Recently, historian of science Steven Shapin reviewed a new book by Nobel prize-winning physicist Steven Weinberg entitled To Explain the World (2014). “Why Scientists Shouldn’t Write History,” The Wall Street Journal, February 13, 2015. Shapin describes how much of Weinberg’s book is about the development of physics from the ancient Greeks through the seventeenth century. Shapin is not impressed.
He explains that historians actually use their specialized skills and training to try to understand events of the past in light of the full context of the world at the time in question, including the participants’ concept of their place and role in the world. It is not meaningful history just to try to identify who (coincidentally) made discoveries or had insights that seem to be important in today, that is, from the standpoint of the modern worldview. In Shapin’s view, Weinberg’s attempt to write history falls short.
Expert arrogance
Shapin also sets out the following version of a well-known story:
“There’s a story told about a distinguished cardiac surgeon who, about to retire, decided he’d like to take up the history of medicine. He sought out a historian friend and asked her if she had any tips for him. The historian said she’d be happy to help but first asked the surgeon a reciprocal favor: ‘As it happens, I’m about to retire too, and I’m thinking of taking up heart surgery. Do you have any tips for me?’”
What is the point? Shapin explains that the story demonstrates “a real asymmetry between two expert practices”—one expert (cardiac surgeon) has what are recognized to be real, hard to acquire skills, the other (historian) is thought to do things that can be done by most anyone.
Fair enough, but the telling of the story says something more. First, it indicates that the arrogance of certain experts (and not just physicists) can extend well beyond the areas of their expertise. Second, it shows how the defensiveness toward certain other experts can generate an arrogance toward non-scientists or other sciences in turn (consider the supposed “physics envy” displayed by economists). And, third, this example also demonstrates how both arrogance and defensiveness can get in the way of the business at hand.
Shapin acknowledges that there may be a real and legitimate interest is what a leading physicist of the twentieth century thinks about the historical development of his science, but then spends more time objecting to the lack of humility in the undertaking than in demonstrating the alleged errors in the book that are supposedly apparent to the trained historian. It would be far more constructive to let insights and analyses compete on the merits.
The importance of methodology
Nevertheless, I believe that the study of the philosophical underpinnings of the methods and methodologies employed by natural and social scientists can provide significant insights into the state, direction and uses of the scientific knowledge being pursued. As observed by John Neville Keynes: “In the long run, time cannot but be saved by making a preliminary study of the instruments of investigation to be used, the proper way of using them, and the kinds of things that they are capable of yielding. For in so far as methods of reasoning are employed without due regard to the conditions of their validity, the results gained must likewise be of uncertain validity… .” The Scope and Method of Political Economy, p.4. Indeed, one danger of not understanding these issues is that, as an even an earlier political theorist, Thomas Hobbes, warned, “...long study may increase and confirm erroneous sentences; and where men build on false grounds, the more they build the greater is the ruin.” Leviathan, Part II, Chapter 26 (1651).
Thus, I include this chapter not so much to identify important things we do not know about economics, many of which are believed to be painfully obvious by most students of politics and public policy, as to help identify and elucidate the methodological problems and issues that arise in all efforts to understand, and make predictions about, our world through the construction of theories.
I begin with a brief introduction to the historical roots and general content of the discipline now called economics.3 Then I discuss some of the early efforts by economists to understand and articulate what they were doing as social scientists. The issues involved are illustrated by an examination of the theoretical debate within the profession and among some close observers about the traditional “theory of the firm” and the fundamental assumption of profit maximization, a debate that spilled over to challenge the more pervasive and fundamental concept of “maximization” itself. The example is interesting because several traditional economists used as a “sword” in the debate some of the concepts of philosophy of science, attempting to demonstrate that their critics simply did not understand the nature of scientific theories and were advancing arguments based upon mere misunderstandings and mischaracterizations. I conclude by offering some observations about economics as a science, with some implications about scientific knowledge more generally, suggesting that the traditionalists may have found themselves “hoisted on their own petard.”
The Subject of Economics
The branch of human “knowledge” known as economics has ancient roots, reflecting man’s long-standing interest in trade and money (media of exchange). But, then, we see in the eighteenth century a new focus on two rather distinct questions:
Why are certain nations richer than others, even when one controls for natural resources?
Why are diamonds—intrinsically useless—worth more than water—an essential of life?
Some striking insights into the first question were achieved. For example, Adam Smith identified the importance of the division of labor and specialization. Smith attributed much of the progress and promise of industrialized economies to the benefits that were derived from the increasing division of labor that greater scale and free trade would enable. The benefits of the specialization that is engendered by the division of labor include improved skill at the task at hand resulting from repetition, improved techniques that may be discovered as a result of the greater experience gained with specialization, new technology made feasible as a result of the increases scale of the process at issue, reduced time and resources spent in frequently changing tasks, efficiencies in training for specialized jobs and, even, the opportunities to capture differences in relative differential abilities in performing particular tasks (although, the full theory of “comparative advantage” awaited David Ricardo, 50 years later). See, e.g., Matt Ridley, The Origins of Virtue, pp.42–4.4 Nonetheless,the question has begged a convincing answer for almost 250 years (during which time, the answer has undoubtedly changed for different places and different stages of development).
In contrast, the study of what came to be known as the theory of value was astonishingly successful.
Value theory
The second question was answered at the end of the nineteenth century (Adam Smith and, even, David Ricardo had sought to find value in the “labor content” of goods, as—of course—did Karl Marx) by the theory of the interaction of supply and demand. Value is determined by the interaction of the costs of production and the relative scarcity (relative to demand) of the good in question. Thus, while water is essential for life, its relative abundance and low cost of “production” cause water generally to be cheap or, in some places, free. Diamonds (gem quality) have no practical utility as such, but they are scarce and costly to obtain. When sufficient demand arose for diamonds, presumably for aesthetic and status-securing purposes, the value became high. People were prepared to pay large sums because of the scarcity.
The high values previously placed by earlier societies on other scarce, but useful, materials like iron and bronze, presumably reflected the worth associated with status as well as that of productivity. Superficially, the theory seemed readily to resolve the apparent paradox. Subsequent development of the theory of supply and demand generated the concept of marginal analysis—the understanding that decisions were made and prices (and many other things) are determined at the margin. Marginal