A Companion to the History of Economic Thought - Chapter 38 pot

634 M. PERLMAN CHAPTER THIRTY- EIGHT The History of Ideas and Economics Mark Perlman 38.1 INTRODUCTION Ideas are intellectualized concepts. Some seem so attractive that they are bench- marks, or “authority-statements.” Different authority-statements develop, inter- mingle, and mature into comprehensive “authority-systems.” Several have thoroughly revolutionized physics and chemistry. The task for anyone using a single authority-system is easy; the economists’ world is full of conflicting authority-statements, with each school of economic thought embracing multiple (frequently contradictory) authority-statements. For economists, there are three types of authority-systems: Faith, Science, and public policy. 38.2 IDEAS EMANATING FROM THIRTEENTH-CENTURY ROMAN CATHOLICISM Modern secularists consider religious Faith as superstition, albeit a potent authority-system. For some religions Faith is sufficient, for others it is a necessity, and for still others (those based on ethical conventions) Faith is irrelevant. None- theless, all schools of economic thought draw on authority-systems that are derived originally from religious Faith, or from a system that was once intertwined with religious Faith. 38.2.1 The background Until early in the thirteenth century, the long-established dominant Roman Catholic theological authority-system was anchored to St. Augustine’s belief that THE HISTORY OF IDEAS AND ECONOMICS 635 “Absolute Truth” (i.e., the Eucharist) was necessarily an abstraction; that is, beyond sensory perceptions. That belief stemmed from Neo-Platonism, a third-century Hellenic philosophy that melded ideas from pre-Socratic schools, Plato, Aristotelian metaphysics, and Stoicism with an oriental theory of emanation. Neo-Platonism rejected mathematics as a form of “Absolute Truth.” 38.2.2 Scholasticism: Aristotle rediscovered By 1240 two Dominicans, Albertus Magnus (1200–80) and Thomas Aquinas (1225– 74) were teaching in the Faculty of Theology of the University of Paris. Departing from Augustinian orthodoxy, the two contended that sensory experience should be incorporated into theology as an additional form of “Truth.” The proposal came from their reading Aristotle, a literature long-lost but recently translated from Arabic into Latin by Averröes. For conventional theologians, their pro- posal spelled danger. Would it not encourage Dual-Truth conflicts between real “Theological Truth” and mere philosophical truth? Aquinas’s ready-if-putative answer was that such conflict was unlikely; if ever the two “differed,” the explanation could only be an as-yet-undiscovered philosophers’ logical error. Dual-truth Averröism interested some in the theology faculty; it also became an anti-theology rallying point among those in the Faculty of Philosophy. Aquinas’s fame mushroomed. By 1258 he was called to Rome to serve as the adviser on theology for four successive popes. In 1268, the Archbishop of Paris demanded his return, to undo his “damage.” That task was overtaken by Thomas’s death in 1274. Notwithstanding the Archbishop’s assessment, the Church canon- ized him in 1323, declared him a Church Father in 1567, and by 1900 Thomism had become accepted Roman Catholic theology. Besides introducing sensory perceptions to Catholic theology, the two reintro- duced another Aristotelean thought, namely Aristotle’s distinction between what is “just-by-law” and what is “just-by-nature.” The latter (“Natural Law”) was taken to be the manifestations of God through sensory perceptions of the world’s regularities (for example, seasonal change or lunar phases). In Catholic theology, Natural Law became the virtual equivalent of Scripture. 38.2.3 Problems with the Scholastic tradition Scholasticism credited a presumption of religious authority to everything found in Aristotle. Our reading of Aristotle is different; much was true, but much was palpably false. The Holy Inquisition, administered after 1233 by the Dominicans, eventually adopted a religious zeal that considered as heresy any criticism of the Aristotelean summa. The Zeitgeist of the Renaissance included bitter intoler- ance. Both the Inquisition and zealous Protestants burned their victims, reflecting angers that were only partly attributable to theology – rising nationalism was another factor. 636 M. PERLMAN 38.2.4 The Reformation and developments in Britain THEOLOGICAL CHANGES After the thirteenth century, the Church’s political hegemony began to totter. Instability affected every European institution. Land-wasting wars and population-killing epidemics were frequent. Also a variety of instability-causing inventions – for example, gunpowder, navigation discoveries that opened up the New World, and the impact of book printing – changed people’s thinking. The Catholic bishops, long-accustomed to thwarting pietists’ demands for inter- nal reforms, now faced strong armies driven by nationalism, and intent on controlling land and wealth. Withal, the Reformation was theologically and polit- ically an attack on the hegemony of Roman Catholicism’s authority-system. Luther, Knox, and Calvin, the leading Protestant theological reformers, did more than attack the hierarchy’s wealth and (personal) sins; they proposed to replace Catholicism’s interposition-theology, God–Church–Man, with a direct God–Man nexus. The roots of Protestant pietism were old. In 1208, Pope Innocent III authorized a “domestic” Crusade against the reform-minded Cathers (Albigensians) living in Southwest France. In 1382 John Wiclif, a pietist as well as an Oxford don, translated the Bible into English, believing that the Word should be pondered by everyone. The Bohemian university pietist, John Huss, became so popular a threat that he was burned at the stake in 1415, a fate that Martin Luther (1483–1546) escaped only because of a German nobleman’s protection. BRITAIN AND THE PROBLEMS OF THE CROWN An anomaly ties Luther to the English King Henry VIII. Henry took full credit for writing the Assertion of the Seven Sacraments (1521), an anti-Luther screed probably drafted by Erasmus. For this, Pope Leo X awarded him the title Defender of the Faith. Yet in 1532 (after only 13 years, but two popes later) Clement VII refused Henry VIII the divorce thought necessary to ensure the future of his dynasty. Henry’s reaction was royal; England divorced Rome in 1534. Personally controlling “his” Church of England thereafter, Henry enriched the treasury by confiscating the properties held by monastic orders. Henry preferred conventional theology, but the vagaries of his marital adventures turned him into a religious wild-card – authorizing the publication of the pietistic Tindale vernacular English Bible in 1536, and yet also issuing the Statute of Six Articles in 1539, which narrowly defined and punished heresy. Further vagaries left him married to Catherine Parr, a pietist with whose theological arguments he so violently disagreed that, at the time of his death, she feared for her life. Henry’s immediate successors (the Protestant Edward VI and the devoutly Catholic Mary I) reigned sequentially, giving England a decade of religious conflict. Elizabeth I, after ascending the throne in 1558, trod cautiously on religious topics, a need that soon passed. The principal problem was Parliament’s centuries-old reluctance to raise and appro- priate revenues. However, Henry VII (the first Tudor) artfully bypassed Parlia- ment’s powers by creating in 1487 the Star Chamber, a special court that operated THE HISTORY OF IDEAS AND ECONOMICS 637 in camera, that generally found his enemies guilty of High Treason, and that invariably included in their punishment the seizure of their lands for the Crown. Used carefully, the threat of indictment with trial in the Star Chamber brought Parliament members to heel. Nonetheless, Parliaments continued to be elected, sit, deliberate, and vote taxes with reluctance. The Stuart accession in 1604 exacerbated the Crown’s tax problems. As King of Scotland, James I levied taxes easily; his Edinburgh problems were with pietistic Scottish Presbyterians. Arriving in London in 1603, James found a fully cooperative English episcopacy, but relations with Parliament were otherwise. Parliament was jealous of its rights and voted funds reluctantly. Charles I trumped James’s Scottish ecclesiastical and his English parliamentary problems. Ill-advised by his Archbishop of Canterbury (William Laud), Charles proposed an English-type episcopacy for the Presbyterians. Reacting to Parliament’s repeated refusals for money, Charles overdid the Star Chamber route. Nothing worked. After fleeing Scotland, which had been enraged by his episcopacy proposal, he faced an urgent need to pay for an enlarged army. Proffered concessions to Parliament were always too late and too small. Charles turned desperate, and his maneuvers of trying to play off his Scottish against his English enemies became ever more clumsy, turning crises into disasters. Civil war followed. Charles was twice captured, and Parliament eventually authorized a trial. He was immedi- ately found guilty and beheaded (January 1648). Parliament then declared Britain a Commonwealth. Oliver Cromwell, the suc- cessful leader of the Parliamentary Army, served as Lord Protector until his death. Richard, his son, was unable to maintain Puritan power. Thus, in 1660, the new leader of the Parliamentary Army, George Monk (a quondam Royalist who had served Oliver Cromwell loyally), invited the Stuart Pretender back, as King Charles II. Why all this English history? In order to put the development of scientific induction into perspective, one must know something about the monarchs and their attitudes regarding the purpose of education. THE PURPOSES OF KNOWLEDGE Henry VIII, Elizabeth I, and James I had quick minds and boasted of their personal intellectual attainments. But theirs was a conventional knowledge – language fluency and some mastery of the seven Liberal Arts; that is, Porphyry’s quadrivium (arithmetic, geometry, music, and astronomy) and the trivium (grammar, rhetoric, and logic). Their self-pride was in their “knowledge-for-its-own-sake.” Puritan theology included as a sine qua non universal Scriptural education. Their thinking was that after Man’s Expulsion from Eden, all children, cursed by being born totally ignorant, had to be educated so that they could understand God’s Word. But knowledge of Scripture, although necessary, was insufficient. As per the Prophets, additional knowledge was required: But thou, O Daniel, shut up the words, and seal the book, even to the time of the end; many shall run to and fro, and knowledge shall be increased. (Daniel, XII:4, italics added) 638 M. PERLMAN This meant that the acquisition of knowledge had a purpose aside from its own possession; “knowledge-for-its-own-sake” was replaced by “knowledge- for-social betterment.” There it is: two views about the purpose of knowledge – a conventional Tudor–Stuart interest in the traditions of the seven liberal arts, and a Puritan religious obligation that justified education as a social necessity. By 1600, these conflicting knowledge authority-statements were creating serious rifts. Oxford and Cambridge became hotbeds of factionalism, with Archbishop Laud (also Chancellor of the University of Oxford) expelling all teachers and students known to favor Puritanism in the 1640s; the Puritans replying in kind in the 1650s. With the Restoration, Oxbridge returned to the old seven liberal arts curriculum, and although religious factionalism continued, it was muted. The college dons were careful about what they said and wrote. Even Isaac Newton, who thought his best work was in Unitarian theology, hid it with a difficult cipher. Religious warfare ended when the Protestants in Parliament forced the abdica- tion of the openly Catholic James II, just after his second wife gave birth to his first son. They replaced him with his Protestant oldest daughter (Mary II) and her Dutch husband (William III) to reign jointly. They passed legislation that required the monarch to be a member of the Church of England. 38.3 IDEA-SETS ABOUT SCIENCE We come now to Science and its relationship to religious Faith (e.g., Scholasti- cism), and the seminal contributions of Francis Bacon, René Descartes, and Isaac Newton. 38.3.1 Bacon’s Scientific Method Francis Bacon, who came from an established family with Puritan connections, complained even while a Cambridge undergraduate that the conventional trivium and quadrivium curriculum was intellectually sterile. After his graduation and further legal training at Grey’s Inn, Bacon turned to a political career that was accurately characterized as brilliant and cynical. In Elizabeth’s time when his sponsor Essex fell from favor, Bacon protected his own career by joining the group that prosecuted Essex to his death. The accession of James I offered new opportunities. Bacon used the occasion to get the king’s attention by appending an obsequious dedication to his major treatise The Advancement of Learning (1605). The ploy succeeded. Bacon became James’s favorite – resulting in many, ever-increasing honors, including the Lord Chancellorship. Criticizing him for doing James’s dirty work – that is, cynically maneuvering Parliament – Bacon’s many enemies eventually discovered instances of his taking substantial bribes while adjudicating cases. Parliament then im- peached him. He was tried, convicted, fined, and imprisoned. That finished his public career. Yet, James’s friendship survived – in good part because the king, no slouch when it came to learning, had considerable respect for Bacon’s intellect THE HISTORY OF IDEAS AND ECONOMICS 639 and his contributions to philosophy. Bacon’s prestigious Novum Organon (1620) was published just prior to his disgrace. It is an extremely readable summary (in aphorism form) of his accumulated wisdom. He intended it along with The Advancement of Learning and some still-unfinished work to be his magna summa, tentatively entitled the Great Instauration. Contemptuous of the traditional organization of Porphyry’s quadrivium and trivium, and turning to Aristotle’s early efforts to organize the body of knowledge, Bacon came up with his own tabular Tree of Knowledge. Regularly revised, his Tree serves as the point of departure for modern epistemology – with the Propaedia of the current (15th) edition of the Encyclopedia Britannica being a recent example. Skepticism about authority-statements came naturally to Bacon. Specifically, he questioned logical argumentation as the basis for establishing truth. Instead, turning to Aristotle’s endorsement of sensory cognition, he set about creating a standard system (i.e., an authority-statement) for using sensory impressions. As formulated, Bacon’s system counseled iterative observations followed by tent- ative generalizations until the (n − 1)th and nth generalizations were identical – making it conditionally true – but only until some later observations replaced it. Bacon called this procedure the “Scientific Method.” It remains the foundation of induction, a second perception of “Science.” 38.3.2 Science as Cartesian modeling René Descartes (1596–1650) was by profession a soldier and only by avocation a philosopher and a mathematician. He took Roman Catholicism seriously, but had no sympathy for Scholasticism’s endorsement of Aristotle. His book Discours de la Méthode (1637) articulated a “new” system. Personally dubious about Truth coming from anything so unreliable as sensory perceptions, he turned to abstract idea-sets that antedated Augustinian neo-Platonism and Aristotle. What emerged first was a conviction that the meaning of life, itself, was the act of thinking (cogito, ergo sum). Secondly, completely rejecting the anti-mathematical biases of the neo-Platonists and St. Augustine, he found in Plato’s acceptance of math- ematics as Truth exactly what he sought. Use of the term Science has problems – for Descartes, Science is defined as any part of the spectrum of learning that can be mathematically formulated. Hence, just as the queen is the mother of all of the bees in a hive, so mathematics becomes the “Queen of the Sciences.” As a philosopher, Descartes is credited with laying the foundations of modern rationalism. His credentials as a mathematician come from his inventing co- ordinate (analytic) geometry. His record as a soldier was mostly that he kept out of trouble. To summarize: mathematical statements are logical models, and accordingly mathematically correct models share a communality, “Truth.” The test of a Carte- sian model is not what it predicts, but that it is immanently correct. For Cartesians any proposition in correct mathematical form is scientific. Some naive Cartesian modeling has proven useful in spite of its incomplete or totally incorrect assumptions; for example, marine navigation models work well even though 640 M. PERLMAN they postulate the Earth to be the center of the universe. By contrast, Newton’s theory of gravitation and equilibrium of forces, a model that had passed repeated tests of immanence, seems to have been incompletely specified. Since Edwin H. Hubble’s spectrography results, it now seems that Willem de Sitter’s theory of the expanding nature of the universe is valid, and the universe is not a balance between centrifugal and centripetal forces. 38.3.3 The Royal Society Even prior to the Commonwealth, a group of intellectuals, most of whom had University of Oxford connections, met informally but regularly in London to discuss their ideas. Eventually, the group named itself “The Philosophical Club,” but it was known as “The Invisible College.” By the late 1650s, William Petty was its leader. Just after the Restoration, Petty along with others approached Charles II petitioning for a Royal charter. Charles was enthusiastic, and the Royal Society was chartered in 1662. From the outset, election was based solely on intellectual merit; social status was irrelevant. The Society’s interests broadened – it became an amalgam of the Stuart “knowledge-for-its-own-sake” and the Puritan “knowledge-for-social- betterment” traditions. It became the locus for scientific reporting, and when something new was to be announced the Royal Society in London, rather than in Oxford or Cambridge, was the preferred site. Members carefully eschewed discussions of anything that involved theology or theological conflict. Their con- cern was limited to how and when natural phenomena occurred; for the most part, questions of why (God’s purpose) were omitted as being essentially theological. Papers were delivered and the best of them were eventually published in the Society’s Proceedings. Much of the Society’s early work, clearly in the Bacon mold, dealt with geographical and cosmological discovery that involved reports of new flora and fauna as well as the mapping of the universe. What resulted was a residual, “Science,” by which they seem to have meant “studies of natural systems.” At first, the members seemingly favored Bacon’s perception of what scientists should do. These include an early paper by William Petty, “A treatise on taxa- tion” (1662) – it manifested Petty’s instinctive feel for random sampling and was the first of many economic studies later lumped under the heading of the “Polit- ical Arithmetic School.” Another by an early member, John Graunt, was “Some observations on the London bills of mortality,” which “created” modern medical epidemiology. And Edmond Halley, even as a stripling Oxford student, inter- rupted his college years to travel to the island of St. Helena, and reported to the Society on his mapping of the stars seen in the Southern Hemisphere. As the membership also included major mathematicians, papers that reflected the Cartesian approach to Science were also regular fare. One by Edmond Halley built on something that he had been told, namely that Breslau (Germany) had a constant population. This point absorbed, Halley speculated that if its age dis- tribution also remained stable, he could easily calculate both age-specific death rates and normal survival rates by age. These estimates, he opined, could serve THE HISTORY OF IDEAS AND ECONOMICS 641 as the bases for further calculations about the amounts of money necessary to pay off life annuities and life insurance policies. (So persuasive was his presenta- tion that some traders began to sell policies. Alas, Halley lacked knowledge of sampling, and speculators were economically ruined!) Early influential members included William Wallis and Robert Boyle, both mathematicians of note. However, it was another mathematician, Isaac Newton, elected to the Society in 1671–2, who eventually reshaped the Society’s program. 38.3.4 Fusions of the two systems of Science THE NEWTON CRUCIAL TEST Some claim that Isaac Newton (1642–1727), one of the two inventors of the calculus, was the all-time greatest physicist – if only because afterwards there remained so much less to invent. Yet, what was truly his and how much he “borrowed” from others remains hard to tell – Trinity College (Cambridge) lore is full of gossipy stories. Part of Newton’s record must be his neurotic (possibly psychotic) person- ality: jealousies, hatreds, and a love of manipulation. Nonetheless, his personal brilliance dominated the Royal Society’s activities for the last 40 years of his life. Newton was an autodidact. Trinity College did not appreciate his abilities during his undergraduate years (even though that was when he invented “fluxions,” his version of the calculus). Thereafter, he began work on his theory of mechanics, which eventually matured into his laws of motion. From these laws, he (or perhaps someone else) derived a theory of the celestial equilibra- tion of forces. It took years for him to refine their presentation, but when they were eventually published as De Motu Corporum, and later much expanded as Philosophiae Naturalis Principia Mathematica, his preeminence was universally recognized. These were conceived as abstract mathematical models – clearly in the Cartesian tradition. Newton’s later study of optics, including findings about the color spectrum, was in the Bacon tradition. His procedure has become for many the standard for declaring a proposition to be scientific – namely, a scientific theory is the result of a hypothetico-deductive model being subsequently confirmed by a great empirical test (for example, Eddington’s 1919 confirmation of Einstein’s general theory of relativity). What this leaves open, of course, is doubt as to whether the test is absolute; it may be a special case. THE GREAT NEW PARADIGMS Turning to the great scientific advances during the latter half of the second millennium, there is consensus that they started with Nicholas Copernicus’s De Revolutionibus (1543), which proved that the Earth revolved around the Sun (not the reverse, as Aristotle had believed). By 1600, what had been heresy was becoming orthodoxy; by 1700, it was canon. However, in spite of it being thought canon, Newton’s celestial mechanics-in-equilibrium theory was wrong. Edwin P. Hubble’s crucial experiment “confirmed” a theory advanced by Willem de Sitter (1872–1934) that the universe was infinitely expanding. Orthodoxies are not necessarily permanent! 642 M. PERLMAN The period includes displacement of the Aristotelian and alchemist phlogiston theory, that the four source materials of all earthly matter were fire, earth, air, and water. The great names were Robert Boyle (1627–91), Joseph Black (1728–99), Henry Cavendish (1731–1810), Antoine Lavoisier (1743–94), and Joseph Priestly (1733–1804). Later, in 1805, John Dalton (1766–1844) offered a general theory of the chemical elements. A theory of their “Periodic Table” was proposed by John Newlands in 1863, but remained unconfirmed until 1869, when some predictive experiments were made by Dmitri Mendeleyeef (1834–1907). This panoply of post-Scholastic brilliance has been considered from another standpoint. Thomas Kuhn calls the suddenness and totality of authority-system change the emergence of New Scientific Paradigms, by which he means a con- ceptually new Weltanschauungen built on formal modeling, data-accumulation, and classic (i.e., crucial) experiments using tested methods (cf., The Structure of Scientific Revolutions, 1962). However, even if our minds boggle at the number of scholarly fields enjoying such new paradigms, it does not follow that all fields can expect changes of such magnitude. Kuhn himself opined that those who looked for New Scientific Para- digms in the social sciences were going to be disappointed. There, the advance of knowledge was likely to be of the bit-at-a-time variety – Alfred Marshall’s Natura non facit sultum. Pursuing that topic, in his controversial 1959 Rede Lecture Two Cultures and the Scientific Revolution, the quondam physicist–science-administrator-turned- novelist Charles Snow asserted that what divides the sciences from the human- ities is that science’s virtue is that it is forward-looking; the humanities’ failing is that it is backward-looking. A more appropriate distinction would be that science has been looking at how things are, while the humanities are studying how human thought expresses itself. In the former case, the evidence yields to sys- tematic observation of mostly factual phenomena – with the biggest problem being accuracy of measurement. Fields of evidence in the case of human thought, largely records of subjective choices, are generally to be found in old libraries, where the big problem is not measurement but how to infer the loci of human understanding (Perlman, 1996, pp. 35–46). 38.3.5 Summary: Science and Faith THE HISTORY OF SCIENCE Although it is common to date modern thought to the series of wide-ranging seventeenth- to nineteenth-century discoveries in the many sub-fields of physics, chemistry, medicine, and biology, I believe that the Scholastic contribution, which opened scholars’ eyes to taking in all of the information offered by each of the five senses, has a special claim to being the foundation of modern thought. Why? Because the Scholastics broadened Faith to include phenomena that were not explicitly Scripture-related. Irrespective of Bacon’s careful eschewing of any discussions that could reveal his choice between his mother’s Puritanism and his patron’s High Church reli- gion, and Descartes’s skirting of Roman Catholic hierarchical questions, their THE HISTORY OF IDEAS AND ECONOMICS 643 legacies were two new general authority-systems, each calling itself Science. Bacon’s Science was an inductive method. Descartes’s Science was a system that established Truth and integrated certain parts of Natural Law. Newton’s Science, which fused the other two, was both mathematical and empirical. As we have noted, for many only what passes Newton’s test is said to be scientific. TYPES OF FAITH The period from the mid-sixteenth to the early eighteenth century was one of budding authority-systems. Conflicts between scientists were rife, but questions relating to variations because of religious Faith were increasingly avoided. Indeed, by 1700 the idea that among scientists there should be religious toleration was born and was growing apace. Many avoided specific references to God (a theological entity) and, as Deists, they chose secularly neutral synonyms such as “the invisible hand” or “nature,” terms meant to posit an ordered universe – even if they felt uncertain about the details of its making. The atheism of the French Revolution served for many to separate conviction from cant. For many scientists (a self-description often pertaining to members of a profession that accepted only the Newton test), Science and religion were unrelated concepts. Both were perceived as authority-systems, each of which had its own brand of faith. The faith of scientists was in the logic and regularity of natural phenomena; while religious Faith often embraced an irregularity of natural phenomena – that is, miracles. However, what emerged clearly in the nineteenth century was attempts to divorce completely scientific work from any religious foundations. This shift did not vitiate the role of faith – as an act. For many, faith in regularities explained by Science came to be their principal authority-system. Several philosophers wanted something more material than religious Faith. Auguste Comte, the father of sociology, invented Positivism, a creed – somewhat in the original Bacon induction tradition – that facts, as perceived through the senses, are the source of information. Comte advised taking that knowledge and using deduction to extend one’s reasoned conclusions. Accepting Bentham’s util- itarianism as a way of discovering ethics, Comte added a set of his own social objectives, including the elimination of all ecclesiastically determined social norms, and the creation of an egalitarian society with some socialization of property and the means of production and distribution. Comte’s Positivism was further for- malized in the early twentieth century by a group of Viennese philosophers (the Vienna Circle) into a more sophisticated methodology, “Logical Positivism.” They combined a logical model with empirical testable properties (including reference to statistical probabilities that affected observational errors) to find seemingly stable conclusions, if not exactly any final truths. Karl Popper’s version is termed “falsificationism” (cf., Blaug, 1980). Others, such as John Stuart Mill, seemingly had their faith grounded in their own cultural ethics. With them, their cultural ethics, specifically, and their under- lying cultural traditions, generally, became their preferred standards, which – because father-figures are traditionally authoritative – I term Cultural or Patristic Authority-Systems (cf., Perlman and McCann, 1998, 2000). Some economists [...]... (Mathematical Psychics, 1881; Metretike, 1887), and Irving Fisher (Mathematical Investigations in the Theory of Value and Price, 1892) Publication of the 1944 Theory of Games and Economic Behavior by von Neumann and Morgenstern, Samuelson’s 1947 Foundations of Economic Analysis, and Gary Becker’s 1976 The Economic Approach to Human Behavior, alone, mark the transformation of mainstream professional economics... Industry and Trade (1920), with its considerable episodic and quantitative empirical materials, that served as the optimal examples of the fusion of deduction and induction However, Marshall was skeptical of any mathematical formulation of economic relationships being able to stand up to a Crucial Experiment; indeed, Marshall’s purpose was to explain the factors involved in the economic process rather than... danger of violent death, and the life of man solitary, poor, nasty, brutish, and short” (The Leviathan, part I, ch xviii) Man, he conjectured, fortuitously had a capacity to reason imaginatively Considering his situation, man realized the advantages of making agreements with other men One was Social Contract; and, that established, the other would be a Government Contract The Social Contract involved a. .. to try to weigh their importance or make predictions about outcomes Pareto’s mathematically formulated (log-normal) Law of Wages has stood up in repeated Crucial Experiments, but it was derived inductively and lacks any deductive core Clearly, econometrics is the optimal example of the fusion that Newton had in mind It offers a plethora of mathematically formulated models, with preliminary THE HISTORY. .. invariably complex and often a bit contradictory – particularly if several policy questions are involved 38. 5.1 The impact of ideas involving pure Faith and ideology Again, I treat Faith as beliefs that are unconditionally accepted as Truth, whether divinely revealed, or Kantian categorical imperatives, or as historically necessary ideologies Accordingly, there are many points of contact between Faith... mathematics had advanced, and Keynes’s use of probability distributions could be phrased as mathematical abstractions Whether even more recent developments in mathematics – for example, chaos theory – will revolutionize economics to the point of Kuhnian Paradigmatic Change remains an interesting speculation NEWTON-TYPE FUSIONS Newton’s hypothetico-deduction with empirical verification clearly underlay... population characteristics, A Treatise on Man and the Development of his Faculties (as translated in 1842) SCIENCE AS CARTESIAN MODELING This approach, often termed hypothetico-deductive modeling, uses the authoritysystem of logic Many of the earliest writers, however – Cantillon, Quesnay, and Say – eschewed formal mathematical display Later, von Thünen and Cournot improved the standards of presentation... presentation with mathematically formulated models, particularly in Cournot’s Researches into the Mathematical Principles of the Theory 648 M PERLMAN of Wealth (1963 [1 838] ) The French formalistic tradition in economics came to full-flower with Walras’s model of static general equilibrium The list of English-language economic “greats” is longer Among the better known were Jevons (The Theory of Political Economy,... Cournot, A A 1963 [1 838] : Researches into the Mathematical Principles of the Theory of Wealth, with Irving Fisher’s original notes Homewood, IL: Richard D Irwin Edgeworth, F Y 1996 [1881]: Mathematical Psychics, an Essay on the Application of Mathematics to the Moral Sciences, ed C R McCann, Jr Cheltenham, UK: Edward Elgar Fisher, I 1925 [1892]: Mathematical Investigations in the Theory of Value and Prices... policies Paradox; private vice– public weal, anti-labor Individual morality, communitarian identification Self-regulating markets, free trade, individual self-determination, labor welfare Authority-statements and authority-systems Christian theology, Aristotle Faith – trade optimal industry with zero-sum international competition Faith – trade optimal industry with zero-sum international competition Natural . rejecting the anti-mathematical biases of the neo-Platonists and St. Augustine, he found in Plato’s acceptance of math- ematics as Truth exactly what he sought. Use of the term Science has problems. philosophy that melded ideas from pre-Socratic schools, Plato, Aristotelian metaphysics, and Stoicism with an oriental theory of emanation. Neo-Platonism rejected mathematics as a form of “Absolute. fortuitously had a capacity to reason imaginatively. Con- sidering his situation, man realized the advantages of making agreements with other men. One was Social Contract; and, that established, the