Abstract:A paper by W.J. Alexander concluded that a decrease in inflation rate would result in a significant gain in the growth rate of national output, on the basis of econometric analysis involving variables additional to the two principal ones. This note shows that this verbal conclusion does not follow from the results of the algebraic analysis which precedes it, and more generally, that time-series analysis, with or without additional variables, is unlikely to be able to contradict the conclusion of simple two-parameter cross-section correlation studies - namely that the growth rates of countries are not correlated with their inflation rates.
WoPEc - Working papers in economics - WUSTL March 1998 Paper in pdf form
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My paper "Is low inflation an important condition for high growth?" (Stanners 1993) concluded: "No evidence has been found to support the notion that a low rate of inflation has in the past and in various countries been associated with improved growth rate". In a further note (Stanners 1996), I examined the results of a paper by R. Barro (1995), concluding that these results, although presented forcefully as supporting the case for low inflation, were on the contrary further evidence for the statement quoted above.
The occasion of the present note is a paper by W.R J. Alexander (1997).
Alexander, like Barro, gives strong support in the conclusions of his paper to the policy-aim of a low level of inflation.
The paper deals "in a pooled time series and cross-section fashion" with 11 OECD countries over the period 1966 to 1988. Remarking that reported work which regresses simple growth data against inflation data "must necessarily be flawed", it begins with a regression of growth data on net capital and labour increments, and then successively adds the annual inflation rate, the annual change in the inflation rate, government expenditure, and exports. Highly significant coefficients are found for all parameters - positive for capital and labour inputs, and for government consumption and exports, negative for inflation and delta-inflation. No results are reported for regression of growth on the inflation data alone. Nor are inter-country (crosssectional) results given, on the grounds that the data are too sparse.
I have no particularly adverse comment on the work of the paper apart from its last paragraph which states the paper's conclusion. The purpose of this note is to point out, not only that the conclusion does not follow from the numerical analysis, but that, in general, work involving additional modelling parameters cannot lead to any useful (in the sense of being predictive in the real world) statement on the relationship between the two parameters, growth and inflation. Such work falls into the trap of assuming that some theory must be better than none.
The paper's conclusion is as follows: "There is little existing empirical evidence on the relationship between inflation and growth, and much of what evidence there is fails to control appropriately for growth in real inputs. The present work uses a small sample of OECD countries for which capital stock and labour force data are available to investigate, in a pooled time series and cross-section fashion, the relationship between inflation and growth. Strong evidence is found contrary to the hypothesis that there should be no association between inflation and real growth. Even if inflation had been at a constant rate for some time, the result implies lost growth on a scale similar to that claimed by Grimes.
Yet, to the loss of growth from a high level of inflation that this finding implies must be added further loss from an increase in inflation. Taking these combined effects, a reduction in inflation from, say, 6% to 2% would imply an improved growth performance of the order of 0.93176%, or close to 1% p.a. There is no need to stress the long-run benefits of such an increment to growth."
In what follows, I will follow the paper in using the adjective "atheoretical" to describe work involving simple regression using the raw data on growth rate and inflation available in official statistics. No argument is given in the paper as to why "any study of growth which fails to control for the growth of the capital stock and the growth of the labour force must necessarily be flawed", or why two, and only two, further variables are added. The author remarks that "there is no shortage of candidate regressors", but "many of them are dubiously measured socio-political variables", and merely adds, "let us check the effect of allowing government consumption and exports to enter the equation". There is no later discussion of the results of this "check", apart from the tabulated (significant) results and the observation that the inflation relationship is "robust" when these variables are added.
No attempt is made to confront or reconcile the new results with existing ones. The paper passes from the tables of coefficients and t-statistics to the quoted conclusion without a backwards or a sideways look.
The last sentence of the conclusion, together with the reference to "lost growth", makes it clear that the paper is supporting a prescription for action in the real world.
However, the gap between the analysis and the prescription involves at least five unstated and undiscussed assumptions: First, that the response of a complex real economy to a given administrative measure is likely to be forecastable by an arbitrary few-variables model. There is no mathematical model which comes near to a complete description of real economies.
The use of a simple model, not, as might be valid, to throw tentative light on the past, but to give unguarded and unqualified prescriptions for the future of a highly complex economy, can only introduce confusion.
Second, that a statistically established relationship is a causal one, and that the causal process is in the chosen direction. Cause is a highly complicated concept. Perceived correlation and time-sequence can certainly play a part in establishing a conviction of cause, but correlation cannot determine cause. The decades-long history of controversy over the statistics related to smoking and lung cancer, where the data were vastly more plentiful and the context much simpler and better-understood than in the present instance, demonstrates both parts of that observation.
Third, that the variable chosen as causal, namely inflation rate, is in reality capable of being set at a pre-determined low value, and that the claimed consequence of this setting, an improved growth rate, can be stated without reference to the other variables. This tacitly assumes that each other variable is also capable of being set at a pre-determined value - for example, held constant. It also ignores the fact that an observed long-term independence of inflation and growth rates cannot be refuted by showing that growth is correlated with inflation and other parameters. An easily visualised (imaginary) example makes this clear. Suppose it is established that men's weights do not correlate with height. To show subsequently that men's weights are correlated with height and girth, does not oppose this. It means that for a given girth, weight correlates with height. Both observations can be true, if tall men tend on average to be thin and short men fat, i.e., if height and girth are themselves correlated.
In one of the models in the paper, it might be argued along those lines that high inflation would, other things being equal, have a negative effect, but that the real world is so arranged that this effect is cancelled by a quasi-automatic increase in labour and/or capital inputs.
Fourth, that a result based on yearly-varying data, thus including short-period business cycles, can confidently be used to prescribe a long term policy-aim. The paper is dealing with year-by-year inflation rates, as do the other papers cited in support. That is, the reported correlations largely reflect the poorly understood dynamics of business cycles, involving factors such as moods and administrative reactions, rather than the underlying factors governing the long-term prosperity of the country. There seems, indeed, to be little doubt that for most advanced countries in the period since World War II, year-by-year growth data are inversely correlated with year-by-year inflation data (even if the correlation coefficients of Gomme (1993) cited (again to 5 significant figures) by Alexander have in fact no evidential value in this regard due to the absence of data in this reference on the statistical significance of these coefficients). However, if long-run time-averaged data for a large number of countries show no correlation of growth rate with inflation rate, then it is difficult to see what is the significance of these time series results. Many variables must cycle either with or counter to growth, and the fact that prices show some tendency to do so is surely not surprising . But to state positively that growth would be helped if just one of these variables, arbitrarily chosen, were somehow held at the value attained at the top of the growth cycle is not logically valid.
The main fault is thus to imply that an algebraic finding that there is no correlation between A and B can be contradicted by an algebraic finding that there is a correlation between A, B, C, D, E and F. This implication is conveyed in the paper simply by omitting C, D, E and F in the verbal re-expression of the latter algebraic finding, so that in effect it reads, "there is a correlation between A and B". Further errors in the conclusions of the paper are that B causes A, and that a prescription for future action in the real world can be based on this cause-and-effect. A substantively weak conclusion is made to appear strong by simply omitting "let us assume" and "other things being equal". Even if the model was a complete description of the economy, and causality was proved, the advice to the minister in control of the economy would have to be in terms of controlling suitably all of the variables concerned.
Logically, the paper's conclusion should be: "If the complex real economy of a country did behave according to one of the six models, and if it was possible in a real economy to ensure that none of the other variables changed during a certain period, then any change in the rate of inflation in that period would be associated with a change of opposite sign in the rate of growth." It might go on: "If it is in fact observed that inflation in different countries has no systematic relationship to the growth rate of these countries (and nothing in the paper refutes this1), then according to the model, this would be because, in the absence of means of controlling the variables, any change in inflation rate is systematically counterbalanced by opposing changes in other variables. For example, in the second model, an increase in inflation rate would be balanced by increases in capital and/or labour inputs (or vice versa)." No mention of cause or antecedence would be permissible.
Tentative remarks of this nature might have been technically interesting on their own terms. The last observation, for example, happens to be a re-statement of two currently unfashionable ideas which the paper briefly cites in an introductory discussion: "In the Phillips curve tradition it was long assumed2 that there was a negative correlation between inflation and unemployment. According to the Tobin- Mundell hypothesis an increase in inflation ought to cause a substitution away from money to investment in fixed capital, with a consequent positive impact on the rate of economic growth." But the conclusion is far from tentative. It states categorically that a four percentage point reduction in inflation would cause (the word "imply" is used but later text leaves little doubt that "cause" is meant) additional growth of 0.93176% (sic) per annum.
The treatment of inflation at some length in the conclusion is in contrast with the omission of any reference at all to the other variables. The statistical analysis showed the positive effect of an increase in government expenditure or exports just as clearly as the negative effect of inflation. If true, this would be of technical interest, seeming to favour small, open, high government countries, but this is not mentioned in the conclusions, perhaps because it does not lean in the currently approved direction regarding government expenditure.
In saying that other atheoretical studies are flawed, the paper falls into the trap of assuming that some theory must be better than none. My atheoretical paper of 1993 undertook a comparatively simple task. Everybody in politics and the media seemed to take it as axiomatic that low inflation was good for growth, so surely the evidence should have been plain to see at a glance. I looked in simple ways, but fairly diligently, at the superficial data on inflation and growth and could find no evidence for this.
More recently, I became aware of a further example of atheoretical evidence of the robustness of output in the presence of inflation through a remark of R. Barro in his book "Macroeconomics" (p201): "(In) the post-World War I German hyperinflation ..... we have something close to a laboratory experiment for studying the consequences of high and variable rates of monetary growth and inflation. Over the period from 1921 to 1923, the rates of inflation ranged from near zero to 500% per month! Further, the available data suggest that relatively small changes occurred in aggregate real variables, such as total output and employment." The observation regarding aggregate real variables is not referred to again, in a chapter chiefly dealing with levels of real money balances, transaction costs and real government revenues obtained from printing money.
The references given by Barro (Bresciani-Turroni, 1937 and Cagan, 1956) confirm that pre-monetarists who studied the post-WWI or post-WWII inflations in Germany, Hungary, Russia, Austria and Poland, related in a seemingly unsurprised and off-hand way that output, although cut, maybe by a third or a half for some months, was far from halted. Remembering that the German 1913 Mark was worth10 thousand Marks in January 1923 and 10 billion in November 1923, while unemployment was 4% as late as July 1923, this superficial evidence thus adds powerfully, in my view, to the evidence that less apocalyptic inflations may well be growth-neutral.
Barro, in his paper, and Alexander, set themselves a very much more demanding task than mine. I and others have looked atheoretically at the raw growth/inflation data bearing on a belief, held almost unanimously by intelligent people to whom this evidence is readily available, and we have reported on how much we searched and on what we found - namely no supporting evidence. Alexander's task is to prove that the popularly held belief is a truth which lies hidden behind the seemingly opposed raw data. It seems to me much more credible and in line with historical precedent that people may believe something which makes a plausible story, or which they want to believe, or which it is in their interest to believe, or simply which it is fashionable to believe, than that they have collectively, almost unanimously, and relatively suddenly, stumbled by chance on a truth so deeply hidden as to be detectable only by econometrics.
Alexander makes the mistake of assuming that some theory is better than none, and indeed states with double emphasis that an atheoretical treatment must necessarily be flawed. This is clearly not so, as I hope the above has illustrated. When the situation is that there is no mathematical model which comes anywhere near to a complete description of real economies, there may be no alternative to studying atheoretically the untreated growth and inflation data. A conclusion reached by such a study may or may not be correct, but it cannot possibly be modified by an argument involving one or more (but in the nature of things never enough) additional variables. Adding more un-understood relationships to the one you already have can only introduce more doubt and confusion, even if, as is too often seen, this confusion allows ill-based and tendentious conclusions to be laid plausibly before the reader.
Economics is uniquely beset by this type of problem. In literature, history and the non-numerical social sciences, plausibility, wit, cleverness, the appeal to the audience, are of the essence. Tendentiousness is not necessarily a vice in such studies. In the hard sciences, at the other extreme, the audience is irrelevant. The appeal is to fact.
Tendentious results fail to be replicated. Economics is alone in having to deal with numerical data in a rhetorical context, i.e., a context in which the accrediting appeal is to the audience rather than to the factual world, for propositions which are presented as numerical and factual. A small but telling, and far from rare, example of the effect of falling between these two stools is that the number 0.93176% quoted above in Alexander's conclusion - a change of 1 in the last place representing 10-7 , or say one millimetre in 10 kilometres - simply could not appear in any engineering context, since engineers are continually dealing with numbers in the real world. Absolutely nothing in engineering (and little for that matter in physics) is accurate to 1 in 10 million. Why then can such a number appear in a subject in which quantities cannot even be defined with rigor, much less measured with a stated accuracy? The reason may be that economists are not as a daily experience brought up sharply by confrontation with fact. A competent economist may often be confronted by a colleague who disagrees with him, but almost never by one who can say flatly "the facts prove you wrong". A number emerging from a computer with 6 significant digits is transferred to the published page. It is rarely tested against reality, only on whether it passes muster with the audience.
This is a milieu in which it is only too easy to pursue a numerical investigation until the desired verbal conclusion can plausibly be extracted, and then to stop. In the absence of confrontation with fact, professional intellectual rigor must remain the only barrier to tendentious argument. This is not a novel observation, of course.
Many similar remarks could be cited - see for example Clower (1989) and Colander (1989). Little can be added, indeed, to the opening words of Malthus' Principles of Political Economy (1820): "It has been said ... that the conclusions of Political Economy partake more of the certainty of the stricter sciences than those of most of the other branches of human knowledge. Yet we should fall into serious error if we were to suppose that any propositions, the practical results of which depend upon the agency of so variable a being as man, and the qualities of so variable a compound as the soil, can ever admit of the same kinds of proof, or lead to the same certain conclusions, as those which relate to figure and number. ... The science of political economy bears a nearer resemblance to the science of morals and politics than to that of mathematics. ... This conclusion ... is further strengthened by the differences of opinion which have prevailed among those who have directed a large share of talent and attention to its study."
The main fault of Alexander's paper is to imply that an algebraic finding of no correlation between A and B can be contradicted by an algebraic finding of correlation between A, B, C, D, ..... This implication is conveyed in the paper simply by omitting any mention of C, D, and further variables, in the verbal reexpression of the latter algebraic finding, so that in effect it reads, "there is a correlation between A and B". The further verbal implications in the conclusions of the paper that B causes A, and that a prescription for future action in the real world can be based on this cause-and-effect, are erroneous on several counts.
Thus, the paper does not, contrary to the implication of its conclusion, refute the evidence that the long-term growth rates of countries are not correlated with their inflation rates.
1. The paper analyses growth "in a pooled time series and cross-section fashion" in terms of:
1) Capital input, labour input
2) Capital input, labour input, inflation
3) Capital input, labour input, inflation, change of inflation
4) As 1), plus government consumption, exports
5) As 2), plus government consumption, exports
6) As 3), plus government consumption, exports
It does not give, or refer to, results of this type of analysis for growth against inflation alone. It is remarked also that "there are too few countries in the sample for cross-sectional work".
2. This formulation was indeed "long assumed", but is a misreading of the original Phillips curve. A. W. Phillips (1958) did not put forward the idea that there is a tradeoff between inflation and unemployment. He noted that there was during the period 1861 to 1959 a rather well defined relationship between the rate of increase of nominal wages and the level of unemployment. Prices and output as such were not involved. He did not recommend that price inflation should be stimulated or accepted in order to promote employment, but that "aggregate demand" should be regulated to keep prices stable (i.e., to promote zero price inflation rate) while nominal wages (in these circumstances also real wages) had a positive "inflation rate" reflecting productivity gains. This view might today be applauded by any central bank.
Alexander, W.J., 1997, Inflation and economic growth: evidence from a growth equation, Applied Economics, vol. 29, no. 2
Barro, R. J. 1993, Macroeconomics, New York, John Wiley & Sons Inc.
Barro, R. J. 1995, Inflation and economic growth, Bank of England Quarterly Bulletin, vol. 35, no. 2
Bresciani-Turroni, C. 1937, The Economics of Inflation, London, Allen & Unwin
Cagan, P. D. 1956, The monetary dynamics of hyperinflation, in Friedman, M. ed., Studies in the Quantity Theory of Money, Chicago, University of Chicago Press
Clower R. W., 1989, "The state of economics: hopeless but not serious?" in Colander D. C. and Coats A. W. (eds), "The Spread of Economic Ideas", Cambridge University Press
Colander D. C., 1989, "The invisible hand of truth" in Colander D. C. and Coats A. W. (eds), "The Spread of Economic Ideas", Cambridge University Press
Gomme, P. 1993, Money and growth revisited. Measuring the costs of inflation in an endogenous growth model, Journal of Monetary Economics, vol 32
Phillips, A. W. 1958, The relation between unemployment and the rate of change of money wage rates in the United Kingdom, 1861-1959, Economica vol 25
Malthus, T.1820, Principles of Political Economy, London, John Murray
Stanners, W. 1993, Is low inflation an important condition for high growth? Cambridge Journal of Economics, vol. 17, no. 1
Stanners, W. 1996, Inflation and growth, Cambridge Journal of Economics, vol. 20, no. 4
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Abstract. It seems rash even to raise the question in the title. The universal belief is
that the answer is and must be "yes". Yet factual evidence for this belief is curiously
lacking, maybe even felt to be unnecessary. This paper takes what is thought to be all
the, not very voluminous, post-war factual data which exists and which may bear on
the matter, and treats this data in every plausible way to find if any convincing
demonstration is possible that low inflation is associated with high long term growth
rate in GNP. This includes special attention to Germany, the country which is the
popular (and sole) paradigm among UK authorities and commentators. The paper
concludes that no such demonstration is possible.
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Abstract. In a previous paper, the author concluded that there was no evidence that
low inflation was associated with improved growth rate. In this note, he examines a
paper by R. J. Barro which tends to the opposing view. He suggests that the evidence
of this paper in fact reinforces his conclusion.
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Abstract:
We all, including economics professors, statisticians and journalists, know just by looking around that our comfort and prosperity is determined by the plethora of objects produced by technical innovations over the millennia, centuries and decades. The earnings of billionaire investment managers may come from their “services”, but their prosperity is manifest in their possession of, or ability to buy, things which have been grown, cooked, mined, constructed, or manufactured. However, by some quirk of social psychology, those economics professors, statisticians and journalists (and no doubt bankers too) apparently believe, simultaneously, that things are not “important”. Agriculture has already been written off as “contributing only 2% of the economy”, and manufacturing is “declining” towards the same invisibility. Recently headlines appeared in the Financial Times and the Daily Mail that “business and financial services eclipse manufacturing” and “the City is supreme as factories fade away”. What was the source of those preposterous views? None other that our Office of National Statistics, whose own press release had been headlined in a similar way. As usual there was no response from any quarter, not even from the CBI Manufacturing Council, to point out that the ONS data had absolutely nothing to do with the only aspect of manufacturing that matters for national prosperity, namely physical output. This note suggests that the ONS should put its house in order. We need not only facts, but a balanced presentation, without attention-seeking headlines.
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Abstract. The general view of the media, bankers, business and politicians, not noticeably contradicted by academics, is that one of the main functions, or the main function, of the central bank is to analyse the progress of the economy, and then to steer it with skilful judgement towards health and growth, by making decisions to change their base interest rate, with carefully chosen timing, amount and direction. The data presented here show that it is impossible to sustain this notion of skilful time-critical steering, or even that the central bank does in fact lead or determine the short term interest rates available to savers or business. The contrary proposition, that commercial short-term interest rates are in fact observed and followed by the central bank, is mathematically sustainable, and generally in accord with the observed facts.
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Abstract: Following on from the note entitled “The Function of the Central Bank” (see above), this note brings the data up to date. It will be re-issued at intervals. It will monitor the tendency of short-term interest rates, give the author's judgement on the likely movement of the central bank rate in the UK, US and EU zones, and enable the reader to make his own judgement. An addendum shows that by the normal standards of statistical testing (which by their nature must always fall short of proof), the 3-month bank rate leads the changes announced by the central banks in their base rates.
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Abstract. Politicians, journalists - commentators on economic matters generally - evolve a sort of quasi-stable rhetoric. They select two or three foreign countries with which they like to compare their own, either as models to be followed, or traps to be avoided. Other countries are rarely or never mentioned. They repeat over and over again mantras such as "we are the fourth largest economy in the world" in the UK, or variants of "the dot.com revolution" or "the new paradigm" in the USA. In arguments in the UK over the replacement of sterling by the Euro, it is almost a daily occurrence to hear growth in the UK contrasted with recession in Eurozone Germany. It appears likely that these stories emerge in part from appraisals of GDP expressed for the purpose of cross-country comparison in a currency unit (the Euro or dollar, say) calculated at the ruling rate of exchange. This calculation can be done instantly. It is "news". The more recent method of using purchasing power is much more complex and its results are published late. They are not "news", and do not affect the established rhetoric. Nevertheless, they are the truth, or as near to that as economic data can be, and often quite strikingly at variance with the current story.
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Abstract. The notion of de-industrialisation arises from the fact that industrial
employment, having risen rapidly, is now in equally rapid decline. This paper presents
the view that agriculture and industry together form, and have always formed, a
"primary" sector which from the beginning, because of its inherent capacity for
productivity gains, has progressively freed labour for non-productive work. The
"industrial" revolution was really a "primary sector" (in the above sense) revolution.
There is no new phenomenon of de-industrialisation, merely a speeding up of a process
of labour-freeing from the primary sector, whose ever decreasing work force produces ever increasing output.
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Abstract. Economic theory is dominated by abstract structures. Underneath, there is no firm foundation. Above, there is a lack of rigorous confrontation with established fact. Basic theoretical concepts have no acknowledged definition. The apparatus of graphs, algebra and technical vocabulary are often vehicles for rhetoric rather than descriptions of truth. In this abstract world, it seems to be accepted without embarrassment that all opinions are possible, while adopting the style of science in delivering each conclusion as if it was a fact. The closest parallel is perhaps with theology, where also each practitioner presents his story as fact, but there are differing stories. This paper illustrates this theme, with particular reference to "deindustrialization".
It points out that it is tangible things which are the primary measure, literally the sine
qua non, of all material, cultural and intellectual progress. Official statistics necessarily
aggregate market transactions involving tangibles and intangibles at monetary
exchange values. However it is an error, in the sense of being a misperception leading
to wrong action, to mistake this equivalencing of things and non-things as more than a
necessary procedural fiction. In this system, one opera performance equals, say, 100
lorryloads of gravel, but the logical reality is that gravel is part of the primary
inventory, opera and all other intangibles are secondary or consequential. This
inversion of the important and the estimable lies behind the paradox of the
deindustrialization which is in process and the deagriculturalization which has already
run its course in some parts of the world - namely that our entire civilisation rests (and
logically and factually must always rest) on the output of this (in employment terms)
disappearing sector. Eventually, the sector which ultimately produces all value
will appear in the statistics as one which adds zero value in current terms.
Fortunately, the real word of affairs shows no sign of acting on this erroneous
perception. For those accustomed to see the world in abstractions, misperceptions still
seem to obscure the reality.
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Abstract: Is industrial production relatively in decline? No, it is not. This note displays the evidence that for the last 40 years, in the 6 largest economies of the world, industrial production has kept pace with total output.
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WoPEc - Working papers in economics - WUSTL December 2002 Paper in pdf form
Abstract: The author of this note takes it as self evident that prosperity and the provision of "things" (buildings, roads, furniture, furnishings, clothes, machines and equipment of all sorts) go together. The way people generally speak and act is in line with this view. If this is so, domestic manufacturing must continually keep pace with gross domestic product, provided that the necessary "things" are not imported from elsewhere. However, many people are persuaded that domestic manufacturing is in terminal decline, and that the lost output is being replaced by imports from the developing world. Almost daily, one may read of manufacturing jobs being "exported" to the Far East. However, it is simply impossible to import goods without a more or less balancing volume of exports, and there is in reality limited scope for exporting a sufficient volume of services. Imports of goods must more or less be balanced by the export of domestically produced goods. How can a widespread perception of decline be reconciled with a reality of growth? The answer is that the "decline" which is perceived is a decline in employment in the industrial sector, but this decline is more than counterbalanced by the rise of productivity, so that the domestic output of goods by and large keeps pace with the growth of GDP. This note summarises the statistical evidence for the accuracy of this view. A substantial footnote discusses the role of journalists and academics in sustaining the perception of the decline of manufacturing.
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Abstract:
When Pigou vigorously attacked Keynes immediately the General Theory was published, he wrote that, “since a detailed running commentary would be both tedious and un-illuminating, I shall not adopt that method”. These reading notes follow precisely this tedious route. The truth cannot always be entertaining. Keynes was one of the most fluent and plausible rhetoricians of his age, and it could be argued that his work can be examined only by dismantling his rhetoric line by line to expose the total logical vacuum which in cold objective fact the General Theory is.
Keynes’ book was seemingly written at speed, contains no bibliography, virtually no mention of factual data, little evidence, pseudo-algebra only for appearances, no attempt at anything which could be called scientific method. His acknowledged greatness lay in his cleverness, and his great skill as a debater, negotiator, journalist, and politician, not at all in his ability or interest in searching out the truth. His “theory” is presented in terms of mechanistic cause-and-effect models of economic society, but quite demonstrably, these models are based on nothing but the repetitious re-statement of Keynes’s prior and evidence-free conviction that the cure for unemployment and recession is to stimulate spending, any spending, useful or useless, either by individuals or by governments. Keynes used every rhetorical trick imaginable to hide the empty centre of his work, from “as I shall show … ” onwards. His mainstay, as Pigou remarked, was a deliberate lack of precision and clarity. The great sociological mystery is - how did this transparently fact-free “theory” sweep everything before it?
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Abstract. It has been said, fairly plausibly, that "Bayesian inference is one of the most
widely known eponyms in all of science". But unlike common scientific eponyms, it is
by no means clear exactly what "Bayesian" means, and what it has to do with Bayes.
"Bayesian", and the dozen or so words and phrases which are usually associated with
it, seem to be more like unspecific words of the English language, deployed by an
author as he wishes, rather than fixed technical terms. The obscurity of the language,
relative to the precise meanings associated with, say, Newton's laws or Heisenberg's
uncertainty principle, is matched by the obscurity of the history - the virtually unknown
Bayes, the posthumous paper, the impenetrable and incoherent style, the muddled
logic, the virtual silence on his work for 200 years, the sudden emergence in the last
several decades, not of new knowledge, but of new Bayesian additions to the
vocabulary. This note surveys the notions and the history. It concludes that the
Bayesian vocabulary is vague and pretentious, and serves no useful purpose.
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Abstract:
Wittgenstein and Russell both in their different ways showed that they believed that ultimately, there were better things to do with one’s life than study or talk about philosophy. Both were remarkable men. The words of both appear in the English translation of the Tractatus, Russell’s in his introduction to Wittgenstein’s book. This note comments on these words, almost one at a time. The lack of clarity, logic and coherence of both authors raises the puzzling question – in what does greatness lie? Is it in personality, debating skill, membership of a mutually admiring elite? This note discovers nothing of interest or importance in anything actually written between the covers of this book.
The note is essentially reading notes, as was my note on Keynes’ General Theory. I recall that when Keynes’ friend and rival, Pigou, vigorously attacked Keynes immediately the General Theory was published, he wrote that, “since a detailed running commentary would be both tedious and un-illuminating, I shall not adopt that method”. The notes below follow precisely this tedious route. The truth cannot always be entertaining. Pigou chose to challenge Keynes on the latter’s home ground, as a debater, a predictably hopeless task. For Wittgenstein, as for Keynes, I might argue that his work can be examined only by dismantling his rhetoric line by line to lay bare its lack of discipline, of coherence, of logical development, and of content.
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Abstract:
These are critical notes made while reading Deborah A Redmans's "Economics and the Philosophy of Science". The philosophy is largely that of Popper, Kuhn and Lakatos. Redman begins in the style of a neutral reporter, but later shows her impatience with the confusions sown by those eminent people. Hutchison supplies the main sceptical comments. My main comment is that neither Redman, nor the philosophers she quotes, appear to recognise that it is simply impossible to discuss "science" if the unstated assumption is that science is whatever anyone chooses to call science. One has to start with the strikingly observed worldwide unanimity of physicists and chemists within their respective disciplines, and take account of the fall-off of unanimity (that is, the widening scope for disagreement) as one moves through biology, medicine, etc. (that is, as the matters studied become more and more complex). Economists are in the absurd situation of claiming to be scientists, or at least, wanting to appear to be scientific, when the matters they study are simply too complex ever to lead to consensus. The absurdity is demonstrated when, for example, Friedman is cited in this book as claiming that there is no fundamental distinction between economics and the physical sciences. At the other end of the spectrum, historians and philosophers do well to ply their trade without making inappropriate claims of objectivity.
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This is my own translation of a work which appears from the bibliography to have a significant English-speaking audience, but of which there seems to be no readily accessible English version.
English translation
Abstract:
E O Wilson’s book "Consilience" is a notably unscientific plea for science to take over the so-called social sciences, from economics to psychology, and extend also into art and religion. The text rambles on, with exalted brilliance according to one reviewer, over this whole field, but the brilliance sheds no new light, and fails to explain exactly what consilience is, how it might be achieved, and what benefit would result if any of these subjects (for example, art) was connected back to genes, biology, chemistry and finally physics. It is not mentioned that such a connection to the "harder" sciences is in any case a pipedream.
Paper in HTML form
This counter is freely available from John and Ann Lockett's site at
www.lockettpots.uklinux.net