By Susan J. Fleck.  March, 1994

Scientific Inquiry

Should the goal of scientific inquiry be realism or instrumentalism?  A realist (hard core) would say that any scientific discipline is trying to get to the true reality of the universe (an attempt to do this).  E.g. goal of atomic theory is to get at the true description of the atom.  Truth in reference to description about the true construction of the atom;  positivists would say this is a pseudo problem.  Positivist will be skeptical about whether assumptions of a theory will be true.   Predictive accuracy is important;   e.g. Ptolemy's astronomic view of a stationary earth - gave 'accurate' predictions of the motions of the planets.   An instrumentalist may say  "it is O.K. if you talk about epicycles and such, but I do not have to believe that the planet is really doing all of those things;  as long as your theory is a good prediction about what will happen."   I.e. they have an agnostic attitude about entities which they can not observe.  This paper will explain the main flaw with  Schwartz' criticisms of classical economics by projecting what Friedman's response to those criticisms would be in terms of the instrumentalism in his essay "The Methodology of Positive Economics".  Then we will take a look at a more provocative example of instrumentalist ideology in Dostoevsky's "Grand Inquisitor".

Rational Ecomic Agents

Barry thinks economists have painted a picture of human nature from an economical viewpoint; that rational economic agents (humans) are always out to maximize their self-interest, and if let alone to exchange in the free marketplace, they would create a prosperous, efficient society where everyone gets what he wants (at least most, or more than in any other kind of society).  Three arguments against this viewpoint: 

1. The portrait of human nature given by economists is (in important respects) inaccurate;  e.g. people sometimes display a variety of economic "irrationalities".

2. The portrait of human nature is incomplete.  We need to examine their non economic activities in order to make sense of their economic ones. 

3. It depends on the kind of culture people inhabit, for how closely they approximate the economist's portrait of economic rationality.  I.e.  cultural relativity.

Examples of human's economic "irrationalities":

We do not express and maximise preferencesFifty dollar example.

Do not always prefer cheap to expensivePrice as guide.  6 VCRs example.

Preferences not always transitive.  A over B over P.  Preferences can be transitive whenever there is only one dimension of comparison among commodities that is relevant.  He says this does not work because objects come as whole objects; and people cannot decompose t hem into dimensions.

Actions are not based on complete information.  Paralysis of analysis.   Habit & tradition play roles.

"Satisficing":  rational economic agents do not do this;  they have unlimited wants.

Preferences are unstable over time.  affective contrast - drugs & convenienceswild goose chase.

Real people:  (unlike economic men) cannot express preference among all possible commodities, do not always prefer cheap to expensive, do not always have transitive preferences, do not act with complete information, no not act to maximize preference, and do not have stable preferences.  Economics presents a limited picture of the way people actually are and how they actually operate.  (Realism)    Barry is misleadingly attributing realism to economists, when, in fact, they are instrumentalists in their use of a model for humans.

Meaningful Prediction

Friedman explains that the goal of a positive science is the development of a theory or hypothesis that yields valid and meaningful (not trueistic) prediction about phenomena not yet observed.  The widely held view is wrong:  to suppose hypotheses have assumptions as well as implications and that conformity of assumptions to reality is a test of the validity of the hypothesis different from or in addition to the test by implications.  Truly important and significant hypotheses will be found to have 'assumptions' that are widely inaccurate descriptive representations of reality, and, in general, the more significant the theory, the more unrealistic the assumptions  (model) . . .  A hypothesis is important if it 'explains' much by little, that is, if it abstracts the common and crucial elements from the mass of complex and detailed circumstances surrounding the phenomena to be explained and permits valid predictions on the basis of them alone.  To be important, therefore, a hypothesis must be descriptively false in its assumptions;. . . "

Examples:  theory of gravitation is wildly unrealistic.

Galileo - falling bodies;  vacuumAristotelians say, "oh, well, you are not describing the real world. . .".  They criticized Galileo's unrealistic  assumptions.   Therefore, why would you do this? . . .  because this theory can accurately predict falling bodies  (so say the instrumentalists).   If physicists do this all the time; why cannot economists do this?

Economists have developed the highly abstract and descriptively unrealistic models of rational economic agents and free markets.   ...   do we ever examine every bag of apples to maximize our choice?   The fact that these abstract away certain properties of humans, should not bother us.  The model is an abstraction and does not give an accurate description of people.  If you are an instrumentalist, this does not bother you, if you can apply a theory to a  model which predicts well.  A realist is bothered by this model.  The relevant question to ask about the assumptions is not whether they are descriptively realistic, for they never are, but whether they are sufficiently good approximations for the purpose at hand.  (Do they get the job done?)   Does the theory yield sufficiently accurate predictions.

Challenging Realists

Friedman goes on to challenge the realists' objectives by questioning whether a hypothesis can be tested by the realism of its assumptions. 

Law of falling bodiesapplication - behaves as if falling in a vacuum.  To test by assumptions, you must measure various factors (air pressure, shape of object, etc.)  Rather, we say, in a wide range of circumstances the formula works.  Is it meaningful to say it assumes a vacuum?  Could there be other assumptions which yield the same result?

Perception in peoples' minds that Newton had discovered the laws of gravitation; i.e. laws built into the universe.  This is a realist attitude, that, therefore, there must be similar types of laws of economics that one should be able to discover.

Variables;  disturbing influences:  air pressure; shape of the body; velocity attained; etc.  A more simple theory may be a special case of a more general theory.  But to use the more general theory may entail more cost in order to derive the benefit of more accuracy.

Leaves positioned as if they sought to maximize the amount of sunlight they received.  Implications are consistent with experience; is hypothesis invalid because we know leaves cannot consciously seek?  Even though assumptions are false, it is credible because of conformity of implications with observation.

Billiard players.   Businessmen act as if seeking rationally to maximize returns with full knowledge of all data.

Economists are not providing a portrait of human nature;  rather, they act as if etc.   Does an economic scientist want to do this, i.e. study everything else about a human?  NO!    his comes in at the prediction level.  (Cultural relativity)

Grand Inquisitor Example

Ivan, in the "Grand Inquisitor" is torn between facts & values in a way logical positivists says should be kept separate and distinct.   He goes on and on to describe ugly facts about the world which he cannot understand; yet he goes on in spite of logic.  Facts to him represent how the world really is.   Grownups have eaten the apple, but children are innocent, yet tortured.  "The world stands on absurdities  . . . .  I understand nothing.  I don't want to understand anything now.  I want to stick to the fact.  .  . .   If I try to understand anything, I shall be false to the fact, and I have determined to stick to the fact."  (my Euclidean understanding).  He is afraid that if he goes beyond facts to somehow understand he will then have to accept the facts; which he refuses to do.   If reality is such that children must share responsibility for their father's crimes, such truth is beyond my comprehension  (the fall).   "While I am on earth, I make haste to take my own measures.   Truth (knowledge of good and evil) is not worth the price - if sufferings of children necessary to pay for it.   Ivan asks Aloysha to play the role of God;  would he set things up such that innocent children would have to suffer?   "What about the one without sin and his blood of forgiveness for all?"   The stage is set for the Grand Inquisitor, the ultimate instrumentalist, who confronts the silent one (Christ):

Thou hast no right to add anything to what Thou hadst said of old.  Do not add to the "facts" of the closed canon.  That will certainly confuse people.  The Pope has all the knowledge necessary to control the people  (for their own good).   I don't care if you are really Him - that does not matter.  What matters is the (predictive) happiness of the people.  How can rebels be happy?  You rejected the only way to make men happy.  But, fortunately, you passed on the work to us.

The three questions.  Who was right; Thou or the Devil questioner?  Inquisitor, with the cloak of altruism, shows his real motive for power.  Burden of freedom:  they will come to us and beg us to feed them.  Freedom and bread enough for all are not possible.   Tens of thousands seek the bread of heaven; what about the millions who are too weak to forego earthly bread?  We care for the weak too.   Three powers to control the conscience of these impotent rebels for their happinessmiracle, mystery, and authority.  Thou wouldst not enslave man with a miracle.  You wanted faith given freely.  Men's nature is such that they cannot reject miracle.   You think to highly of man.  You give him too much respect.  Man is weaker and baser.  You asked too much of him.   The elect are only some thousands.  What of all the millions?  This is a mystery.  We have also the right to teach mystery.  It is not love, or free judgment of their hearts that matters, rather a  mystery which they must follow blindly.    We have corrected Thy work.

You rejected that last (third) gift:  the sword of Caesar.  You could have created a universal state;   Someone to worship, someone to keep his conscience, and some means of uniting all in on unanimous and harmonious ant-heap.  Thou art proud of Thine elect; but Thou hast only the elect, while we give rest to all.   Freedom, free thought, and science, will lead them into such straits, and will bring them face to face with such marvels and insoluble mysteries.  Many will come whining at our feet and say "You were right; you alone possess His mystery;  save us from ourselves!"   We will teach them not to be proud; to be as children; and to think that childlike happiness is the sweetest of all.  They will submit to us gladly and cheerfully.    Peacefully they will die, and will find nothing beyond the grave; but we shall keep that secret and for their happiness allure them with the reward of heaven and eternity.

We have seen that to instrumentalists, predictive accuracy is what is important, not the reality of the descriptions of the assumptions of any hypothesis or theory.  The Grand Inquisitor, using his model of an abstraction of human nature, with its common and crucial elements of the need for miracles, mystery  and authority, can reach his predicted results of control of the millions of the non-elect without any regard for the truth of the ultimate destiny for those people.


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