Abstraction (how abstract can you get?)
Issues in economics: can an economic theory be attacked successfully simply on the
grounds that it is abstract/unrealistic? How much is there in the idea that orthodox
equilibrium theory over-abstracts to such an extent that it becomes vacuous? Are rival
economic theories any better off in this respect?
Philosophy employed: transcendental arguments (Stroud; Hollis). (Locke and
Wittgenstein on the nature of abstract ideas would also be relevant).
Argument
a. 3 responses to criticism of General Equilibrium (GE) theory for its ‘lack of
correspondence’ with the real world:
i.
the need to abstract (simplicity) (Friedman)
ii.
abstract theories may predict well (Friedman)
iii.
rival economic theories are also abstract (Hahn)
b. But does GE theory predict well? If not,
i.
its possible ‘negative’ role (Hahn v Coddington)
ii.
its status just as a ‘polar case’ (Samuelson, Koopmans v Marx, Kornai,
Joan Robinson, Hollis and Nell). Is it the case that the more we
abstract, the better? Or may GE theory fall foul of a transcendental
argument to the effect that the terms used in its assumptions can’t have
reference in a GE world, so that the supposed ‘polar’ case isn’t
coherent (Hollis)?
iii.
possibility of relaxing the assumptions, or claiming ‘local’ success
only (Hahn); but then the virtue of simplicity jeopardised.
c. Rival theories:
i.
typically do also use at least some ‘facts [that] are stylised with a
vengeance’ (Hahn) (Eatwell on Sraffa; Joan Robinson on Ricardo,
Marx, Keynes)
ii.
are difficult to champion merely with the claim that they focus on
‘more essential’ factors
iii.
but may predict more ‘successfully’ (in a loose sense of ‘predict’)
iv.
and may have more ‘robust’ (more readily relaxed) assumptions
Upshot: GE theory may be open to the over-abstraction charge, but its critics seem
neither to have given full support for the accusation nor to have prepared enough against
similar criticism of their own preferred theories.
(Dr. J G T Meeks)