How Economics Forgot History

There's a lot going on in Hodgson's very expensive book and I wasn't been able to read it all before returning it to the library. However, his main idea, historical particularity, meshes with my own thinking about temporality and contingency, and his observation that economic theory "works principally through its auxiliary [ad hoc] assumptions" (p. 254) moves economics from the realm of timeless theoretical knowledge (on the model of math and fundamental physics) into the practical-historical realm where it belongs.

Hodgson argues that in its pursuit of scientific status and theoretical generality, economics lost touch with historical particularity and with the economy's embeddedness in society as a whole. To him, the eclipse of the American institutional and German historical schools of economics by the positivist / theoretical / mathematical economics of Lionel Robbins, Paul Samuelson, and Milton Friedman put economics on the wrong track. He criticizes his favored schools too, however, for their excessively particularistic, anti-theoretical approaches, and believes that the economics of the future should be attentive both to universalistic / general laws and to the particularistic / historical aspects of each case. 

The questions Hodgson talks about are of very general importance. Theory and universals seems privileged over history and particulars everywhere (even among the decadent dissidents in literary kink studies.) Up until 1950 or so  everyone was thinking about historicity, contingency, and particularity: Dewey, Whitehead, Hayek, Popper, Reichenbach, and later on Donald Campbell, J. H. Hexter, and Stephen Jay Gould. But with the rise of analytic philosophy and neo-classical economics, this theme seems to have disappeared, and the difference between historical and theoretical sciences seems to have been almost forgotten.

It's a common complaint that introductory economics only gives students the basic concepts and gives them an idealized, unrealistic picture of how economies work, and that partly as a result, introductory economics tends to be a form of conservative indoctrination. Hodgson's analysis (and those of Philip Mirowski and Nicholas Georgescu-Roegen) leads to the hypothesis is that this problem arises because economics has been formulated as a theoretical science when it really should have been formulated as a historical / practical science, so that as a result the "basic theory" is misleading. The "auxiliary ad hoc assumptions" to which Hodgson refers are comparable to epicycles or bricolage -- kludges and shims and adapters used to make an overgeneralized, falsely universal science work. At the bottom is the error Mirowski wrote about in More Heat than Light: the attempt to describe an evolutionary, historical, emergent system as a conservative equilibrium system. This is, in turn, the same problem Prigogine saw in physics' grudging century-long attempt  to come to grips with irreversibility (and history) in  thermodynamics.

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Original materials copyright John J Emerson

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