Thomas Kuhn liked to remind his readers that Newton didn't have much to say about gravity.
That sounds odd to most people, but if you know the argument it makes more sense. What Kuhn meant was that for Newton gravity may have been very important but it was just assumed. There was no great effort expended on figuring out why it was the way it was and where it came from, etc. Although the idea of incommensurate scientific paradigms had to do with many things, this fundamental point that different paradigms sought to explain different pieces of the puzzle was an important one.
Einstein wanted to explain gravity and that was a major element of what separated Newtonian from post-Newtonian physics.
I think it's instructive to think about Kirzner's work on the market process in these terms. Economists aren't dunces. They know there is a market process operating in the world. But they're like Newton in that they don't have much to say about it. Kirzner has a lot to say about it and doesn't care very much for everything the mainstream has to say about equilibrium models, despite the fact that many reasonable people insist that you can get a lot of important mileage out of those models! It doesn't matter. Kirzner says a fundamental point is being neglected.
In prior posts I confessed skepticism about the importance of Kirzner's departure from the mainstream. However, if I'm right here that the market process is analogous to gravity it means that Kirzner is far more significant insofar as he might represent a new paradigm for thinking about the economy rather than simply a scholar interested in a side-point that most people acknowledge but don't think is worth delving into in any detail.
It's certainly worth a thought.
So if the mainstream is Newton, Kirzner is Einstein, and the market process is gravity that bodes really well for the modern Austrian school, right?
Maybe. Maybe not.
The first problem is that you need more for a paradigm shift than just focusing on something that other people don't focus on. It needs to be something which, when attention is turned to it, you are able to explain paradoxes that the existing paradigm struggles with. Does market process work fit the bill? Ehhh... I'm not so sure. Nothing obvious springs to mind. Certainly none of the things that really puzzle mainstream economists seem to be suddenly solved by market process theory. I'm happy to hear candidates in the comments, but let's be very specific please. Of course the market process undergird all market activity but grandiose talk like that doesn't answer how it address specific scientific puzzles.
The second problem, of course, is that assigning the mainstream to Newton and Kirzner to Einstein is not the only option available. Kuhn talks about how Descartes and others with a mechanical theory of gravity offered (like Einstein but unlike Newton) an explanation of gravity rather than just responding to the problem with hand-waving. And we all know what happened to the Cartesian theory of gravity: nothing.
So is Kirzner a Descartes (or worse, a post-Newtonian Cartesian!) or is he an Einstein?
Friday, October 3, 2014
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"Kirzner has a lot to say about it and doesn't care very much for everything the mainstream has to say about equilibrium models, despite the fact that many reasonable people insist that you can get a lot of important mileage out of those models!"
ReplyDeleteYou saw Kirzner give a single talk, and he was asked to specifically address what made Hayek and Mises DIFFERENT. So he highlighted what he understood about that.
I have read half-a-dozen of his books and sat in the same room with him in discussions maybe 50 times. He is not anti-equilibrium models, although I can see how this single talk might have made him seem so.
"I have read half-a-dozen of his books and sat in the same room with him in discussions maybe 50 times. He is not anti-equilibrium models, although I can see how this single talk might have made him seem so."
DeleteWell certainly not this single talk because he said pretty clearly in response to a question by Russ Roberts that he is not anti-equilibrium models and that there is value in them.
I feel like we're talking past each other. I have not said he is categorically opposed to equilibrium models here. I am making a claim about the broader dismissiveness that he offers of models that don't address to his satisfaction the more fundamental point of the market process. I think you are taking my bigger claim about paradigms explaining and leaving unexplained differing elements of the problem and taking it as a personal attack on Kirzner, which it's not.
A full catalog of my wiggle words in this post:
Delete1. "have much to say" (in reference to the mainstream)
2. "very much" (in reference to Kirzner)
3. "skepticism" (in reference to Kirzner's insignificance)
4. "he might" (in reference to Kirzner's significance)
5. "in any detail" (in reference to the mainstream)
6. "it's certainly worth a thought" (in reference to my own argument)
7. "maybe, maybe not" (in reference to my own argument)
8. "Ehhh... I'm not so sure" (in reference to my own argument)
Having successfully girded myself with these wiggle words there's really no need to think I'm trashing Kirzner. I have no interest in that. I'm offering a way to think about this point of theory that he thinks is fundamental and that he thinks others suffer considerably from for ignoring.
So it really bothers me that you get this out of the portion you quote so I want to make this point in a little more detail. The whole research program of Kirzner is thinking about how we grope towards equilibrium (to borrow the old Walrasian way of talking about it). It makes no sense to talk about him as being anti-equilibrium (which I'll stress again I've never said here). What he's concerned with - what he's "anti-" if you want to use that language - is equilibrium thinking that doesn't consider the process of getting there.
DeleteYou can dismiss the fact that I've written a couple blog posts based on one talk if you want (although I blog about a lot of one-off interactions - I don't see anything wrong with that), but at least understand what it is I'm claiming. I'm not claiming he's anti-equilibrium models.
Aaaaaand Daniel has now officially written more on Kirzner than me.
ReplyDeleteDaniel, a few things:
ReplyDelete==> Yes I think in this post you're getting closer to how Kirzner's fans think of the situation.
==> Let me step out of character for a moment and compliment you: You are a "deep" kind of guy who likes to think about what he's doing. You spend a lot of time at my blog keeping tabs on how those wacky Austro-libertarians look at the world, you read Sumner to see what mischief he's raising today, you read Boettke and Boudreaux to see how they are straw-manning people this morning... You get the point (and I'm trying to be funny), you spend a lot of time thinking through stuff. Most people--including economists--don't do that.
So where am I going with this? The fact that you asked your micro class to think about finding equilibrium doesn't mean too much. It would be like me saying, "People say Austrians don't use math, but I taught a game theory class at Hillsdale." You are not a proxy for "the mainstream" since you keep abreast of a lot of approaches and like to think through what you're doing. You sort of gave away the game when you said, "But when we moved to Slutsky equation I lost them..." (or whatever). That's just what the Austrians say: They are doing intuitive, real-world economics, while mainstream does formal math models that are confusing and pointless.
AH! You've cornered me between my vanity regarding maintaining admirable personal qualities and my vanity regarding being right!
DeleteCurse you Murphy! Curse you!
Thoughtful guy that I am, I'm going to slink away and think abut how I can have both.
btw - Slutsky isn't pointless at all it's just harder than that easy market process stuff ;-)
DeleteI found Slutsky to be very easy, at least relative to market process theory. IO is far easier to grasp than the resource based theory of the firm. Math is very neat and clean and doesn't require much more than the ability to follow rules. Economath (as Caplan calls it) is able to generate internally-consistent theories that abstract from reality to such a degree that its assumptions often dictate the hypothesized results. As a (relatively) fresh PhD, that's how I see it.
DeleteOh, several years ago I wrote something up that critiqued Kirzner on coordination; I said in his writings he was conflating Nash equilibrium with Pareto optimality. If you want I can dig it up, just send me an email...
ReplyDelete"The first problem is that you need more for a paradigm shift than just focusing on something that other people don't focus on. It needs to be something which, when attention is turned to it, you are able to explain paradoxes that the existing paradigm struggles with. Does market process work fit the bill? Ehhh... I'm not so sure. Nothing obvious springs to mind. Certainly none of the things that really puzzle mainstream economists seem to be suddenly solved by market process theory. I'm happy to hear candidates in the comments, but let's be very specific please. Of course the market process undergird all market activity but grandiose talk like that doesn't answer how it address specific scientific puzzles."
ReplyDeleteThese are good points (though you probably mean 'anomalies' where you wrote 'paradoxes') and it would be good for Austrians to think about the specific issues that are illuminated / explained by a focus on market processes, and to compile a list of them (something that may have been done already).