise Neoclassical theory as Lionel Robbins had laid it out.
In consequence of this paradigmatic change the usual products of North American graduate programs in Economics are engaged in testing hypotheses drawn from narrow, bastardized versions of Neoclassical theory. If results indicate that an hypothesis will not "predict" the short to medium term past, the model in terms of which the hypothesis has been conjectured is adjusted until it does. Many do econometric work for governments, private corporations, and "think tanks", where broad policy considerations, that is the questions asked, are their employers's. Of course, many economists in universities and political parties defend their own policy commitments. What ever the case, however, these commitments are not products of systematic empiricism. Rather, systematic empiricism is their first line of defense.
Adjustment to the internal contradictions of Positivism has not deprived Economics of a highly technical, that is systematic method. Postmodern economics is systematic in a way in which Veblen's economics was not, but Veblen's economics was systematically evolutionary in a way in which postmodern economics is not systematically positive. The spirits of Heraclitus and Parmenides fight an unacknowledged war in the bosom of postmodern mainstream economics.
There have been economists who have seen and made explicit the internal contradictions of postmodern economics. They saw that economics evolved, but not as an evolutionary science. Their's was not Veblen's evolutionary account of an evolving subject. Neither was it an account of an internally consistent elaboration of a set of unchanging principles. It was, rather, an account of a body of knowledge changing discontinuously under the external influence of a large number of social and informational factors. J.J. Spengler (1940, 1953, 1972), at Duke University, and Harold Innis (1934, 1935, 1936), at the University of Toronto, expressing an opinion that emerged from the informational turbulence of the 1930s, made this point. They were not alone. When, in 1938, T.W. Hutchison complained about the failure of Economics to conform to the canons of positive science, Frank Knight responded that Economics was not a positive science, and succinctly put the postmodern view.
.....It should now be clear that we cannot separate the discussion of
.....reality from the discussion of the knowledge of reality, the nature of
.....the structure of thinking, and the conditions of its validity, or the
.....workings of "mind" (meaning minds) (1954, p. 159).
This view has continued to receive expression in a new subdivision of Economics, the History of Economic Thought, though many even in that subdiscipline have remained in denial (Shabas and critics, 1992).
The economics profession as such has remained in denial with respect to its new relativist perspective. Nonetheless, relativism has asserted itself in the discipline with the inevitability of the new informational environment. Perfect competition was replaced with "workable competition". J.M. Keynes filled the shell of Marshallian economics with irrational expectations and inefficient outcomes. Neoconservative positive economics admitted the unreality of the Neoclassical model in "as if" true propositions. It wrote history "as if not" true. Monetarists demonstrated that the quantity theory of money held under certain circumstances; that is, it held if it held, and did not hold if it did not, though that had no necessary connection with Neoclassical theory. Economics bifurcated, half becoming advanced mathematics and statistics, and half remaining discursive. Along with the "math and stats" came Game Theory, Chaos Theory, Post Keynesian theory, Post Autistic theory, and Cybernetics, all imported into economics from sources outside of traditional Neoclassical theory (de Marchi, 1993). Those who practiced "standard economics" were more interested in "predicting" the past, than in the analytic purity of Neoclassical theory. Once again it was as if Feyerabend looked at late-twentieth-century Economics before declaring that in science as in literature, "anything goes". Economics became a "discourse" like all the others (Samuels, 1990).
Reborn Evolutionary Economics
Certain elements in late-twentieth-century economics did self consciously turn in the direction of Veblen's concerns. Research groups formed around what they deemed to be old style and new style "evolutionary economics"; and the "economics of competitiveness", which had evolutionary aspirations, momentarily captured the policy spotlight in America.
In 1966, the Association for Evolutionary Economics began publishing its Journal of Economic Issues. Though dedicated to the "Old Institutional Economics of Veblen, Commons, and Mitchell", the Association has been pluralistic in the methods and approaches that it supports. Veblen, by comparison, was narrow mindedly systematic. Still, the Journal has carried institutional studies, and has featured systematic internalist (Veblenian) as well as postmodern externalist analysis
More recently, since 1991, the Journal of Evolutionary Economics has published studies growing out of Schumpeter's depiction of economic development as a rupturing of Walrasian general equilibrium. The journal has presented attempts
to mathematically express the dynamics of this rupturing, or to explain just how it is that the static mathematics of the Neoclassical Arrow-Debrew model cannot account for such a fundamentally important phenomenon. The work of Brian Loasby (2000, 2001) in this cluster of opinions is similar to that of Veblen in so far as it traces institutional evolution to epistemological roots. Still, the more recent "research project" is distinct from that of the Veblen oriented Association for Evolutionary Economics. One looks long and hard for any reference to Veblen in the articles in the Journal of Evolutionary Economics. It would seem, too, that Loasby's reduction of novelty to the recognition of previously unrecognized "connections" between exogenously given elements does not satisfy the meaning of "creativity"; but repeats what Veblen treated as the mistake of "utilitarian associationist psychology". The evolutionary economics of the Journal is more systematic than Veblen's insofar as it is much more technical. It adds to the mathematized Neoclassical model by investing it with even more sophisticated mathematics. Veblen did not add to Neoclassical theory. He dismissed it.
The Economics of Competitiveness appeared as a combination of the New Institutional Economics and Endogenous Growth Theory written into international trade theory to explain post industrial global economic activity. (Grossman and Helpman, 1991; Lipsey, 1991).
Endogenous Growth Theory, building on both Marxist and Neoclassical theory, was intended to explain what Veblen called "a process of ... growth". The New Institutional Economics, with no reference to "evolutionary economics", intended to explain what in fact were certain elements in Veblen's "cumulative sequence" of institutions. Neither the New Institutional Economics nor Endogenous Growth Theory intended to succeed in Veblen's project, to which they made no reference; nor did they in fact succeed in Veblen's project, because they were not systematic as he was systematic. Specifically, they did not have his concept of capital, nor did they have his concept of institutional formation, both of which were essential to his evolutionary approach.
For Veblen, capital was "a matter of knowledge, usage, habits of life ... a body of technological knowledge" (1908(a), p. 325). It grew not by a random or a
chaotic process, but by instinctively purposive additions to knowledge. Against this stood the Neoclassical "pecuniary view of capital", that is, capital as so many dollars, a sum of unspecified ownership that could be accumulated by predacious redistribution and expended with no necessary improvement in welfare (Veblen, 1908(a); 1908(b)). This non Veblenian concept of capital was at the heart of growth theory when it bifurcated at mid point in the twentieth century. A Marxist idea of capital, still defined as a sum of unspecified ownership, was introduced into Keynesian macroeconomics to produce a Cambridge, U.K.,"Post Keynesian" theory of growth. In the information environment of the Cold War, this theory was given microeconomic foundations and transmogrified into a competing Cambridge, U.S., Neoclassical theory of growth. Unfortunately for their proponents, a long fruitless search for an empirical measure of capital as they defined it (Usher, 1980, pp. 1-21) provided internal evidence that neither theory was "operationally meaningful". Growth theory, as presented in either Cambridge, was an attempt to explain a subject " while abstracting from the subject to be explained" (Johnson and Kraus, 1974, p. 335). Late in the twentieth century, yet another revision the theory, under the title of "Endogenous Growth Theory", added little to the bastardized theoretical system. It bowed to Veblen by classifying knowledge as a form of capital, but, by measuring this as the amount of money spent on research and development, it left itself entirely within the Post Keynesian and Neoclassical systems.
The New Institutional Economics, as it came from Ronald Coase, was an attempt to rebuild the theory of the firm outside the price system. As it came from Stigler's version of "the Coase Theorem", however, it was an attempt to explain institutional formation in terms of the price system. In so doing it left human agency in the degenerate state of passive response to given choices that was characteristic of "the utilitarian associationist psychology".
However systematic the Economics of Competitiveness, and it was a combination of a number of systematic theories (growth theory, the theory of the firm, and the theory of dynamic comparative advantage), it did not have the consistency, that is the systematic persistence of view, of Veblen's evolutionary science. It was, rather, a hodgepodge of Classical, Marxist, Keynesian, and positive Neoclassical views. It was randomly postmodern, an unplanned mixture of intuition and observation, of Heraclitean and Parmenidean elements, a "research program" open to a systematic Veblenian critique.
(1) For an account of Veblen's understanding of historical progression in the idea of science see Robert Griffin, "What Veblen Owed to Peirce - The Social Theory of Logic", Journal of Economic Issues, vol. 32, 1998, pp. 733-757.
(2)I have relied on Frederick Copleston's History or Philosophy, volume VI, to access Kant's Critique of Pure Reason, but not to access his Critique of Judgement.
(3) For a concise critique of positivism, and a rejection of Postmodernism, see Larry Laudan, Beyond Positivism and Relativism, Westview Press, Boulder, 1996; especially pp. 1-25.
(4) Much of what follows here can be found in tony Lawson's Economics and Reality, Routledge, London, 1977. Still, I do not agree with his proposed solution to the "problems of economics".
1968, The Origins of Pragmatism, Macmillan, London.
2003, "The Formalist Revolution of the 1950s", Journal of the History of Economic Thought, vol. 25, pp. 145-156.
1964, A History of Philosophy, The Newman Press, Westminster, vol. 6.
1953, The Vienna Circle (trans.) New York.
De Marchi, N., (ed.)
1993, Non Natural Social Science: Reflecting on the Enterprise of "More Heat than Light", Duke University Press, Durham and London.
1949, The Economic Mind in America, vol. 3, the Viking Press, New York.
1955, "The Role of the German Historical School in American Economic Thought", American Economic Review, vol. 45, pp. 17-28.
1975, Against Method, NLB. London.
1978, Science in a Free Society, NLB, Atlantic Highlands, Humanities Press, London.
Flower, E. and Murphey, M.G.,
1977, A History of Philosophy in America, G.P. Putnam's, New York.
1967, "The Specification Problem in Economic History" Journal of Economic History, vol. 17, pp. 283-308.
1983, "'Scientific' History and Traditional History", in G.R. Elton and R.W. Fogel (eds.) Which Way to the Past?, Yale University Press, New Haven, pp. 5-70.
1953, "The Methodology of Positive Economics", in Essays in Positive Economics, University of Chicago Press, Chicago, pp. 3-43.
1962, Price Theory: a Provisional Text, Aldine, Chicago.
1958, "The Case of New Countries" in D.f. Dowd (ed.), Thorstein Veblen: a Critical Appraisal, Cornell University Press, Ithaca.
Grossman, G.M. and Helpman, E.,
1991, Innovation and Growth in a Global Economy, MIT Press, Cambridge University Press, Cambridge, Ma.
1991, "On the Historiography of Austrian Philosophy", in T.E. Ubel (ed.), Rediscovering the Forgotten Vienna Circle, Kluwer Academic, Boston. Pp. 41-50.
1968, The Progressive Historians, Knopf, New York.
1929, "The Work of Thorstein Veblen" Southwestern Political and Social Science Quarterly, vol. 10, pp. 56-68.
1934, "Economics for Demos", University of Toronto Quarterly, vol. 3, pp. 389-95.
1935, "The Role of Intelligence: Some Further Notes," Canadian Journal of Economics and Political Science, vol. 1, 280-287.
1936, "Discussion in the Social Sciences", Dalhousie Review, vol. 15, pp. 401-13
1981, The Principles of Psychology, Harvard University Press, Cambridge, Mass.
1950, A Critique of Logical Positivism, Chicago.
Johnson, H.G. and Kraus, M.B.,
1974, General Equilibrium Analysis, Allen and Unwin, London.
1954, On the History and Method of Economics, University of Chicago Press, Chicago.
Lane, F.C. and Riemersma, J.C.,
1953, Enterprise and Secular Change, George Allen and Unwin, London.
1996, Beyond Positivism and Relativism, Westview Press, Boulder.
1997, Economics and Reality, Routledge, London and New York.
1991, Economic Growth: Science and Technology and Institutional Change in a Global Economy, Reprinted in Canadian Business Economics. vol. 2, 1993, pp. 3-17.
2000, "Market Institutions and Economic Evolution", Journal of Evolutionary Economics, vol. 10, pp. 279-309.
2001, "Time, Knowledge and Evolutionary Dynamics: Why Connections Matter", Journal of Evolutionary Economics, vol. 11, 393-412.
1940, "Reflections on the History of Ideas", Journal of the History of Ideas vol. 1, pp. 3-23.
1965, "The History of Ideas, Intellectual History, and the History of Philosophy", History and Theory, vol. 4, pp. 33-66.
1998, "Europe in America: Veblen and His Canadian Connections", in M. Rutherford (ed.) The Economic Mind in America: Essays in the History of American Economics, Routledge, London., pp. 167-189.
1943, The Open Society and Its Enemies, Harper and row, New York.
1952 (1932), The Nature and Significance of Economic Science, Macmillan, London.
1982, Consequences of Pragmatism, University of Minnesota, Minneapolis.
1998, Truth and Progress, Cambridge University Press, Cambridge, U.K.
1996, Institutions in Economics: the Old and the New Institutionalism, Cambridge University Press, Cambridge Mass.
Rutherford, M. and Morgan, M.S. (Eds),
1998, From Interwar Pluralism to Post war Neoclassicism, Duke University Press, Durham.
1990, Economics as Discourse: an Analysis of the Language of Economics, Kluwer Academic Publishers, Boston.
1954, History of Economic Analysis, Oxford University Press, New York.
Shabas, M. and critics,
1992, "Breaking Away: History of Economics as History of Science", History of Political Economy, vol. 24, pp. 187-247.
1969, "Meaning and Understanding in the History of Ideas", History and Theory, vol. 8, pp. 260-275.
1940, "Sociological Presuppositions in Economic Theory", Southern Economic Journal, vol 7, pp. 131-157.
1953, "Sociological Value Theory, Economic Analysis, and Economic Policy", American Economic Review, vol. 43, pp. 340-349.
1972, "Social Science and the Collectivization of Hubris", Political Science Quarterly, vol. 87, pp. 1-21.
1958, The Sociology of Knowledge, Routledge, Kegan Paul, London, 1958.
1998, Memoirs of an Unregulated Economist, Basic Books, New York.
1980, The Measurement of Capital, University of Chicago Press, Chicago.
1898, "Why is Economics not an Evolutionary Science", Quarterly Journal of Economics, vol.12. Reprinted in The Place of Science in Modern Civilization, Russel and Russel, New York (1961), pp. 56-81.
1900, "The Preconception of Economics", Quarterly Journal of Economics, vol. 14,. Reprinted in The Place of Science in Modern Civilization, Russel and Russel, New York, (1961), pp. 148-179.
1908(a), "Fisher's Capital and Income", The Political Science Quarterly, vol. 23; reprinted in T.B. Veblen, Essays in our Changing Order (L. Ardzrooni, ed.) Viking Press, New York, 1945, pp. 148-172.
1908(b), "On the Nature of Capital", Quarterly Journal of Economics, vol. 22; reprinted in T. B. Veblen, The Place of Science in Modern Civilization, Russel and Russel, New York, 1961, pp. 324-351.
1961, The Place of Science in Modern Civilization, Russel and Russel, New York.
1974, Macroeconomics, Irving, Homewood.
1973, Pragmatism and the American Mind, Oxford University Press, New York.
1977, "Intellectual History and the Social Sciences", in H. Higham and P.K. Conkin, New Directions in American Intellectual History, Johns Hopkins University Press, Baltimore, pp. 27-41.
1998, The Struggle over the Soul of Economics, Princeton University Press, Princeton.