Tag Archives: Objective

Why Economics Should Return to its Roots

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Economics explains how people interact within markets to accomplish certain goals. People; not robots. And people are creatures with desires, animalistic urges that guide them into making conscious, but often unconscious, decisions. That sets them apart from robots, which act solely upon formal rules (If A, then B, etc.). But this difference between humans and robots shouldn’t have to be a problem, right? Not if economics takes into account the fact that humans are biological creatures, who (might) have got a free will; an observation which makes their actions undetermined and therefore unable to be captured in terms of laws.

It seems fair to say that we all want to increase our utility – in the broadest sense of the word. But do we always know why we want to increase our utility? Don’t we never ‘just want’ to go out, ‘just want’ to buy a new television, ‘just want’ to go on holiday? Yes we do: it seems that, sometimes, we just happen to want things: we don’t know why, we don’t have explicit motives for our desires. And if we – the people having the desires – don’t even know why we do things, how on earth could economists know, let alone capture these actions in laws? That’s only possible if you make assumptions: very limiting assumptions.

Rational choice theory is a framework used within economics to better understand social and economic behavior by means of formal modeling. But if this sense of understanding – that is possible only through formalizing humans’ behavior – is only possible by treating humans like robots, what then, on a conceptual level, is the difference between economics and artificial intelligence? Besides that the latter really works with robots and the former seems to assume to work with robots? Robots whose actions are fully predictable and explainable by a set of parameters: speed, vision, greediness etc. Or its formal economic counterpart: humans whose actions are manipulable by changing interest rates, government expenditures, taxes and other parameters that are part of the large economic machine we are all a part of. Assuming a mindless creature, following formal rules, makes it possible to capture his intentions in a formal corset. Everything should be dealt with in a formal manner: even uncertainty should be put in mathematical terms. Anything to make sure that we don’t miss out on any of the creature’s shenanigans. Even the ones that are grounded in the deep domains of irrationality.

But maybe it’s time to wake up and ask ourselves the question: have we come to forget what that we’re dealing with humans here? That the economy is not a steam engine, robot or any other mindless entity whose actions are fully explainable – let alone predictable. Have we forgotten that economics is a ‘social’ science, a science dealing with products of the human mind, related more to psychology than to mathematics?

It’s understandable that economics wants to position itself as being a ‘genuine’ science, a science that is able to objectively describe the way the world works. A science that wants to show that it is capable of capturing its findings in laws. But why should economics be dependent upon these kind of formalities in order for it to be a science? Isn’t it time for economics to stop being insecure? To realize that it’s beautiful the way it is. Why does it behave like an 18-year old girl, whining and crying about the girls who she thinks are prettier than her? Stop it economics! You’re pretty: be happy with what you are.

But this leads us to the real question: what is economics? Economics is – much like politics – a system created by the interaction between us human beings. A system that – although less explicitly than politics – is founded on the notion of morality: our ideas about what’s right and wrong. It’s no surprise that figures such as Adam Smith and Friedrich Hayek have been so influential in economics. They understood what economics was really about: economics is in the basis a philosophy of what it means to be a human being, and the fundamental rights that each one of us should have. This ethics is the starting point of their economic systems. And that’s a tradition current economists should try to continue: interweaving morality and money. Keeping an eye on the moral fundamentals underlying markets and coming up with original ideas about how to improve these markets on a moral level. So there’s plenty of work left to do for the genuine economist.

But what do you think?

Flipping the Hierarchy of the Sciences

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There are different sciences, and each one is ‘appreciated’ for its own unique contribution to our collective knowledge pool. But some sciences are appreciated just a little more than others. Whether it be the social sciences that are regarded as the most complex and developed sciences, as Auguste Comte believed, or the natural sciences as being the ones coming closest to the ‘objective truth’, as people in our society – implicitly or explicitly – seem to presume: there’s always a certain hierarchy in our perception of the sciences.

It’s understandable why – at least in our society – the natural sciences are regarded to be ‘better’ or ‘more scientific’ than those ‘subjective’ social sciences. The natural sciences – physics, chemistry etc. – are related to Western industrialism and the inventions (steam engine, electricity, televisions etc.) it brought forth. And since natural sciences –> inventions –> money, and since money is good, the natural sciences are good too. At least better than the social sciences, for the latter won’t make us millionaires. But even though such hierarchies are understandable, they might have some negative implications for the manner in which the ‘lower’ sciences are being looked upon. They might, for example, lose their ‘scientific status’, and hence the respect that comes with this status. But there’s a remarkably easy way to solve this problem.

People are used to thinking in terms of higher and lower, at which ‘higher’ is associated with ‘better’ and ‘lower’ with ‘worse’. This vertical manner of thinking might be a relic from the past, in which religion was very prominent and in which higher meant closer to heaven, and in which heaven was good. But whatever metaphor was responsible for the pyramid-structured hierarchies we tend to visualize in our heads, it’s a fact that it’s omnipresent in our conceptual frameworks.

But let me ask you something: what would happen if we would turn this vertical hierarchy on its side? If we would obtain a horizontal ‘hierarchy’? Would we then still have a hierarchy? Probably not, for the distinction between higher and lower ranks would have disappeared. It’s just left and right, with left – for example – being the social sciences and right the natural sciences – in case you order the sciences based on a criteria such as ‘nature dominance’. Or you could put the natural sciences on the left hand side and the social sciences on the right – in case the variable of choice would be something like ‘people dominance’. Whatever criteria you use for ordering the sciences, the hierarchy will have disappeared, and hence the negative consequences for a science appearing at the bottom of the ranking.

It’s a very easy change in ordering the sciences, but one who doesn’t entail the negative consequences of a vertical hierarchy.

But what do you think?

The Subjective Nature of Scarcity

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‘Mum, I want an iPad too!’, ‘Really?! You’ve got tickets for Glastonbury? Aah…I envy you so much right now!’, ‘You’ve gotten a bonus of 150.000 dollars?! Jesus…well, believe me: in a couple of years from now, I’ve got that too.’

More opportunities and more possibilities create more wants and more needs. Hence it is very plausible that we – the ‘rich people in the West’ – have more unsatisfied desires than the ‘poor in Africa’, numerous of which are starving each day due to a lack of food. After all, we want an iPad, MacBook and iPhone; they only want some bread and water. Hence we are the ones having more unsatisfied needs, thus we are less satisfied than the poor in Africa. Poor old us: it isn’t easy being rich…

Scarcity is defined as the ‘insufficiency of amount or supply’ of a good/service. Note the word insufficiency in this definition, since it is this word that points to the root of the problem. Unlike things as ‘supply’ or ‘amount’ – that are quantifiable and hence (at least partially) measurable or objective – ‘sufficiency‘ is an intrinsically subjective judgement. And the problem with something being subjective, is that it is relative; its ‘value’ is determined by means of comparison to what is going on in one’s surroundings. And if you’re living in a rich environment, an environment in which iPads and MacBooks are within reach for everyone, then this environment is likely to make you want different (read: less basic) goods than you would have wanted if you’d been living in, let’s say, the poorest regions of Africa.

Capitalism is a train, and profit is perishable. Yesterday’s profit is not today’s profit. And it is today’s profit that counts. Standing still is falling behind; you have to keep moving in order to keep your balance. That is the system we’re living in and that is the system we’re constantly trying to prevent from collapsing. Not because we want to keep it on its feet, but because we have to: after all, we are part of the system too, and we have got to make sure that we keep on our feet.

Sure: you could be stubborn and decide not to take part in the ever-continuing rat-race called ‘the economy’. But what then? Where do you – and where can you – turn to? Nowhere, right? You need your money in order to stay alive: in order to satisfy your iPad-needs, your longings, desires and deepest fetish-like obsessions, you have to keep on producing and buying. We’re locked up in a prison: a prison we’re painfully dependent upon.

We could of course turn to communism, an economic system without money. By doing away with money, we might do away with the vicious circle of making each other more horny and horny for bigger and bigger goods. A horniness without an organism to mark the end point of our satisfaction-seeking journey. No money means no satiable goals – or at least no goals that are within financial reach. And no satiable goals would prevent us from having feelings of insufficiency. But communism…hmm…that doesn’t sound very attractive, does it? No: we’d rather keep on hoping for that Lamborghini.

But what do you think?

The Humanities: Are They Truly Scientific?

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What are the criteria for being called a “science”? Usually we seem to associate scientific thought with notions like “facts”, “the truth” and non-subjective enumerations of “the way the world works”. This “normal” interpretation of science often comes down to the idea of science as being able to describe and explain the universe according to a set of formal or natural laws. However, not each discipline that we normally consider to be a science seems to occupy such an “indisputably scientific” position; an indisputable position like physics or chemistry does. Not all the sciences are about the predictable domain of nature. Some of them handle about what might be the most difficult entity to capture in terms of laws: the human being and its utterly unpredictable behavior. Therefore the following question seems justified: are the disciplines that are trying to grasp this interpreting and subjective animal called “human” worthy of being called a science? That is, are the humanities truly scientific?

By humanities, I am referring to disciplines like history, literature and likewise disciplines having the human, or its creations, as its research object. In order for these disciplines to position themselves as being a collective of genuinely “scientific” endeavors, they could try to shed any accusations of subjectivism by adopting an empirical and falsifiable method of inquiry. Being “scientific” in this sense means having a positivistic stance of gathering data and inferring logical conclusions from this data; a stance that isn’t interfered by any introspective or intuitional attempts to gain knowledge. By choosing the positivistic route, no doubts about the objectivity (as being the counterpart of subjectivity) of the humanities’ claims can be made.

However, applying this empirical method of inquiry, and presupposing an attitude of “just sticking to the facts”, might hollow out all that is the humanities. And although the humanities might not be objective in the sense that physics or chemistry are objective, they still seem to be able to contribute valuable insights to our shared pool of knowledge. Therefore, it might be more reasonable for us to make a distinction – within the humanities – between: (1) descriptive inquiries and (2) hermeneutic inquiries.

By making this distinction, full clarity can be provided about (1) the areas within the humanities that are striving to represent “the facts”, and thus should be interpreted to provide an objective description of any state of affairs, and (2) the research that strives to come up with reasonable interpretations of historical events, texts and any other product of human creativity. By explicitly separating these two types of research from each other, we might be able to get the best of both worlds: on the one hand (1) we can satisfy our need for “objective data”, and on the other hand (2) we are still able to come up with interpretations of human constructs. This would provide us with the completest picture the humanities would be able to offer us.

So let’s wrap things up. You could say that the humanities provide us with interesting reflections on what might be going on in those creative minds of our ancestors. However, we should not expect the humanities to adhere to the rules of scientific investigation as they are laid down by positivism. In order to avoid the harmful trap of condemning all of the humanities to the realm of subjectivism, we could try to come up with a sub-domain within the humanities that is confining itself to empirically verifiable facts. However, on a holistic scale, the humanities should be respected for the unique contribution they make to our system of beliefs; even though it might not be possible to capture their insights in terms of laws, and even though a certain part of the scientific community might have problems with calling the humanities “true” sciences.

But what do you think?