Journal Article

No. 2008-2 | February 07, 2008
Science and Ideology in Economic, Political and Social Thought PDF Icon
(Published as Survey and Overview)

Abstract

This paper has two sources: One is my own research in three broad areas: business cycles, economic measurement and social choice. In all of these fields I attempted to apply the basic precepts of the scientific method as it is understood in the natural sciences. I found that my effort at using natural science methods in economics was met with little understanding and often considerable hostility. I found economics to be driven less by common sense and empirical evidence, than by various ideologies that exhibited either a political or a methodological bias, or both. This brings me to the second source: Several books have appeared recently that describe in historical terms the ideological forces that have shaped either the direct areas in which I worked, or a broader background. These books taught me that the ideological forces in the social sciences are even stronger than I imagined on the basis of my own experiences.

The scientific method is the antipode to ideology. I feel that the scientific work that I have done on specific, long standing and fundamental problems in economics and political science have given me additional insights into the destructive role of ideology beyond the history of thought orientation of the works I will be discussing.

JEL Classification

B40 C50 D6 D71 E32

Citation

Claude Hillinger (2008). Science and Ideology in Economic, Political and Social Thought. Economics: The Open-Access, Open-Assessment E-Journal, 2 (2008-2): 1—70. http://dx.doi.org/10.5018/economics-ejournal.ja.2008-2

Assessment

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Comments and Questions


Gerhard Schroeder - Science and Ideology in Economic, Poli... Neoliberalism?
February 09, 2008 - 15:05

I have one question when starting to read (still not finished) your interesting paper which is the term: "Neoliberal".

To my best knowledge the Austrian school mutated in Germany into the social market economy (Soziale Marktwirtschaft with the most prominent name of Ludwig Erhard). ...[more]

... The founding group (Germany Alexander Rüstow and Wilhelm Röpke and Austria Friedrich August von Hayek, Ludwig von Mises and Alfred Schütz.) named itself "Neoliberale" during a Colloque Walter Lippman August 1938 in Paris. In Germany the School used rather the term ordo liberalism. The ordo stood for the state role to ensure good market rules.

I don't know whether the "Chicago boys" claimed the term neoliberalism for themselves. Of course, von Hayek, later LSE London was, a link between both of them.
However I se e 2 differences between the Austrian/German School and Chicaco:

1. The original neoliberals had a western type of state in mind, more or less a democracy. The Chicago concept in contrary was also suggested to Chile (during Pinochet), to Singapore, Hong Kong, Taiwan and finally to China mainland. There was an interesting discussion between Galbraith and Friedman about Hong Kong. (Somehow: the people even under the strong, non democratic british regime would still benefit from the neolib economy..) The was another discussion in the FT, whether the wester (free) economy requires free press? (The story was that a western HK editor was cut of his "writing arm" by a triade. I do not recall what message of him made them hostile.)
2. The dimension of free floating money was not imagined by the ordo liberals in the 30s and 40s. And no „Structured investment fonds (SIF)“ either.

My suggestion is if using the term then better to define it explicitly? Sociologists and politologists use it rather in a meaning of globalism, government should withdraw, international companies can do what they want... When in Germany Heiner Geißler (left wing of christian democrats) tries to link liberals to historical Manchester type of industry he speaks of neoliberals what is wrong anyway.

Gerhard Schroeder (reader)


Claude Hillinger - Reply
February 09, 2008 - 20:02

The purpose of my paper was to trace the evolution and motivation of certain related ideologies, mainly in economics, but also in other social sciences and in politics. This is a vast subject, and to handle it in one article I had to simplify and to concentrate on the main ...[more]

... developments. Largely, these developments took place, first in England, later in the United States. Outside the English speaking world, the most important influence to the particular developments that I discuss came from France, in the form of the emphasis on mathematics and general eui8librium analysis. For these specific developments, the scholars whom you mention mentioned did not play a significant role. With the exception of Hayek, I hardly ever encounter them in the English language literature. Astudy of the contributions of German scholars to economics and other social sciences can certainly be a worthwhile enterprise, but it was not my purpose.

Regarding terminology, I wanted to adhere to commonly understood definitions. I think that in current political debates the term 'neoliberal' has a fairly clear and generally accepted meaning. One complicatio is that those usually labeled in this manner prefer to call themselves 'conservatives'.

Thanks for your comments and I hope to hear from you again when you have read further!

Claude Hillinger


Gerhard Schroeder - Still not satisfied regarding 'neolib'
February 11, 2008 - 00:06

I enjoy the natural science approach and the analysis of the controversy between „scientific method“ vs ideology. Still concerns regarding 'neolib', suggestions and furnishing information.
I would suggest a third term: economic policy: In the past there seem to have been established goals like „the mystic triangle“ meaning full employment ...[more]

... / price stability / stability of foreign trade and payments. (Difficult to manage, agreed in tendency, sounds still decent – even for the USA?) The could be labelled common 'belief' but not ideology... (I don't know whether you view 'ideology' negative or 'left' per se?)
In line with the intention of the paper I come back to 'neoliberalism' and your regarding comment. The mutation of the term 'neolib' as being a name of a market oriented theory towards the ideologic, today's phrase and typically ment negative should be part of the paper. Saying that the names didn't crossed your list of references is unsatisfacory. Today one could say that every important scientific contribution should be better formulated in English. (A lot of bright Chinese ideas may be then excluded still.) However, history covering the early 1900 should include references in other languages. the 1938 neoliberalism or better ordo liberalism had also links to protestant and catholic social theories (Soziallehren) which are of course some kind of ideology but not just „left“. Order liberalism was the base of post war German economy and still is - „enhanced“ by (but not without critics) future markets, socalled fair (random) pricing legalized by global accounting rules. It's not „peanuts“!
And there should be some semanic analysis regarding 'neolib': neo instead of new seems to be typically ment negative and 'liberal' also – in the USA in particular. Neolib is a „battle term“ (? for „Kampfbegriff“). Is it common understanding that the neolib ideology is the „third floor“ of the Chicago School? At least for myself the meaning of neolib is not clear apart from being just negative when used by Attac and similar organizations. A suggestion:
Neolib = stable currency + balanced budget + free market / free trade
a) + (or not +) global trade 24h/7d including continuous pricing
b) + future and options markets and random prizing and global rules for value accountig
(Means: Non Neolib = full emloyment + fair trade...?)
I wonder whether there is an additional field of „non scientific“: There is a belief in the anglo-american academic world that the Gaussian bell curve is a master, a blue print for all kind of economic behavior up to most recent and complex financial instruments and even of the predicting industry.
Background is a different view of the curve. In Germany it's an important contribution to the theory of errors, a most interesting function. When one is uncertain – say about the error behavior of a new machine – one is well advised to apply the Gauss formula. However, as soon as there is numerical experience the latter is dominant.
My suggestion: Why not including some of these thoughts in the paper? Even if it means some additional pages – your view will be interesting.


Justus Wesseler - comment
February 12, 2008 - 20:54

This is an interesting piece of work and stimulates thinking about the scientific approach in economics. The papers is great as the authors clearly indicates his beliefs and demonstrates where some his beliefs are supported by facts. This provided the reader the opportunity build-up (or improve) and reflect on his ...[more]

... own beliefs by this learn.

I share many of the views, with some I do not agree and some are outside my area of expertise (the history of macro economic models).

Ideology plays an important role in society as well as science. We choose our professions, hobbies, groups we join including becoming a scientists according to our beliefs. I find the distinction between conservatives and leftists to polarizing. There are policies I belief do make sense and have been supported by conservatives, while others have been supported by the left. In particular, differentiating current according to left and right becomes very difficult.

I fully agree with the author that the measurement problem does not receive sufficient attention from our profession and spending time on properly measuring important variables is by most not considered a worthwhile exercise. There we need a paradigm shift.

I am less pessimistic about the significant confirmed knowledge in economics. I see common agreement among economists on such as that ceteris paribus demand for non-Giffen goods does not increase with an in crease in prices, the supply of goods does not decease with an increase in product price, and that the utility of income does not decrease with an increase in income. This has been confirmed by a number of different studies and may seem obvious to economists but is not undisputed outside of our profession.


Claude Hillinger - Reply
February 14, 2008 - 10:54

Thanks for your comments.

Regarding the concepts of the political Left and Right. I perfectly agree that there are both leftist policies and rightist policies that may be quite reasonable. I wrote that and ideology to be plausible has to incorporate aspects of reality. The problem is that the ...[more]

... ideological view of reality is partial and therefore distorted. That it is possible and useful to place political parties and movements along a uni-dimensional axis is a fact of experience. If this were not so, the concepts would not have been in constant use for more than 100 years. That does not mean that every policy or issue has a place on this axis.

The evidence offered for the achievements of economics are, I am afraid, completely trivial. The statement involving non-Giffen goods is a tautology following from the definition of the term. The fact that a higher income is preferred to a lesser one hardly requires the economics profession for its validation.


Thomas Mayer - Comments on Hillinger paper
February 15, 2008 - 08:54

see attached file


Claude Hillinger - Reply
February 22, 2008 - 14:42

See attached file.


Gerhard Schroeder - economics as science
February 22, 2008 - 15:25

reg. 2. (Ideology): I may refer to the christian contribution to economy politics, the socalled social theory or doctrine furnished by protestant and catholic papers (EKD 1997, Deus Caritas Est 2005):
In „old (continental) Europe“ this thinking it is not ideology, we call it more decent „tendency“ literature or ...[more]

... doctrine and for sure it is not simply right or left / western or eastern.

reg. 4. (methodology). Of course, each field has its own methodogy. However the same, common established proof theory (Einstein, Popper, Kurt Schuette, others) should be applied which is
Hypothesis > Test > Proof or Findings > Theory > Proof
As long as economic science deals with models and theories it should be methodolical clean. Which is not the case often. The way computing socalled fair values violates
The problem of economists is that their science is partly prognosis, forecasting. There is in between quite some maths involved to promote forecasting. However, the GARCH-forecasting technique (or better named industry) is scientificly reading tea leaves. One can say the better the model the better the results. It's not my field but I think it's the same considering econometry. There is quite a number of institutions that try on economic cycles – again it is rather an industry than science.

reg. 5 (pro-market): It's not only Chicago, it's also the original neoliberal circle in Vienna, Freiburg and London that promoted the market idea. And to be fair: global trading and markets was a fundamental idea of the British Empire (weakend by the tea plantages and the drug infiltration) in controversy to the Netherlands' approach of drawing taxes from their colonies.

reg. 6 (empirical evidence): Yes, that's the way and sticking on assuptions made. Unfortunately the empirical evidence of forecasting is possible only after the fact, ex post - too late for political advice.


Gerhard Schroeder - Neoliberlism Vs. Nobel Prize
February 15, 2008 - 15:19

One can't expect the bandwidth of a textbook from e single article. However, there are some questions left open: Does the Nobelprize in Economics have a „neolib“ tendency? And, are Scholes, Merton and maybe Engle the „computing servants“ of neoliberalism?

According to the German Wikipedia 7 Nobel Prizes (out ...[more]

... of 61) are related to "neolib": Friedrich von Hayek, Milton Friedman, George Stigler, Ronald Coase, James M. Buchanan, Maurice Allais, Gary Becker, Vernon L. Smith i.e. about 10 per cent. Erik Lundberg, the longtime president of the nobel committee was a member of the Mont Pelerin Society, a (neo)liberal thinktank.
Keynes died 1946 before the economical neobel prize was instituted. May be Galbraith was more a politician than an economist. I don't know whether he was ever on the short list? I would add 3 to the neoliberals: Robert C. Merton, Myron Scholes and Robert F. Engle. All are bright mathematicians. However, their formulas are misused to keep the future markets going. James Tobin is special:
His idea to tax FOREX is interesting. That it became one of the key postulations of ATTAC to fight „neoliberalism“ was not his intention.Is the Swedish nobel prize is ideological?
Financial market theories have an increasing impact on history of economics: After the Wallstreet Crah of 1929 trading of financial options was suspended for more than 30 years until Black and Scholes found a formula in 1972 that seemed to make option pricing and thus trading again possible. Volatility prediction is Engle's field. However it's guessing based on probabilities and the key variable, the future volatility, is unknow. Financial options, derivatives and certificates are practically unlimited. They are emitted in millions. Its like lottery. They are not 'limited goods'. They absorb liquidity and this way of pricing is random, relying on probability functions. All that is contrary to historical economy and kind of unscientific.

Albert Einstein: "Niemals aber kann die Wahrheit einer Theorie erwiesen werden.
Denn niemals weis man, daß auch in Zukunft keine Erfahrung bekannt werden wird, die ihren Folgerungen wiederspricht." (Induction and deduction in Physics, Berliner Tageblatt, Dec 25, 1919, 4. Att., p. 1). Somehow: "However, the truth of a theory can never be proven. Because one never knows, whether no future experience will become known also, being contrary to its (the theory's) consequences." This elegant (proof theory) statement might be a cover also for all economic theories when considering whether they are ideological. There are similar ones postulated by Karl Popper in Logik der Forschung (Logic of Scientific Discovery, 1934).


Claude Hillinger - ADDENDUM
May 08, 2008 - 09:02

SCIENCE AND IDEOLOGY-ADDENDUM

In this addendum I discuss some related literature that has appeared, or come to my attention, since the publication of my paper. Section 1 is about the role of the Rand Corporation. Section 2 concerns Steven Fuller’s work on ideology and science.

1. RAND AND ...[more]

... THE CONSEQUENCES
A major role is played in my paper by the Rand Corporation as the hatchery of neoliberal ideology. Significant new literature regarding the role of Rand has appeared. My source is an article by Chalmers Johnson (2008) that has just appeared at Tomdispatch and that I saw on AlterNet. Johnson is the preeminent writer on post-World War Two American imperialism, his most recent book on the subject being Nemesis. His article is a review of Abella’s Soldiers of Reason which is a history of the Rand Corporation. Johnson generally accepts the factual history presented by Abella, but is more critical in his interpretation. I do not wish to review Johnson’s review of ‘Abella, urging instead the reader consult the article; however I will report a few items that I found particularly interesting.

During the Cold War era, Rand felt that the US had to battle on two fronts: military and ideological. On the military front, the US suffered major military setbacks, above all in Vietnam and more recently in Iraq. No such setbacks were encountered on the ideological front, particularly in penetrating the social sciences. This becomes clear from the list of leading social scientist who were Rand alumni:

“Among the notables who worked for the think tank were the economists and mathematicians Kenneth Arrow, a pioneer of game theory; John Forbes Nash, Jr., later the subject of the Hollywood film A Beautiful Mind (2001); Herbert Simon, an authority on bureaucratic organization; Paul Samuelson, author of Foundations of Economic Analysis (1947); and Edmund Phelps, a specialist on economic growth. Each one became a Nobel Laureate in economics.” Add to this list the Rand alumnus William H. Ricker who became the most influential political theorist and together with Arrow pointed the direction in which political theory evolved. Consider also that American social science became the model for most of the rest of the world, the Nobel Prize committee inclusive, and English the associated lingua franca.

The ideological ballast carried by the Rand alumni was apparently no handicap in conquering academia; on the military front the ideology came in conflict with reality.

“Following the axioms of mathematical economics, RAND researchers tended to lump all human motives under what the Canadian political scientist C. B. Macpherson called "possessive individualism" and not to analyze them further. Therefore, they often misunderstood mass political movements, failing to appreciate the strength of organizations like the Vietcong and its resistance to the RAND-conceived Vietnam War strategy of "escalated" bombing of military and civilian targets.”

Ideologists may be sincere, even fanatical believers in what they preach; alternatively the ideology may simply be a vehicle of convenience in order to achieve certain aims. Usually, both components are likely to be present in varying proportions. Commitment to truth wasw certainly not a high value at Rand:

“Daniel Ellsberg's release to the public of the secret record of lying by every president from Dwight D. Eisenhower to Lyndon Johnson about the U.S. involvement in Vietnam. However, RAND itself was and remains adamantly hostile to what Ellsberg did.

Abella reports that Charles Wolf, Jr., the chairman of RAND's Economics Department from 1967 to 1982 and the first dean of the RAND Graduate School from 1970 to 1997, "dripped venom when interviewed about the [Ellsberg] incident more than thirty years after the fact." Such behavior suggests that secrecy and toeing the line are far more important at RAND than independent intellectual inquiry and that the products of its research should be viewed with great skepticism and care.”

2. STEVE FULLER ON IDEOLOGY AND THE PHILOSOPHY OF SCIENCE
A referee had drawn my attention to the work of the sociologist and philosopher of science Steve Fuller. Just reading the introduction to Thomas Kuhn: A Philosophical History for our Time proved valuable for my purposes in that I learned about since I learned about yet another institution and associated actors that were influential in generating a Cold War ideology that impacted the social sciences and humanities. I am referring to Harvard University, its past president James Conant and his disciple Thomas Kuhn. Impressed by the need for a strong science, particularly for national defense, they aimed at both generating public support for science and fending off public criticism. Particularly the latter aim was served by Kuhn’s famous concept of a ‘paradigm’, that could be understood only by those trained within it and could not be validly criticized from without.

From my mention that I read the introduction, the astute reader will have gathered that I did not read the rest. This was not because I felt the rest to be of low value. It was because I found the going quite difficult and was not willing to invest the time that would have been required for a serious consideration of the many topics covered. Fuller is extremely well read in ancient and modern philosophy with the emphasis on the philosophy of science. He is also a trained sociologist, knowledgeable regarding many areas of social science and the humanities. His nimble mind moves easily between diverse fields and literatures finding surprising parallels and lines of influence. For a reader not already familiar with the literatures discussed, many passages are difficult to understand or evaluate. For a graduate student in philosophy, or a professional philosopher the book is a goldmine of ideas and topics that merit further investigation; for the general reader it is hard to digest.

The reason for turning my attention to this author again here is that he has written a subsequent book in which he makes a conscious effort to address the general reader and succeeds to a considerable extent. Kuhn vs. Popper: the Struggle for the Soul of Science is a much shorter book, without footnotes and a guide to the literature at the end. Moreover, contrasting Kuhn and Popper is more interesting than focusing on Kuhn alone. Popper and many other philosophers are discussed in the earlier book also, but in the later book the contrast is much better worked out.

Fuller argues that these two philosophers and others of their generation were profoundly influenced by the role of science in the Second World War, particularly of course through the creation of the atomic bomb. Kuhn reaction was one of denial. He defined science as “puzzle solving”, completely ignoring the social consequences. This would seem to justify the pursuit of whatever activities the currently accepted ‘paradigm’ of a discipline happens to suggest. Popper also believed in the internal control of science. He felt that science should achieve this through eternal questioning of its own results. The fact is that scientists generally do not do this, nor is there any convincing argument advanced by Popper why they should. Furthermore, even if they did, it would not solve the problem of the social consequences of science.

In his laudable effort to write clearly and understandably for the lay reader Fuller does not succeed entirely. I give one of a number of possible examples. He disc used the ‘underdetermination thesis’ according to which empirical evidence is generally insufficient to decide between alternative theories and writes:

“Pierre Duhem (1861-1916) is normally credited with the underdetermination thesis. He believed that the question uniquely arose in his own discipline, physics, because of the laboratory conditions in which experiments are normally conducted. In that case, how are the field's artificially generated results to be judged in relation to alternative accounts of the natural world? As a Catholic living in France's Third Republic, with its clear separation of church and state, Duhem turned to divine illumination for guidance - but only because of the epistemic limits of physical inquiry implied by the underdetermination thesis. Fifty years later, Harvard logician Willard Quine (19°8-2000) universalized and secularized Duhem's original thesis. Quine replaced God with whatever theory had the best track record, a kind of evolutionary naturalism that upheld a conservative presumption in the conduct of inquiry.”

I cannot conceive how a physicist would test a theory against catholic dogma. Neither do I understand the position ascribed to Quine. What is the ‘track record’ if not agreement with observation? A further problem with this passage is that the preeminent non-empirical criterion used in the natural sciences and amply discussed in the philosophy of science, simplicity is not even mentioned by Fuller.

Such shortcomings notwithstanding, this is the best, and almost the only, broad coverage of the interrelations between ideology, philosophy and science. I strongly recommend it.

REFERENCES
Abella, Alex (2008), Soldiers of Reason: The Rand Corporation and the Rise of the American Empire, Orlando FL, Harcourt.

Fuller, Steve (2004), Kuhn vs. Popper: the Struggle for the Soul of Science, New York, Columbia University Press.

Johnson, Chalmers A. (2006), Nemesis: The Last Days of the American Republic, New York,Henry Holt.
(2008), The RAND Corporation: America’s University of Imperialism, Tomdispatch.com.
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