|Peter Boettke|

It is not mathematics. When mathematical techniques are used correctly they are extremely helpful -- perhaps essential -- to clear thinking on many topics. But when questions are restricted due to mathematical tractability, or models are developed which assume what they are supposed to prove, mathematical techniques can hinder progress in the social sciences.

This argument is not new -- especially to careful readers of the Austrian tradition of economic scholarship. This was essentially the argument with those who developed the mathematical model of market socialism in the 1930s and 1940s, and with those who depicted the market economy in the perfectly competitive general equilibrium model in the 1960s and early 1970s. These mathematical models Mises, Hayek, Kirzner respectively attempted to demonstrate assumed what they had to prove, and in doing so blocked from our economic view essential characteristics of the market economy --- namely processes of adjustment to changing conditions, competition as rivalry, and entrepreneurial alertness as the driving force of the market economy.

This argument has not been that persuasive to the profession of economists (to say the least). There have been various warnings over the years about the excessive use of mathematics voiced across the methodological spectrum in economics. But they have gone in one ear and out the other for the most part.

However, consider this very thoughtful discussion of 2009 Nobel Prize by Paul Romer.

Economists who have become addicted to skyhooks, who think that they are doing deep theory but are really just assuming their conclusions, find it hard to even understand what it would mean to make the rules that humans follow the object of scientific inquiry. If we fail to explore rules in greater depth, economists will have little to say about the most pressing issues facing humans today – how to improve the quality of bad rules that cause needless waste, harm, and suffering.

Cheers to the Nobel committee for recognizing work on one of the deepest issues in economics. Bravo to the political scientist who showed that she was a better economist than the economic imperialists who can’t tell the difference between assuming and understanding.





Addendum: Roger Koppl has an excellent discussion of the logical contradiction involved with 'magical thinking'.