Reorienting Economics (Economics as Social Theory)

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Summary: Lawson keeps repeating himself
Review: Lawson(L)has written a book which covers the same material and makes exactly the same arguments as in his previous books and journal articles.There is nothing new,creative,original,innovative or novel in his latest book.L has said it all many times before.Any potential buyer of this book will find the constant repetition unsatisfying.L emulates Paul Davidson and G L S Shackle by saying the same thing over and over again. Again,we are told that the economic and/or social world is open,nonergodic and inorganic due to the fact of constant change over time .Lawson is only partly correct. This change is primarily brought on by technological innovation and advance over time that introduces "irregular regularity",to use Joseph Schumpeter's description of this process,into the social world.This means that the phenomenon studied by economists and other social scientists is a mixed bag that is partly ergodic,partly nonergodic;partly organic,partly inorganic;partly open,partly closed.Lawson is partly incorrect.The particular mixture that is occurring at any particular point in time is sometimes clear and sometimes unclear.However, it is very clear,at least to J M Keynes but not to L, that the problem of sufficient long run investment in long lived durable capital goods(factories,plants,machinery,computer hardware and software)has been (and will continue to be in the distant future )a CONSTANT problem throughout time.The uncertainty of the information base upon which probabilities(primarily intervals for Keynes) are formed and calculated is a CONSTANT problem for decision makers.Given the fact that the problem of technological obsolescence ,in the face of technological change ,is a CONSTANT problem that repeats either irregularly or regularly through time,Keynes has all the elements needed to come up with a general theory that will be applicable over time.Given these constants,involuntary unemployment will constantly be occurring ,to a greater or lesser degree,and reoccurring as the amount of spending on fixed investment exhibits its unstable,volatile,"unpredictable"pattern throughout time.Only on p. 42 of his book does L vaguely appear to recognize this:"And many patterns appear and disappear only later to reappear,,,".Of course,this is precisely Schumpeter's point,as it was also for Keynes and currently for Benoit Mandelbrot.Finally, L is simply ignorant of the basic nature of Keynesian probabilities.Keynesian probabilities are primarily intervals.The only case where such probabilities could not be specified would be in the case of complete and total ignorance(total uncertainty).L's brief comments about Keynes's approach to probability(pp.173-176)are a caricature of Keynes's theory.L still accepts the erroneous reviews of Keynes's approach to probability made in 1922 and in 1926 by F Ramsey.Nowhere in this book does L operationalize any of the "new" verbiage and terminology he "introduces".He presents no clearcut analysis showing HOW he(and/or assorted post keynesians/cambridge keynesians) has improved in any area of economic or public policy application that has not already been explicitly or implicitly discussed by J M Keynes.

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Summary: Guru of the Economic Flat Earthers
Review: I finished reading Lawson's first book a few days ago, Economics and Reality. I did not have much sympathy with his argument (see my review), but when I saw that there was a new volume coming out, some seven years later, I purchased it to see what progress had been made on forging an alternative to mainstream economics. The answer is simple: none. This book is simply a rewrite of his earlier book, with several journal articles appended as chapters.

The fact is that the twin ideas of ontological commitment and critical thinking are simply generalities that have no possiblity of generating a research program. Lawson will appeal to people who (a) don't like math; (b) have a vague idea that there must be something better than contemporary capitalism, but they don't quite know what; (c) believe that superficial description, when suitably enveloped in philosophical jargon, becomes deep (critial realism, ontology, consciousness, human subjectivity, etc.)

Lawson's assertion that there is something wrong with contemporary mainstream economics has no intellectual basis at all. He notes that undergrads are not majoring in economics (not true, except perhaps in a couple of countries), that French students critique their curriculum, and mainstream economists sometimes gripe about the discipline. Economics is not a popularity contest for undergraduates. Economics is quite imperfect, and there is lots of room for complaining. But Lawson wouldn't know success in economics if it smacked him in the face, because he never deals in the least with modern economics. Nothing on classical game theory. Nothing on evolutionary game theory. Nothing on experimental economics. Nothing (more) on econometrics. The economics of the period 1950-1975, which he continues to take for all of economics, has been mightily succesful, and more than half of economists are employed (at good salaries) applying it in industry and government. Perhaps their employees are also completely deluded. Perhaps they should hire economists who understand ontology. But I doubt it.

Lawson is the height of blandness. He doesn't say economics should be an art rather than a science. He doesn't say that mainstream economists are evil or self-serving. He doesn't claim that mainstream economics is an ideological apology for capitalism, patriarchy, or materialism. He simply says that mainstream economics ignores methodology, and hence can't be sufficiently scientific.

The problem is that scientists never care much about methodology. The great economists (like great physicists, geologists, et al.) learn a very simple set of messages concerning how research is done, and then they do it. It doesn't require extended training. Philosophers who think they can preach to scientists how they should ply their trade are profoundly wrong. Philosophy is wonderful, but not when it tries to tell scientists how to do their work.

It is really sad, to me, that something this shoddy could get the rave blurbs it does, from people who should know better. I am, frankly mystified. The simplest explanation is that Lawson has a small but loyal following, and he is preaching to the choir. I will get lots of "unhelpful" votes for this review, but I've never seen an naked emperor without exclaiming his lack of suitable attire.

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Summary: Reorienting Economics: A Thoughtful Read
Review: I must say that I was quite surprised to read Herbert Gintis's negative review of Tony Lawson's recent book Reorienting Economics (2003) on this website. Especially puzzling is Gintis's impression that the book is simply a rewrite of Lawson's earlier book Economics and Reality (1997) with no new material added. I simply cannot explain how Gintis could have missed so much I found in the book that is new. The only possible explanation is that he must have an edition different from my own; perhaps the one he bought in the US does not have the same content as the one I bought in the UK when the book first came out.

So let me tell the readers of this Amazon reaction line about all of the new material that was in my version of Lawson's book. Let's see: The new book extends Lawson's original ontological analysis (distinguishing among different forms of closed systems, as well as including a transcendental deduction of his conception of social reality) and an account of contrast explanation (tying it in with dialectical reasoning). The book covers such new ground as the role of metaphor in social theorizing, the nature and utility of evolutionary economics, the possibility of borrowing from Biology, the relevance to social theorizing of mimetics, the nature of economics itself, and whether it can qualify as a separate social science. It also provides a lucid account of the current heterodox traditions, careful to identify what constitutes them as heterodox and also what distinguishes them from each other. In that regard, I think that Lawson makes a reasonable attempt at resolving what has been perceived by some as incoherence within Post Keynesianism. Moreover, he indicates ways in which tensions within Feminist projects of epistemology and emancipation might be overcome. The latter analysis includes a novel interpretation and defense of feminist "standpoint theorizing" as well as a contribution assessing the nature of what he calls "sustainable emancipatory projects." Further, in addressing the project of (old) Institutionalism, Lawson makes, in my opinion, a major contribution to the interpretation of Thorstein Veblen. There were things there that I just had never realized before in my reading of Veblen. And further still, the book contains what I consider to be a very significant contribution to the history of formalistic economics (presented in the form of an illustration of Lawson's extremely important and novel model of evolutionary change elaborated in an earlier chapter). As far as I can tell, the coverage and exposition of these issues are entirely new to Reorienting Economics.

So let me warn those of you who plan to purchase Lawson's latest book (and I do encourage you to do so): make sure that you get the one that I did, and not the one purchased by Gintis. Mine has all the new stuff; he should ask for his money back!


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Summary: The reality of reorienting economics
Review: Lawson's new book has been the object of a rather unfair criticism, ie, that 'there is nothing new, creative, original, innovative or novel in his latest book'. I do not agree with this judgement as I see 'Reorienting Economics' as part of a process that began with 'Economics and Reality'. Although Lawson relies on the main foundations of what is known as 'critical realism', there are many original contributions in his new book, and even amendments of certain issues that reflect evolution of Lawson's thought. This is part of an intellectual process that does not show signs of stagnation at all, on the contrary, it evolves.
Instead of pointing out some of these changes, and what seems to me the obvious (and apparent) novelties of the book (which any potential reader might simply corroborate contrasting the contents of both books), I would like to reflect on a deeper issue, which is extremely relevant to understand Lawson's intentions. When he insists that Economics is not in a very healthy situation, I believe that Lawson has a point worth considering. There is nothing wrong with the predominance of one method of doing economics, what has been labelled as 'mainstream economics'. But when this stance is systematically enforced, with no regard to other disciplines, we are facing a different story. Some movements and reactions at different universities in their Economics Faculties (including Harvard and Cambridge) are a simple reflection of this reality. Economics is an offspring of political economy. Currently its teaching has lost political economy's multidicisplinary character. Today Economics has become a discipline that could be worshipped as the mother of social sciences. Those devout and pious economist know what to do. In that sense I believe Lawson raises an important issue pointing out that Economics has sacrificed reality for the sake of formal modelling.
Of course there has always been a divide between 'ortodox' and 'heterodox' economists. But today this is not merely a political stance, it is simply on how economists approach economics. The former have a clear approach which emphasises standard micro, macro, econometrics plus all the necessary mathematical tools. But mathematics can become the method, a master that can slave Economics and its original realtionship with human reality. Then we face a problem. The latter group includes institutionalists, historians of economic thought, behaviour and experimental economists, etc.
Pluralism is a healthy situation in any intellectual discipline, therefore Lawson's attempt to recover what Economics is all about, is a very welcome contribution.




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Summary: Another blow against orthodoxy
Review: There are cracks in the foundation and the neoclassicists are getting nervous. The twin pillars of modern economic theory "infinite economic growth" and "infinite substitutability of resources" have shown to be untenable positions that lack historical foundation. Mainstream economists have now become vulnerable to research showing economic activity inextricably linked to much larger ecological patterns. The notion of "economic growth" when viewed in the context of thermodynamic energy flow and population ecology now shows a pattern of geometrically increasing resource depletion not "growth" in any sort of economic sense. What is viewed by mainstream economists as growth is the increase in market availability provided by population growth which in turn relies on ever increasing amounts of the two most critical resources-water and oil. There are no viable substitutes for either of these. Once the tremendous energy efficiencies resulting from the transition to hydrocarbon fuels are factored into econometric models along with the externalization of industrial waste to the commons we now see that what has been modeled as growth is in reality decay. The energy effiencies gained during industrialization are subject to the process of diminished utility and are steadily being lost over time. When combined with the unfactored costs of cleaning up industrial waste along with other unfactored variables associated with urbanization it now becoming apparent that there has been no growth only a steady accumulation of material goods within a miniscule community within the much broader pattern of resource consumption. Lawson and other are finally exposing the myths of modern economics as nothing more than a rationalization of selfish consumption.

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Summary: Lawson, Economics and Ontology
Review: Thousands of books have been written since the mid 20th century dedicated to exploring orthodox or mainstream economics. Little more than a handful of these books have reflected upon the philosophical and methodological underpinnings of economics. The result is not only that orthodox economics has marginalised heterodox alternatives and come to dominate economics departments in universities around the world, but also the impression has been created that discussion of philosophy and methodology is simply a wasteful distraction from `doing' economics.

Orthodox economics has not benefited from this splendid isolation: quite the opposite. The absence of serious criticism has allowed a body of economic theory to develop that has extremely weak predictive, explanatory and descriptive power. Indeed orthodox economics may well have become the 21st century equivalent of the flat earth theory - something, incidentally, that many (astute) non-economists have known for a long time.

Occasionally, however, books come along that are not afraid to say `the Emperor has no clothes.' Tony Lawson's Reorienting Economics (significantly advancing the ideas of Economics and Reality) says just this. Because iconoclastic books like this challenge deeply ingrained habits of thought, they instil some people with a sense of anxiety, and are often dismissed with a range of rhetorical devices - especially in book reviews where cheap, and often superficial, shots can be passed off as good coin. The author is accused, variously, of failing to understand the technicalities of the subject, misunderstanding theorist X, failing to discuss theory Y or approach Z and so on. This seems to be the unfortunate response of some of the reviewers of Lawsons' books. No doubt Lawson does not understand everything, or everyone, and he certainly does not discuss every theory, theorist, or approach: but then again, who does.

What makes Lawson's work stand out is that he introduces the issue of ontology to the subject matter of economics. Ontology is the study of being; of the fundamental structure or components of a domain of reality; of the general kinds of things that exist. Lawson's books are concerned to elaborate the basic structure of the socio-economic domain specifically. His purpose is to draw out the implications of ontological theorising for all other forms of social theorising, including economics.

This, however, is not how orthodox economists proceed. Instead, they start with a kind of `off the shelf' fixed set of (mathematical) tools and simply presume, quite unreflexively, that it will be everywhere appropriate to socio-economic analysis. Lawson's argument is as clear as it is bold: this particular tool box is mostly inappropriate for investigating the socio-economic world and is certainly not of universal validity. Researchers in economics, typically, end up with a set of tools that predict, explain, and describe little or nothing about the way real (as opposed to fictitious) socio-economic practices actually work.

In Reorienting Economics Lawson urges us not to follow orthodoxy. Instead, he encourages us to embrace ontological investigation, that is, to proceed by enquiring into the way socio-economic reality is. And here economists have much to learn from other disciplines outside of economics - Lawson, in fact, refers to his oeuvre as `social theory.' We should strive to include in our tool box all those techniques that have the potential for uncovering, illuminating and explaining socio-economic phenomena. Following the path sketched in Lawson's books does not mean that we merely describe reality, but it does mean that we have to take the process of abstraction very seriously. Indeed Lawson is careful to differentiate legitimate abstraction from the illegitimate process of making knowingly false assumptions for no other purpose than making possible the deduction of outcomes from initial conditions. There is, of course, no guarantee that following Lawson's suggestions will lead to a solid understanding of socio-economic practices - there is an awful lot of work to be done to get from ontology to theory and practice. Yet the orthodox route, proceeding as it does on the basis of knowingly fictitious theories and models of reality, seems as the outset, doomed to fail.

If you suspect that orthodox economics lacks predictive, explanatory, and descriptive power, if you are interested in why this might be the case, and if you are interested in joining those heterodox economists engaged in the search for a plausible alternative, then Reorienting Economics (and Economics and Reality) should be on your bookshelf.






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Summary: Economics and Realism: An Innocent Bystander's Guide
Review: Tony makes an important argument in this work, and one that bears repeating: that, put plainly, and in rank simplification, mainstream economics serves to mask (socio-economic) reality if only in its very ignorance of it. The best check to the pretensions of this pseudo-science is , therefore, Reality itself, perhaps even more than elaborate theoretical critiques. Radicals and socialists may well chafe at the simpliste nature of the Argument but nonetheless it is a powerful argument, even more potent for being quite irrefutable.
Now the Realist Argument is not the only Argument to make, nor is it the Last Argument of its genre, nor is it entirely an original argument in the history of the sciences, but it is of import in this neo-classical/neo-liberal world which takes it methodology (when aware of such things at all) from Friedman's notorious irrealist critique of yesteryear which blithely scoffed at realism as a non-issue. Whilst these hegemons may never read, or understand , Tony's book the knowledgeable few amongst even their ilk (and they do exist) will know that their metatheoretical hegemony is not quite complete. And , in this age of their triumphal Unilateralism, even such brand of minimalism may well be worthy of consideration.
I am not saying that Tony's work will feed the hungry, empower women, and/or save the rain-forest, which I would personally consider far more worthy as far as ideals go : but we are speaking here of economics as it lives in the Ivory Tower (more specifically , the Ivy League Tower) where argument and debate are the tools of the trade. In that rarefied world, Tony is about the only one making the Realist argument seriously and nobody, frankly, does it better. I would, therefore, unreservedly recommend his work to any one interested in a realist methodology for the sciences. His Cambridge Realist Seminar has attracted the attention of many scholars , even from the Mainstream: and his new book will carry that Conversation even further. I suspect that even those whose ire is easily aroused by the Realist use of the Oh-So-very-Un-Anglo-Saxonish terms like 'ontology' may yet, upon fair reflection, grant that philosophy and method are legitimate fields for debate, even in a discipline that portrays itself rather vainly (in a double sense!) as a natural science. The arena of theoretical struggles has, necessarily, many corners, cusps, and corridors and we would be rash to privilege some and scorn others.