Category Archives: History of Science

Chimeras and Holy Grails

Because the great controversies of the past often reach into modern science, many current arguments cannot be fully understood unless one understands their history.

ERNST MAYR 1982, 1, in McCloskey, Deirdre Nansen; Ziliak, Steve. The Cult of Statistical Significance (Economics, Cognition, And Society)

Too large a proportion of recent ‘mathematical’ economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze or pretentious and unhelpful symbols.

John Maynard Keynes

One of its central tenets is that the “real” nature of the social world imposes restrictions on individuals’ knowledge. (Marqués 2016, 2)

(….) If theoretical practice in economics is going to have authentic epistemic relevance, it is necessary to shift the attention from standard models developed within the current bookish tradition to the solution of those concrete problems which result from open ended, intervenible and conflictive economic processes, dominated by radical uncertainty. (Marqués 2016, 3)

A processes oriented economics would have to provide a different kind of theoretical practice adequate for examining sequences of feasible economic events (i.e., the main developments that those processes could plausibly adopt). This kind of practice offers points of intervention to those skills, qualifications, common sense and political abilities that are needed to manage these processes. (Marqués 2016, 3)

Science and economics

Let me advance a brief comment about the relation between science and economics. This book does not take an irrational or anti-scientific stance. On the contrary, in the domain of natural phenomena modern science has shown extraordinary successful results. But the same cannot be said when social processes are at stake, and I have tried to offer some of the reasons (ultimately, ontological) for this failure. So, I do not share the idea of those authors who think that economics can be scientific (as much as natural sciences), and that such an economic theory, once found, would solve those economic problems that the best theoretical tradition assigned to economics a long time ago (growth, employment and development with fairness and equality). (Marqués 2016, 5)

Particularly, I think that the dream of having a successful theory of expectation formation is largely a chimera, and indeed I dismiss the necessity of having such a theory. Neither governmental authorities nor any other economic actor may count on being able in a sure (scientific) way to intervene and make people entertain “correct” expectations. But as we try to show in this book economic actors (including the state) do not need a scientific theory able to guarantee their goals in order to intervene systematically upon the economy. Instead they can apply feasible sequences as well as direct (practical) knowledge and skills to cope with the situation and push the process in the desired direction. (Marqués 2016, 5)

It is also important to examine the relation between science and economics from another perspective. Theoretical physics has been successfully applied to a wide range of circumstances of our world. This could be done thanks to the development of associated technologies (different kinds of engineering founded on physical theory). Some may think that nowadays economics is at a pre-technological stage (like physics was sometime ago), and that what is needed is more time (and more knowledge, mainly mathematical knowledge) to develop a sort of economic engineering. Popper was confident in the benefits of fragmentary social engineering. The call to elaborate an alternative economics oriented to solve practical problems of our world could be interpreted this way. (Marqués 2016, 6)

Our analysis of deliberate mechanisms like Prospect Theory and Decision Making Models gives testimony of the kind of practical results that can be obtained by this road. But I suspect that in reference to more traditional economic problems like those mentioned at the beginning of this section, a similar expectation is unfounded and doomed to failure. As far as economic phenomena result from open ended processes as we have described them there is no possibility of shaping and controlling them by means of social engineering similar to what happens in the case of natural sciences. The specific domains where neither uncertainty nor conflicts between lobbyists that defend different and opposite interests exist. These technologies are designed for “leading” in a scientific way the economic processes. And I suspect that it is not possible to hope that we may count on similar tools in the near future. (Marqués 2016, 6)

Gustavo Marqués (2016) A Philosophical Framework for Rethinking Theoretical Economics and Philosophy of Economics

This book is set against the assumption that humans’ unique feature is their infinite creativity, their ability to reflect on their deeds and to control their actions. These skills give rise to genuine uncertainty in society and hence in the economy. Here, the author sets out that uncertainty must take centre stage in all analyses of human decision making and therefore in economics. (2019, i)

Economic cycles and economic crises belong to the defining moments in economic history because they affect our sense of economic security and level of welfare at large. They also serve, at least implicitly, as tests of our understanding of the economy as well as our ability to draw the right policy conclusions from our economic theories. No wonder, therefore, that economists have long sought to understand severe economic fluctuations with the ultimate goal of steering the economy clear of their troubled waters. (Müller-Kademann 2019, 1)

To that aim, economists, not least due to John Stuart Mill’s ingenious work, have long ago boarded a particular ontological train with the ambitious goal of keeping up with the natural scientists’ positive-deductive race to uncovering the truth about the world around us. If we only had sufficient knowledge of the machinery we would know how to stop crises from recurring, or so the logic goes. Alas, the financial crisis that started to unfold in 2007 once again reminded us that economists are still a long way from safeguarding the economy from severe difficulties. (Müller-Kademann 2019, 1)

[G]enuine randomness also exists. This genuine randomness occurs at the micro scale, for example, when matter seemingly assumes two states at the same time. According to the Heisenberg uncertainty principle, matter’s actual state can only be pinned down by actual observation, with the striking implication that mere observation affects the state of the matter. What might seem very odd and irrelevant for daily life is actually relevant when it comes to secure data transmission or calculating the costs of nuclear waste disposal because random decay determines the time the waste has to be stored in safe (and hence expensive) conditions. (Müller-Kademann 2019, 7, emphasis added)

Christian Müller-Kademann (2019) Uncertainty and Economics. Routledge. Emphasis added.

You may imagine that your mind — your stream of conscious thoughts, ideals, and feelings — influences your actions. You may believe that what you think affects what you do. You could be right. However, the scientific ideas that prevailed from the time of Isaac Newton to the beginning of the twentieth century proclaimed your physical actions to be completely determined by processes that are describable in physical terms alone. Any notion that your conscious choices make a difference in how you behave was branded an illusion: you were asserted to be causally equivalent to a mindless automaton. (Stapp 2009: vii)

We now know that that earlier form of science is fundamentally incorrect. During the first part of the twentieth century, that classically-based conception of nature was replaced by a new theory that reproduces all of the successful predictions of its predecessor, while providing also valid predictions about a host of phenomena that are strictly incompatible with the precepts of eighteenth and nineteenth century physics. No prediction of the new theory has been shown to be false. (Stapp 2009: vii)

The new theory departs from the old in many important ways, but none is more significant in the realm of human affairs than the role it assigns to your conscious choices. These choices are not fixed by the laws of the new physics, yet these choices are asserted by those laws to have important causal effects in the physical world. Thus contemporary physical theory annuls the claim of mechanical determinism. In a profound reversal of the classical physical principles, its laws make your conscious choices causally effective in the physical world, while failing to determine, even statistically, what those choices will be. (Stapp 2009: vii)

More than three quarters of a century have passed since the overturning of the classical laws, yet the notion of mechanical determinism still dominates the general intellectual milieu. The inertia of that superceded physical theory continues to affect your life in important ways. It still drives the decisions of governments, schools, courts, and medical institutions, and even your own choices, to the extent that you are influenced by what you are told by pundits who expound as scientific truth a mechanical idea of the universe that contravenes the precepts of contemporary physics. (Stapp 2009: viii)

The aim of this book is to explain to educated lay readers these twentieth century developments in science, and to touch upon the social consequences of the misrepresentations of contemporary scientific knowledge that continue to hold sway, particularly in the minds of our highly educated and influential thinkers. (Stapp 2009: vii)

Henry P. Stapp (2007) Mindful Universe: Quantum Mechanics and the Participating Observer. Springer.

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DETERMINISM AND FREE WILL IN ECONOMICS

Most people do not really want freedom, because freedom invovles responsibility, and most people are frightened of responsibility.

— Sigmund Freud

Most of the really fundamental debates in economics today are very old debates indeed. But economists—and not just the economists of the post-war period—have been scrupulous in avoiding many of them. Other social sciences do not suffer the same defect, and one wonders why this might be the case in economics. The key philosophical difference between the view of economics put forward by the marginalists and the one championed in this book is that the former believe that all human action is pre-determined while the author of the present book believes in a large amount of freedom in human affair. (Pilkington 2016, 341)

(….) Economists today instinctively sign on to a sort of vulgar Newtonian view of the world. That is, they instinctively think in terms of a space in which a variety of forces play themselves out—often, in the case of the marginalists, at a given instant in time. But this sort of philosophy was long dead in the humanities at the time Keynes was writing. Rather, the philosophies of Moore and Keynes start from the seat of consciousness. We do not start from the vulgar assumption that reality ‘is’ in some sense a space with deterministic forces playing themselves out. This schema, thought construction or model is fully recognized in Keynes to be something cooked up by consciousness. (Pilkington 2016, 345)

This, I think, accounts for why many economists find Keynes’ writings so obscure. It also accounts for why those with training in philosophy or psychology will find them far more accessible than those with training in mainstream economics, physics or engineering. Keynes’ works are written from the point-of-view of the reasoning subject. This is the natural starting point for Keynes. Consciousness comes first; models and metaphors are adopted later. This is why in Keynes’ work we are from time to time put in the shoes of the investor trying to make decisions about the future. In mainstream economics, agents making investment and consumption decisions are reduced to little objects that reason in a pre-determined manner. In Keynes, by contrast, economic agents making investment and consumption decisions are full subjects endowed with a consciousness that is identically structured to the one that we ourselves possess. Thus in order to understand the choices made by these agents, we do not simply reduce them to little puppets that behave how we assume them to behave but rather we must try to get ‘inside their heads’. (Pilkington 2016, 345)

ECONOMIC MODELING: A PSYCHOLOGISTIC EXPLAINATION

Can anything be imagined so ridiculous, that this miserable and wretched creature, who is not so much as master of himself, but subject to the injuries of all things, should call himself master and emperor of the world, of which he has not power to know the least part, much less to command the whole?

— Michel de Montaigne

Throughout this book, we have been rather harsh on economists. We have accused them of engaging in all sorts of silly behaviour, of constructing irrelevant theories and of being a key force darkening the doorway of knowledge and spreading ideology. But so far we have not really sought out motivation. Are we to assume that most economists working today are nefarious crooks and scoundrels? I should think not. Most economists working today are well-meaning people who genuinely want to make the world a better place. They are men and women who truly believe that they are constructing useful knowledge that will help humanity progress as a species in the future. That they typically make the world a worse place and cloud the judgments of people is not altogether their fault. (Pilkington 2016, 353)

What is it then that drives these people to Bedlam and back? This is something that the present writer has thought about quite a lot. I have come to this conclusion: these men and women are chasing after a Holy Grail, one that has been sought since time immemorial. At first it was sought in the sphere of religion, but after this it was sought in the field of philosophy and, finally, science. Today the sphere in which this Holy Grail is most aggressively sought is in the field of economics. What then characterises this Holy Grail? Well, it is the Holy Grail of perfect knowledge. It is the drive that exists in many intellectually minded men and women to find a sort of perfection, a total and pristine knowledge that would make them, in a very real sense, omnipotent or, at least, omniscient. This Holy Grail was first formulated in the modern age by the French mathematician and astronomer Pierre-Simon Laplace: (Pilkington 2016, 353-354)

We ought then to regard the present state of the universe as the effect of its anterior state and the cause of the one which is to follow. Given for one instant an intelligence which could comprehend all the forces by which nature is animated and the respective situation of the beings who compose it — an intelligence sufficiently vast to submit this data to analysis — it would embrace in the same formula the movements of the greatest bodies of the universe and those of the lightest atom; for it, nothing would be uncertain and the future, as the past, would be present in its eyes. (Laplace 1902, p. 4)

For some rather odd reason, this thought experiment has become known as ‘Laplace’s Demon’ today. In fact, readers of older philosophers will recognise that this is identical to how many philosophers conceived of an image of God. For many writers, God is an omniscient being that has total knowledge of all causes and effects and has a sort of ‘single formula’ in His immediate consciousness that explains everything across time and space. He is, in this conception, outside of time and space and thus merely observes everything happening at once in the form of this timeless, perfect formula. (Pilkington 2016, 354)

When economists try to build totalizing models, they are doing something similar. They are trying to figure out all the mechanisms — the causes and effects — that pertain in the economy at all times, and then they are trying to reduce these to a single model. If they could ever find their Holy Grail, they would then, in the words of Laplace, have ‘the future, as the past, present in their eyes’. They are reaching for perfection. In a strange psychological sense, they are seeking to become like the old conceptions of God that many philosophers and theologians held. Again, they are not the only ones that do this. Many physicists reach for the same Holy Grail and try to generate ‘theories of everything’. But it is in economics, which is not only a far more inexact discipline but also a far more ambitious one, that this fantasy has done the most damage. (Pilkington 2016, 354)

The psychological roots of this tendency are inherently narcissistic. By that, I do not mean that economists are all pathologically narcissistic. No, psychologists have long recognised that all of us have narcissistic tendencies buried within our minds. Somewhere buried within our minds, we all have an image of perfection that haunts us…. On occasion, such a narcissistic image can become an obsession and do serious psychological and physical damage to a person [and society]…. There is no such thing as true perfection just as there is no such thing as a unified theory of how the economy works that will be valid across time and space. These are fantasies and illusions that, if we do not understand them to be illusions, can lead us down wayward paths. (Pilkington 2016, 354-355)

We have argued throughout the book that economics today is predominantly ideology. But just as certain forms of religious discourses were the key ideologies of the past, economics too activates these deep psychological structures within its practitioners to ensure that they remain stuck on the treadmill, chasing ghosts rather than engaging with the real world. Certain religious discourses offered its adherents a sort of union with God if they studied sacred texts hard enough. This kept these conduits of ideology away from the real world and ensured that they engaged in largely useless activity in their fruitless search for omniscience by connecting with God. Economics today does something similar in that it encourages its adherents to build models that are supposed to be true across time and space. The adherents are then encouraged to test these models against data using highly problematic econometric techniques, after which the whole discipline starts to ruminate if they stop yielding accurate results. (Pilkington 2016, 355)

The result is a stagnant discipline. Every few years, economic theory will go into crisis as some real world event calls into question the predominant models. Economists will then go back and reconstruct the doctrines in light of recent events only to have them fall apart once more when something changes in the economic world. It is a bit like watching an unfortunate though well-meaning man build and rebuild his house along an earthquake fault line always insisting that this time the house will survive. Or a cult devotee that continuously says that the end of the world is coming on a given date only to push this date back every time the end of the world does not arrive. (Pilkington 2016, 355-356)

It is in the tendency to model itself — which has deep psychological roots — that leads economics down this dead end and makes it a sort of clown science. If economists would just drop the silly image of timeless truths and recognise that in economics we deal with contingent historical events, we would all be better off. But his cannot happen unless the economics profession as a whole reorients its narcissistic image away from trying to search out Holy Grails and towards trying to manage as best they can in a highly complex and changing world. If this were ever achieved the manner in which argument and debate take place within the discipline would completely and utterly change. This would be wonderful but it would also mean that economics would have to stop being an ideology. This would, in turn, mean that economists would have to stop projecting the image that they hold crystal balls and can see the future. That might not only be a blow to their egos but it might, in a strong sense, also diminish the standing that they hold as ideologues in the political and social arena. Whether economics can ever exist as a non-ideology is an open question. Personally, I believe that it can. But, given I do not pretend to have a crystal ball, only posterity can pass absolute judgement on the matter. (Pilkington 2016, 356)

Phishing for Phools

Mainstream economics takes the particular features of capitalism a very recent form of economic organisation in human history as if they were universal, timeless and rational. It treats market exchange as if it’s the essential feature of economic behaviour and relegates production or work a necessity of all provisioning to an afterthought. It also focuses primarily on the relationship between people and goods (what determines how many oranges we buy?) and pays little attention to the relationships between people that this presupposes. It values mathematical models based on if-pigs-could-fly assumptions more than it values empirical research; so it pays little attention to real economies, having little to say about money and debt, for example! Predictably, the dismal science failed to predict the crisis. When the UK’s Queen Elizabeth asked why no one saw the crisis coming, the economists’ embarrassment was palpable. (Sayer 2015, 23-24)

Andrew Sayer (2015) Why We Can’t Afford the Rich

[M]any of our problems come from the nature of the economic system itself. If business people behave in the purely selfish and self-serving way that economic theory assumes, our free-market system tends to spawn manipulation and deception. The problem is not that there are a lot of evil people. Most people play by the rules and are just trying to make a good living. But, inevitably, the competitive pressures for businessmen to practice deception and manipulation in free markets lead us to buy, and to pay too much for, products that we do not need; to work at jobs that give us little sense of purpose; and to wonder why our lives have gone amiss. (…) The economic system is filled with trickery and everyone needs to know about it.” (Akerlof & Shiller, 2015, viii)

[F]ree markets do not just deliver this cornucopia that people want. They also create an economic equilibrium that is highly suitable for economic enterprises that manipulate or distort our judgment, using business practices that are analogous to biological cancers that make their home in the normal equilibrium of the human body. (Akerlof and Shiller 2015, x)

George A. Akerlof and Robert J. Shiller (2015) Phishing for Phools: The Economics of Manipulation & Deception

Many of the quotes above are from economists, experts in their field, some Nobel Prize-winning economists. One thing is clear; the Great Recession shook the very foundations of economics to its core. Only the blind leading the blind can pretend today that something isn’t amiss within the field of economics. The quotations above only represent a small sampling of the discontent rising to the surface within the field of economics today. There is actually a revolt underway in the younger generation of economic graduate students who lived through the Great Recession and the near melt down of the world’s economy yet witnessed their teachers being confounded by the Queen’s question. And if we value our children’s and our grandchildren’s economic future we can no longer afford to simply leave economics to the expertsthe Econocracy—for as these young graduate students tell us, we do so at our own peril. Amartya Sen in his essay Rational Fools: A Critique of the Behavioral Foundations of Economic Theory takes us on an intellectual journey back in time to the thoughts and reflections of one of the founders of the field of economics:

In his Mathematical Psychics, published in 1881, Edgeworth asserted that ‘the first principle of Economics is that every agent is actuated only by self-interest’. This view has been a persistent one in economic models, and the nature of economic theory seem to have been much influenced by this basic premise…. I should mention that Edgeworth himself was quite aware that this so-called first principle of Economics was not a particularly realistic one. Indeed, he felt that ‘the concrete nineteenth century man is for the most part an impure egoist, a mixed utilitarian’. This raises the interesting question as to why Edgeworth spent so much of his time and talent in developing a line of inquiry the first principle of which he believed to be false. The issue is not why abstractions should be employed in pursuing economic questionsthe nature of inquiry makes this inevitablebut why would one choose an assumption which he himself believed not merely inaccurate in detail but fundamentally mistaken? (Sen 1982, 84-85)

Amartya Sen (1982) Rational Fools

Free License of Creativity

Our discussion of the nature of physical concepts has shown that a main reason for formulating concepts is to use them in connection with mathematically stated laws. It is tempting to go one step further and to demand that practicing scientists deal only with ideas corresponding to strict measurables, that they formulate only concepts reducible to the least ambiguous of all data: numbers and measurements. The history of science would indeed furnish examples to show the great advances that followed from the formation of strictly quantitative concepts. (Holton and Brush 2001, 170)

(….) The nineteenth-century physicist Lord Kelvin commended this attitude in the famous statement:

I often say that when you can measure what you are speaking about and express it in numbers you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of meagre and unsatisfactory kind: it may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of Science, whatever the matter may be. (“Electrical Units of Measurement”)

Useful though this trend is within its limits, there is an entirely different aspect to scientific concepts: indeed it is probable that science would stop if every scientist were to avoid anything other than strictly quantitative concepts. We shall find that a position like Lord Kelvin’s (which is similar to that held at present by some thinkers in the social sciences) does justice neither to the complexity and fertility of the human mind nor to the needs of contemporary physical science itself—not to scientists nor to science. Quite apart from the practical impossibility of demanding of one’s mind that at all times it identify such concepts as electron only with the measurable aspects of that construct, there are specifically two main objections: First, this position misunderstands how scientists as individuals do their work, and second, it misunderstands how science as a system grows out of the contribution of individuals. (Holton and Brush 2001, 170-171)

(….) While a scientist struggles with a problem, there can be little conscious limitation on his free and at times audacious constructions. Depending on his field, his problem, his training, and his temperament, he may allow himself to be guided by a logical sequence based on more or less provisional hypotheses, or equally likely by “feelings for things,” by likely analogy, by some promising guess, or he may follow a judicious trial-and-error procedure.

The well-planned experiment is, of course, by far the most frequent one in modern science and generally has the best chance of success; but some men and women in science have often not even mapped out a tentative plan of attack on the problems, but have instead let their enthusiasms, their hunches, and their sheer joy of discovery suggest the line of work. Sometimes, therefore, the discovery of a new effect or tool or technique is followed by a period of trying out one or the other applications in a manner that superficially almost seems playful. Even the philosophical orientation of scientists is far less rigidly prescribed than might be supposed. (Holton and Brush 2001, 170-171)

Gosse’s Dilemma and Adam’s Navel

‘Tis a dangerous thing to ingage the authority of Scripture in disputes about the Natural World, in opposition to Reason, lest Time, which brings all things to light, should discover that to be false which we had made Scripture to assert.

Thomas Burnet, Archaelogiae Philosophicae, 1692

In the late nineteenth century intellectuals assumed that truth had spiritual, moral, and cognitive dimensions. By 1930, however, intellectuals had abandoned this broad conception of truth. They embraced, instead, a view of knowledge that drew a sharp distinction between “facts” and “values.” They associated cognitive truth with empirically verified knowledge and maintained that by this standard, moral values could not be validated as “true.” In the nomenclature of the twentieth century, only “science” constituted true knowledge. Moral and spiritual values could be “true” in an emotional or nonliteral sense, but not in terms of cognitively verifiable knowledge. The term truth no longer comfortably encompassed factual knowledge and moral values.

Julie A. A. Reuben (1996) The Making of the Modern University: Intellectual Transformation and the Marginalization of Morality

Truth

Certain people have different standards for recognizing “truth.” Given access to the same facts, two individuals can look at an issued and reach utterly different conclusions, to the point where they believe those with a different opinion belong somewhere on a spectrum from stupid to perverse…. (Asher 2012: xiv)

(….) The creationist has something at stake, some worldview or allegiance, that makes a fair, honest view of the data behind Darwinian evolutionary biology impossible. Why?

(….) [T]here is an obvious explanation for antipathy toward Charles Darwin among various anti-evolutionist groups of the last 150 years, groups that are often connected to one kind of intense religious creed or another: they think Darwin threatens their worldview. Contributing to this conviction are those biologists who portray evolution as tied to atheism, who help convince the devout that a natural connection of humanity with other organisms is incompatible with their religion. Compounding things further is the fact that adherence to many religious worldviews is not flexible, and any scientific theory or philosophy that seems to threaten certain beliefs must be wrong, whatever some scientist may say about evidence. (Asher 2012: xvi)

Coyne says there is one way to be rational, and any of this stuff about alternative “truth” is relativist nonsense not worth the flatscreen monitor on which it is written:

What, then, is the nature of “religious truth” that supposedly complements “scientific truth”?… Anything touted as a “truth” must come with a method for being disproved—a method that does not depend on personal revelation. … It would appear, then, that one cannot be coherently religious and scientific at the same time. That alleged synthesis requires that with one part of your brain you accept only those things that are tested and supported by agreed-upon evidence, logic, and reason, while with the other part of your brain you accept things that are unsupportable or even falsified.

I disagree, and would argue that there are many things in life that deserve the descriptor “truth” but are not amenable to rational disproof. Coyne is absolutely correct to say that coddling the irrational—those for whom “religious truth” means stoning adulterers or drinking poisoned Kool-Aid—is incompatible with science and, more generally, civil society. However, while science is a-religious, it is not anti-religious, at least in the important sense that it does not (indeed, cannot) concern itself with phenomena beyond what we rationally perceive. It is not only possible to portray science as lacking fatal consequences for those religious tenets that concern things we cannot empirically observe (such as purpose or agency in life), but it is precisely what scientists have got to do to make a compelling case to the public. Coyne tosses “religion” into the same dumpster as any passing superstition, and actively encourages the perception that science is corrosive to any religious sentiment. Yes, there are religious claims that are demonstrably wrong in an empirical sense. … However, such specific claims do not do justice to the religion integrally tied into the identity of many lay-people and scientists alike, an identity that by any meaningful definition is worthy of the name “truth.” (Asher 2012: xvii-xviii)

Asher, Robert J. Evolution and Belief [Confessions of a Religious Paleontologist]. Cambridge: Cambridge University Press; 2012; p. xiv.

When we reflect on scienceits aims, its values, its limitswe are doing philosophy, not science. This may be bad news for the high priests of scientism, who reject philosophy, but there is no escaping it.

(….) There is a general agreement that science concentrates on aspects of the world that can be studied through theories that can be tested by doing experiments. Those aspects relate to spatiotemporal patterns in nature, for this is what makes experiments possible. If other dimensions of reality exist, they simply cannot be studied using the methods of the empirical sciences.

(….) Modern science is an enormously wonderful and powerful achievement of our species, a culturally transcendent, universal method for studying the natural world. It should never be used as an ideological weapon. Scientific progress demands a respect for truth, rigor, and objectivity, three ethical values implied in the ethos of science. We can nevertheless draw different conclusions from our analyses of science, but we should always present them carefully, distinguishing what can be said in the name of science from personal interpretations that must be supported by independent reasons, or acknowledged simply as personal opinions. Our analysis shows that the Oracles differ in important points and are not consistently fighting for a common cause. When they go beyond their science, they use different arguments and arrive at different conclusions.

We conclude with one final insight. Science is compatible with a broad cross section of very different views on the deepest human problems. Weinberg, an agnostic Jew from New York, shared his Nobel Prize with Abdus Salam, a devout Muslim from Pakistan. They spoke different languages and had very different views on many important topics. But these differences were of no consequence when they came together to do science. Modern science can be embraced by any religion, any culture, any tribe, and brought to bear on whatever problems are considered most urgent, whether it be tracing their origins, curing their diseases, or cleaning up their water. Science should never be fashioned into a weapon for the promotion of an ideological agenda. Nevertheless, as history has shown, science is all too frequently enlisted in the service of propaganda; and, as we have argued in this book, we must be on guard against intellectual nonsense masquerading as science.

Karl Giberson and Mariano Artigas (2007) in Oracles of Science: Celebrity Scientists versus God and Religion.

Darwinism as an ideology

One of the most interesting developments of the twentieth century has been the growing trend to regard Darwinian theory as transcending the category of provisional scientific theories, and constituting a “world- view.” Darwinism is here regarded as establishing a coherent worldview through its evolutionary narrative, which embraces such issues as the fundamental nature of reality, the physical universe, human origins, human nature, society, psychology, values, and destinies. While being welcomed by some, others have expressed alarm at this apparent failure to distinguish between good, sober, and restrained science on the one hand, and non-empirical metaphysics, fantasy, myth and ideology on the other. In the view of some, this transition has led to Darwinism becoming a religion or atheist faith tradition in its own right.

Denis R. Alexander and Ronald L. Numbers (2010) in Biology and Ideology: From Descartes to Dawkins.

It is difficult to overestimate the importance of Darwinian thinking to American economic reform in the Gilded Age and Progressive Era. Evolutionary thought was American economic reform’s scientific touchstone and a vital source of ideas and conceptual support. The Wharton School’s Simon Nelson Patten, writing in 1894, observed that the century was closing with a bias for biological reasoning and analogy, just as the prior century had closed with a bias for the methods of physics and astronomy. The great scientific victories of the nineteenth century, Patten believed, were “in the field of biology.”

SOMETHING IN DARWIN FOR EVERYONE

To understand the influence of evolutionary thought on American economic reform, we must first appreciate that evolutionary thought in the Gilded Age and Progressive Era in no way dictated a conservative, pessimistic, Social Darwinist politics. On the contrary, evolutionary thought was protean, plural, and contested.

It could license, of course, arguments that explained and justified the economic status quo as survival of the fittest, so-called Social Darwinism. But evolutionary thought was no less useful to economic reformers, who found in it justification for optimism rather than pessimism, for intervention rather than fatalism, for vigorous rather than weak government, and for progress rather than drift. Evolution, as Irving Fisher insisted in National Vitality, did not teach a “fatalistic creed.” Evolution, rather, awakened the world to “the fact of its own improvability.”

In the thirty years bracketing 1900, there seems to have been something in Darwin for everyone. Karl Pearson, English eugenicist and founding father of modern statistical theory, found a case for socialism in Darwin, as did the co-discoverer of the theory of evolution by natural selection, Alfred Russel Wallace. Herbert Spencer, in contrast, famously used natural selection, which he called “survival of the fittest,” to defend limited government.

Warmongers borrowed the notion of survival of the fittest to justify imperial conquest, as when Josiah Strong asserted that the Anglo-Saxon race was “divinely commissioned” to conquer the backward races abroad. Opponents of war also found sustenance in evolutionary thought. Pyotr Kropotkin argued that the struggle for existence need not involve conflict, much less violence. Cooperation could well be the fittest strategy. David Starr Jordan, president of Stanford from 1891 to 1913 and a leader of the American Peace Movement during World War I, opposed war because it selected for the unfit. The fittest men died in battle, while the weaklings stayed home to reproduce.

Darwin seems to have been pro-natalist, on the grounds that more births increased the variation available for natural selection. Margaret Sanger argued that restricting births was the best way to select the fittest. Darwin’s self-appointed “bulldog,” T. H. Huxley, thought natural selection justified agnosticism, whereas devout American interpreters, such as botanist Asa Gray, found room in Darwinism for a deity.

It is a tribute to the influence of Darwinism that Darwin inspired exegetes of nearly every ideology: capitalist and socialist, individualist and collectivist, pacifist and militarist, pro-natalist and birth-controlling, as well as agnostic and devout.

Darwinism was itself plural, and Progressive Era evolutionary thought was more plural still. The ideas of other prominent evolutionists (notably, Herbert Spencer and Alfred Russel Wallace) were also influential in the Progressive Era, both when they accorded with Darwin and when they didn’t.

— Thomas C. Leonard (2016) in Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era.

[L]iberal theology reconceptualizes the meaning of Christianity in the light of modern knowledge and ethical values. It is reformist in spirit and substance, not revolutionary. Specifically it is defined by its openness to the verdicts of modern intellectual inquiry, especially historical criticism and the natural sciences; its commitment to the authority of individual reason and experience; its conception of Christianity as an ethical way of life; its advocacy of moral concepts of atonement or reconciliation; and its commitments to make Christianity credible and socially relevant to contemporary people. In the nineteenth century, liberal theologians denied that God created the world in six days, commanded the genocidal extermination of Israel’s ancient enemies, demanded the literal sacrifice of his Son as a substitutionary legal payment for sin [see Laughing Buddha], and verbally inspired the Bible. Most importantly, they denied that religious arguments should be settled by appeals to an infallible text or ecclesial authority. Putting it positively, nineteenth-century liberals accepted Darwinian evolution, biblical criticism, a moral influence view of the cross, an idea of God as the personal and eternal Spirit of love, and a view of Scripture as authoritative only within Christian experience. Nineteenth- teenth- and early-twentieth-century liberals expected these views to prevail in Christianity as a whole, but in the twenty-first century they remain contested beliefs.

Gary Dorrien. The Making of American Liberal Theology: Crisis, Irony, and Postmodernity: 1950-2005 (Kindle Locations 155-157). Kindle Edition.

Unless the moral insight and the spiritual attainment of mankind are proportionately augmented, the unlimited advancement of a purely materialistic culture may eventually become a menace to civilization. A purely materialistic science harbors within itself the potential seed of the destruction of all scientific striving, for this very attitude presages the ultimate collapse of a civilization which has abandoned its sense of moral values and has repudiated its spiritual goal of attainment.

The materialistic scientist and the extreme idealist are destined always to be at loggerheads. This is not true of those scientists and idealists who are in possession of a common standard of high moral values and spiritual test levels. In every age scientists and religionists must recognize that they are on trial before the bar of human need. They must eschew all warfare between themselves while they strive valiantly to justify their continued survival by enhanced devotion to the service of human progress. If the so-called science or religion of any age is false, then must it either purify its activities or pass away before the emergence of a material science or spiritual religion of a truer and more worthy order.

What both developing science and religion need is more searching and fearless self-criticism, a greater awareness of incompleteness in evolutionary status. The teachers of both science and religion are often altogether too self-confident and dogmatic. Science and religion can only be self-critical of their facts. The moment departure is made from the stage of facts, reason abdicates or else rapidly degenerates into a consort of false logic.

~ ~ ~

By the mid-nineteenth century, there were really only three ways in which natural theologians could deal with the growing evidence that the earth was very old, that it was recycling inexorably beneath their feet, and that life on earth had constantly changed over millions of years. They could ignore it, they could accommodate it to the biblical accounts of history by more or less denying the literal truth of Genesis, or they could explain it all away. The later natural theologians largely ignored it. The sacred theorists tried unsuccessfully to reconcile geology with the Bible. And one man above all others tried to explain it away. He was Philip Henry Gosse (1810-1888), a writer on natural history whose books caught the imagination of generations of Victorians and whose life became a tortured tale of religion contesting with science…. (Thomson 2007: 223)

Gosse’s dilemma was that of all natural theologians, especially after the publication in 1844 of an anonymously authored, thrillingly dangerous, and wildly successful book on evolution…. The book’s title, with an allusion to James Hutton that nobody could miss, was Vestiges of Creation. Chambers’ theory was largely derived from Lamarck’s which, like Erasmus Darwin’s, depended upon organisms being subject to change as a direct result of environmental pressures and exigencies [which today is know to be possible via epigentics]. Chambers probably set Charles Darwin back fifteen years — much to the benefit of all. In many ways he blazed the trail that Darwin could more cautiously follow with an even more convincing theory in hand. Darwin must have realized, with the example of Chambers in front of him (and approval of the political left and censure from both the religious and scientific right) that he would have to ensure his theory would have a better reception. (Thomson 2007: 224)

Gosse knew that various versions of what we now call evolution had been around for more than a hundred years. By the mid-1850s, most scientists in Britain knew which way the wind was blowing. Darwin had been hard at work in private since 1842, preparing the ground for his idea of natural selection, and knowing how popular a scientist Gosse was, he tried to enlist him to support his theory. Darwin’s self-designated ‘bull dogs’, including Thomas Huxley, were steadily persuading the sceptics Huxley had been lecturing formally on an evolutionary relationship between men and apes as early as 1858. This growing movement evolutionary movement offered a new way of explaining the evidence of organic changes, but only at the expense of much accepted religious belief. It threatened to change radically the whole frame of intellectual reference and to produce a new explanation of cause. For a huge number of theologians, clerics, philosophers and ordinary people, evolution was changing the metaphysical balance of power. Among those who felt this most keenly was Gosse. (Thomson 2007: 224)

One’s heart has to ache for Gosse, one of the most sympathetic characters of the evolutionary saga, a man weighed down by the burdens of fundamentalist Christianity and at the same time a brilliant naturalist…. He was the first to introduce to a popular audience the life of the seashore, the fragile world of exquisite beauty and strength that lies just a few inches beneath the surface of the sea and in the rocky pools of the coast. Before Gosse, all this was largely unseen. Gosse single-handedly created marine biology and home aquaria, and became one of the great chroniclers of the intricate worlds revealed by the microscope. (Thomson 2007: 225)

(….) Once Lamarck and Chambers had made it possible (even necessary) to take evolution seriously, and after his meeting with Charles Darwin had shown how powerful was the extent of the challenge to his fundamentalist beliefs, Gosse felt called to respond; as a Plymouth Brother and as a scientist, it was his responsibility, just as it had been Paley’s and before Paley John Ray’s or Thomas Burnet’s. Gosse’s dilemma was to try to find a way to reconcile his science and his faith. He chose to challenge the rapidly growing support for evolutionists from the geological record. (Thomson 2007: 226)

(….) Huxley had a favourite lecture a “Lay Sermon’ entitled Essay on a Piece of Chalk. He would stand before an eager crowd and take a piece of common chalk from his pocket, asking the audience what it could possibly tell them about the history of the cosmos and of life on earth. The answer is that chalk (in those days, before blackboard chalk was an artificial, hypo-allergenic substance) represents the accumulation on an ancient sea bottom of the skeletons of countless billions of microscopic planktonic organisms that once inhabited vast tropical oceans that extended across the earth, from Europe and the Middle East to Australia and North America. (Thomson 2007: 227)

(….) Philip Gosse knew only too well what a piece of chalk looked like under a microscope and that the earth’s crust consisted of thousands of feet of different rocks, some bearing fossils, others the remains of ancient lava flows, dust storms, water-borne sediments, and even ancient coral reefs just like those he had seen in Jamaica…. How could Gosse explain away this all-too-solid evidence of the ancient history of the earth and its denizens? What did it have to say about the biblical account of creation in six days? (Thomson 2007: 228)

(….) Gosse’s answer cost him dearly. The dilemma figuratively tore him scientist and fundamentalist Christian in half. In a classic example of ad hoc reasoning, he explained away all this appearance of change in a book entitled Omphalos, the Greek for ‘navel’, and in that one word is contained the core of Gosse’s argument. It is the old conundrum: did Adam have a navel? If God created Adam as the first man out of nothing, Adam would have no need for a navel, since he had never been connected by an umbilical cord to a mother. Nor indeed had Eve, of whose origin Genesis gives two accounts. Nor indeed (remembering that the Bible tells us that God made man in his own image) would God physiologically have needed navel. (Thomson 2007: 229)

Gosse simply asserted that at the moment of creation, just as God made Adam with a navel, he also made the earth with all its complex layers, its faults, every one of its fossils, volcanoes in mid-eruption and rivers in full spate carrying a load of sediment that had never been eroded from mountains that had never been uplifted. Similarly, at that instant, every tree that had never grown nevertheless had internal growth rings; every mammal already had partially worn teeth. He created rotting logs on the forest floor, the rain in mid-fall, the light from distant stars in mid-stream, the planets part-way around their orbits … the whole universe up and running at the moment of creation no further assembly required. (Thomson 2007: 229)

Such an argument, of course, can never be beaten. It says that God has created all the evidence that supports his existence and (shades of Hume) all the evidence that appears to cast doubt on it. Equally, of course, a theory that explains everything explains nothing. Omphalos is untestable and therefore one cannot concur rationally with its argument; you must simply close your eyes and believe. Or smile. (Thomson 2007: 229-230)

Over the years, Gosse’s argument has been bowdlerised to the slightly unworthy proposition that God set out the geological record, with all its evidence of change, in order to test man’s faith. It was, therefore, the ultimate celestial jest and cruel hoax. This was about as far from Gosse’s pious intention as Darwin’s impious theory. As for what Paley would have made of Omphalos I like to think he would have rejected it, but kindly, for he was a kind man. Victorian England not only rejected it, they laughed at it cruelly. Gosse became overnight a broken man, his reputation as a scientist in shatters. (Thomson 2007: 230)

But nothing is as simple as it ought to be. A community that mocked Omphalos and had no problem in coming to terms with the even more difficult issue of cosmology, still could not come to terms with geology. In fact, whether in Paley’s time or in Darwin’s, or indeed our own, one of the oddities in the history of interplay between science and religion is that cosmology never seems to have become as serious a threat to revealed religion as natural science. When pressed, people often revert to believing two things at once. The evidence that the universe is huge and ancient can be assimilated seemingly without shaking the conviction that the earth itself is 6,000 years old and that all living creatures were created over a two-day period. For example: ‘The school books of the present day, while they teach the child that the earth moves, yet assure him that that it is a little less than six thousand years old, and that it was made in six days. On the other hand, geologists of all religious creeds are agreed that the earth has existed for an immense series of years.’ These last words were written in 1860 and appear in a work that arguably presented a greater threat to the Established Church than the evolutionism of Erasmus Darwin, Lamarck, Robert Chambers or even Charles Darwin. Essays and Reviews was an example of the enemy within, a compilation of extremely liberal theological views by noted churchman and academics. Among their targets was the unnecessary and outmoded belief in miracles and the biblical account of the days of creation. The battle is still being fought. (Thomson 2007: 230-231)

Imaginary Empty Balls

The answer, therefore, which the seventeenth century gave to the ancient question … “What is the world made of?” was that the world is a succession of instantaneous configurations of matter — or material, if you wish to include stuff more subtle than ordinary matter…. Thus the configurations determined there own changes, so that the circle of scientific thought was completely closed. This is the famous mechanistic theory of nature, which has reigned supreme ever since the seventeenth century. It is the orthodox creed of physical science…. There is an error; but it is merely the accidental error of mistaking the abstract for the concrete. It is an example of what I will call the ‘Fallacy of Misplaced Concreteness.’ This fallacy is the occasion of great confusion in philosophy. (Whitehead 1967: 50-51)

(….) This conception of the universe is surely framed in terms of high abstractions, and the paradox only arises because we have mistaken our abstractions for concrete realities…. The seventeenth century had finally produced a scheme of scientific thought framed by mathematics, for the use of mathematics. The great characteristic of the mathematical mind is its capacity for dealing with abstractions; and for eliciting from them clear-cut demonstrative trains of reasoning, entirely satisfactory so long as it is those abstractions which you want to think about. The enormous success of the scientific abstractions, yielding on the one hand matter with its simple location in space and time, on the other hand mind, perceiving, suffering, reasoning, but not interfering, has foisted onto philosophy the task of accepting them as the most concrete rendering of fact. (Whitehead 1967: 54-55)

Thereby, modern philosophy has been ruined. It has oscillated in a complex manner between three extremes. These are the dualists, who accept matter and mind as on an equal basis, and the two varieties of monists, those who put mind inside matter, and those who put matter inside mind. But this juggling with abstractions can never overcome the inherent confusion introduced by the ascription of misplaced concreteness to the scientific scheme of the seventeenth century. (Whitehead 1967: 55)

Alfred North Whitehead in Science and the Modern World

In the UK, for example, 97 percent of money is created by commercial banks and its character takes the form of debt-based, interest-bearing loans. As for its intended use? In the 10 years running up to the 2008 financial crash, over 75 percent of those loans were granted for buying stocks or houses—so fuelling the house-price bubble—while a mere 13 percent went to small businesses engaged in productive enterprise.47 When such debt increases, a growing share of a nation’s income is siphoned off as payments to those with interest-earning investments and as profit for the banking sector, leaving less income available for spending on products and services made by people working in the productive economy. ‘Just as landlords were the archetypal rentiers of their agricultural societies,’ writes economist Michael Hudson, ‘so investors, financiers and bankers are in the largest rentier sector of today’s financialized economies.’ (Raworth 2017, 155)

Once the current design of money is spelled out this way—its creation, its character and its use—it becomes clear that there are many options for redesigning it, involving the state and the commons along with the market. What’s more, many different kinds of money can coexist, with the potential to turn a monetary monoculture into a financial ecosystem. (Raworth 2017, 155)

Imagine, for starters, if central banks were to take back the power to create money and then issue it to commercial banks, while simultaneously requiring them to hold 100 percent reserves for the loans that they make—meaning that every loan would be backed by someone else’s savings, or the bank’s own capital. It would certainly separate the role of providing money from the role of providing credit, so helping to prevent the build-up of debt-fuelled credit bubbles that burst with such deep social costs. That idea may sound outlandish, but it is neither a new nor a fringe suggestion. First proposed during the 1930s Great Depression by influential economists of the day such as Irving Fisher and Milton Friedman, it gained renewed support after the 2008 crash, gaining the backing of mainstream financial experts at the International Monetary Fund and Martin Wolf of the UK’s Financial Times. (Raworth 2017, 155-156)

Kate Raworth in Doughnut Economics

Suggestions are anchored in neoclassical theory

Despite growing diversity in research, the theory flow of economics, often referred to as neoclassical, continues to dominate teaching and politics. It developed in the 19th century as an attempt to apply the methods of the natural sciences and especially physics to social phenomena, In the search for an “exact” social science, social relationships are abstracted to such an extent that calculations are possible. The neoclassical economics department primarily asks one question: How do rational actors optimize under certain circumstances? This approach is nothing bad in and of itself. However, in view of the ecological crisis, we have to ask ourselves completely different questions in society: How can the planetary collapse be prevented? What can an economic system look like that is social, fair and ecological?

Katharina Keil and Max Wilken

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The dematerialization of the value concept boded ill for the tangible world of stable time and concrete motion (Kern 1983). Again, the writer Jorge Luis Borges (1962, p. 159) captured the mood of the metaphor: (Mirowski 1989, 134. Kindle Location 2875-2877)

I reflected there is nothing less material than money, since any coin whatsoever (let us say a coin worth twenty centavos) is, strictly speaking, a repertory of possible futures. Money is abstract, I repeated; money is the future tense. It can be an evening in the suburbs, or music by Brahms; it can be maps, or chess, or coffee; it can be the words of Epictetus teaching us to despise gold; it is a Proteus more versatile than the one on the isle of Pharos. It is unforeseeable time, Bergsonian time . . . (Mirowski 1989, 134-135. Kindle Location 2877-2881)

It was not solely in art that the reconceptualization of value gripped the imagination. Because the energy concept depended upon the value metaphor in part for its credibility, physics was prodded to reinterpret the meaning of its conservation principles. In an earlier, simpler era Clerk Maxwell could say that conservation principles gave the physical molecules “the stamp of the manufactured article” (Barrow and Tipler 1986, p. 88), but as manufacture gave way to finance, seeing conservation principles in nature gave way to seeing them more as contingencies, imposed by our accountants in order to keep confusion at bay. Nowhere is this more evident than in the popular writings of the physicist Arthur Eddington, the Stephen Jay Gould of early twentieth century physics: (Mirowski 1989, 135. Kindle Location 2881-2887)

The famous laws of conservation and energy . . . are mathematical identities. Violation of them is unthinkable. Perhaps I can best indicate their nature by an analogy. An aged college Bursar once dwelt secluded in his rooms devoting himself entirely to accounts. He realised the intellectual and other activities of the college only as they presented themselves in the bills. He vaguely conjectured an objective reality at the back of it all some sort of parallel to the real college though he could only picture it in terms of the pounds, shillings and pence which made up what he would call “the commonsense college of everyday experience.” The method of account-keeping had become inveterate habit handed down from generations of hermit-like bursars; he accepted the form of the accounts as being part of the nature of things. But he was of a scientific turn and he wanted to learn more about the college. One day in looking over the books he discovered a remarkable law. For every item on the credit side an equal item appeared somewhere else on the debit side. “Ha!” said the Bursar, “I have discovered one of the great laws controlling the college. It is a perfect and exact law of the real world. Credit must be called plus and debit minus; and so we have the law of conservation of £. s. d. This is the true way to find out things, and there is no limit to what may ultimately be discovered by this scientific method . . .” (Mirowski 1989, 135. Kindle Location 2887-2898)

I have no quarrel with the Bursar for believing that scientific investigation of the accounts is a road to exact (though necessarily partial) knowledge of the reality behind them . . . But I would point out to him that a discovery of the overlapping of the different aspects in which the realities of the college present themselves in the world of accounts, is not a discovery of the laws controlling the college; that he has not even begun to find the controlling laws. The college may totter but the Bursar’s accounts still balance . . . (Mirowski 1989, 135-136. Kindle Location 2898-2902)

Perhaps a better way of expressing this selective influence of the mind on the laws of Nature is to say that values are created by the mind [Eddington 1930, pp. 237–8, 243]. (Mirowski 1989, 136. Kindle Location 2903-2904)

Once physicists had become inured to entertaining the idea that value is not natural, then it was a foregone conclusion that the stable Laplacean dreamworld of a fixed and conserved energy and a single super-variational principle was doomed. Again, Eddington stated it better than I could hope to: (Mirowski 1989, 136. Kindle Location 2904-2907)

[Classical determinism] was the gold standard in the vaults; [statistical laws were] the paper currency actually used. But everyone still adhered to the traditional view that paper currency needs to be backed by gold. As physics progressed the occasions when the gold was actually produced became career until they ceased altogether. Then it occurred to some of us to question whether there still was a hoard of gold in the vaults or whether its existence was a mythical tradition. The dramatic ending of the story would be that the vaults were opened and found to be empty. The actual ending is not quite so simple. It turns out that the key has been lost, and no one can say for certain whether there is any gold in the vaults or not. But I think it is clear that, with either termination, present-day physics is off the gold standard [Eddington 1935, p. 81]. (Mirowski 1989, 136. Kindle Location 2907-2913)

The denaturalization of value presaged the dissolution of the energy concept into a mere set of accounts, which, like national currencies, were not convertable at any naturally fixed rates of exchange. Quantum mechanical energy was not exactly the same thing as relativistic energy or thermodynamic energy. Yet this did not mean that physics had regressed to a state of fragmented autarkies. Trade was still conducted between nations; mathematical structure could bridge subdisciplines of physics. It was just that everyone was coming to acknowledge that money was provisional, and that symmetries expressed by conservatiori principles were contingent upon the purposes of the theory in which they were embedded. (Mirowski 1989, 136. Kindle Location 2913-2918)

Increasingly, this contingent status was expressed by recourse to economic metaphors. The variability of metrics of space-time in general relativity were compared to the habit of describing inflation in such torturous language as: “The pound is now only worth seven and sixpence” (Eddington 1930, p. 26). The fundamentally stochastic character of the energy quantum was said to allow nuclear particles to “borrow” sufficient energy so that they could “tunnel” their way out of the nucleus. And, inevitably, if we live with a banking system wherein money is created by means of loans granted on the basis of near-zero fractional reserves, then this process of borrowing energy could cascade, building upon itself until the entire universe is conceptualized as a “free lunch.” The nineteenth century would have recoiled in horror from this idea, they who believed that banks merely ratified the underlying real transactions with their loans. (Mirowski 1989, 136-137. Kindle Location 2918-2925)

Goldman Sachs and Flash Boys

In the City, they sell and buy. And nobody ever asks them why. But since it contents them to buy and sell, God forgive them, they might as well.

Humbert Wolfe, The Uncelestial City, 1940

Front-running in the name of ‘democratizing’ Wall Street

Unlike most trading platforms, it [Robinhood] does not charge a commission for letting users buy and sell shares. Instead it makes money by selling data on those deals to others before they go through.

— Elon Must grills Robinhood boss over GameStop row on Clubhouse, BBC

There is no such thing as a free lunch. Just as social media platforms like Facebook have been used to manipulate class grievances and spread falsehoods the claim that Robinhood is ‘democratizing’ Wall Street and putting the ‘little guy’ aka retail investors on an even playing field is another Big Lie. But to understand why requires a sophisticated understanding of how Wall Street trading of stocks really works and that nanoseconds matter. It is based on not just information but timing and we are talking about microseconds or perhaps even nanoseconds (think quantum computing).

‘High-frequency trading’ is undertaken by computers which are constantly offering to buy and sell securities. The interval for which these securities are held by their owner may—literally—be shorter than the blink of an eye. Spread Networks, a telecoms provider, has recently built a link through the Appalachian Mountains to reduce the time taken to transmit data between New York and Chicago by a little less than one millisecond. (Kay 2015, 2)

John Kay, Other People’s Money: The Real Business of Finance

What better way to manipulate the market than to aggregate the trades and sell the information before the trades are made to front-run the “little guy” so the platform doesn’t charge transaction fees but does let the “little guy” buy on “leverage” aka credit so they can lose their shirt, house, and everything else and then hold his trade long enough to sell the information to high-frequency traders who can then front-run them. We need to be asking “Who is Robinhood selling this information to? Who would profit from such information to a degree greater than Robinhood’s client trading costs and therefore be willing to pay for it? And what are they doing with it?” Epistemic Inequality is a dangerous thing. By holding its clients trades long enough to sell information about those trades to a third-party the cost of the ‘free lunch’ is a dystopian future of Surveillance Capitalism.

When you combine ignorance and leverage, you get some pretty interesting results.

Warren Buffett, on the global financial crisis, 2008

When Robinhood delays their retail-investor’s stock transactions in lieu of charging a commission this gives the illusion of something for nothing (i.e., ‘democratizing’ Wall Street with a ‘free lunch’) for its “retail investor” clients. But this is sham, a fraud, for Robinhood is collecting its commissions by selling its “retail investor” stock data information on trading positions while holding/delaying the trade going through so third-parties can profit on this information at the “retail investors” expense. This trading data can then be used to front-run the positions of Robinhood’s “retail investors.” This is Surveillance Capitalism at its best!

Lucky fools do not bear the slightest suspicion that they may be lucky fools.

Nassim Nicholas Taleb, Fooled by Randomness, 2001

We the public have no idea at this time who the real people are profiting overall from this phenomena; it could even be outside foreign powers with a larger agenda such as destabilizing the US economy. As the SEC says, to find out who is really behind it you must follow the money; for those who profit most are most likely those who are behind this front-running market manipulation. The majority of actual “retail investors” who are being pumped up on Reddit to hold until the end will lose much depending on how leveraged they are. A few will make a killing, make the news, and further pump the dump. But in the end the one’s who really make a killing over the long haul are those who have the millisecond advantage and the cash to purchase Robinhood’s “retail client” positions and based upon this asymmetric (insider?) information take trading positions to win on the up-side and down-side (win-win) while the “retail investors” are left with win-some lose-many.

In the long haul the stock market cycle of creating bursting bubbles is a numbers game in which the only people really winning are Robinhood and its third-party clients who roll in the cash on the backs of the con of the retail investors. Only a fool thinks outside investors would drop 3.4 billion into Robinhood overnight if not for the fact that it was a win-win regardless of the fact that what wild speculation drives up based upon no intrinsic value inevitably will come crashing down. They have already banked (front-run) their profits and left many naïve retail investors qua speculative day traders who bought into this Ponzi scheme no chair to sit in when the music stops. This in the end is nothing but a massive transfer of wealth from the middle class to the wealthiest 1% in the world.

The goose that lays the golden eggs has been considered a most valuable possession. But even more profitable is the privilege of taking the golden eggs laid by somebody else’s goose. The investment bankers and their associates [aka financial services qua Robinhood] now enjoy that privilege. They control the people through the people’s own money.

Louis Brandeis, Other People’s Money, 1914

The junk merchant doesn’t sell his product to the consumer, he sells the consumer to his product.

William S. Burroughs, Letter from a Master Addict to Dangerous Drugs, 1956

Robinhood sells its retail customer’s trading data as its product. Robinhood’s real customers are those who pay for this time-delayed “retail investor” data. How convenient to misdirect the outrage at Robinhood’s halting trading when its clearing house demanded it put up 3 billion cash to back its positions. Like all misleading and/or disinformation, this directs the “retail investors” anger away from the real abuse of Robinhood, which is not stealing from the rich and giving to the poor but fleecing the not-so-poor out of their money by delaying their trade while selling their stock positions (data) to potential third-parties who can then trade to their own advantage based upon this information. What the retail investors should be angry about and asking for is absolute transparency as to why their trades are delayed while their data is sold to third-parties, who these third-parties are, and how is their time-delayed trade data being used by these third-parties?

Someone out there was using the fact that stock market orders arrived at different times at different exchanges to front-run orders from one market to another…. [He] explained … how his team had placed big trades to measure how much more cheaply they bought stock when they removed the ability of the machine to front-run them….

“It happens on such a granular level that even if you tried to line it up and figure it out you wouldn’t be able to do it. People are getting screwed because they can’t imagine a microsecond.”

When bids and offers for shares sent to these places arrived at precisely the same moment, the markets acted as markets should. If they arrived even a millisecond apart, the market vanished, and all bets were off. [He] knew that he was being front-run—that some other trader was, in effect, noticing his demand for stock on one exchange and buying it on others in anticipation of selling it to him at a higher price.

— Lewis, Michael. Flash Boys: A Wall Street Revolt . W. W. Norton & Company. Kindle Edition

It took only a few weeks for a consortium of high-frequency traders to marshal an army of lobbyists and publicists to make their case for them. These condottieri set about erecting lines of defense for their patrons. Here was the first: The only people who suffer from high-frequency traders are even richer hedge fund managers, when their large stock market orders are detected and front-run. It has nothing to do with ordinary Americans. Which is such a weird thing to say that you have to wonder what is going through the mind of anyone who says it. It’s true that among the early financial backers of IEX were three of the world’s most famous hedge fund managers (Bill Ackman, David Einhorn, and Daniel Loeb). But rich hedge fund managers aren’t the only investors who submit large orders to the stock market that can be detected and front-run by high-frequency traders. Mutual funds and pension funds and university endowments also submit large stock market orders, and these, too, can be detected and front-run by high-frequency traders. The vast majority of American middle-class savings are managed by such institutions.

Lewis, Michael. Flash Boys: A Wall Street Revolt . W. W. Norton & Company. Kindle Edition.

When angry class grievance mixed with greed and desire for a quick profit are joined with an army of “little guys” jumping into the market on a SPAC Jesus rumor and randomly running up the price of stocks based not on any intrinsic value in the underlying asset but only anger at the “big guy” aka hedge funds and greed for quick capital gains unaware of front-running because of their greed, anger, and mob psychology riled-up by Reddit social media posts the golden age of fraud has dawned and we have entered the era of the ‘democratization’ of Long-Term Front-Running and turned the entire American economy into the wrecking ball of casino capitalism.

“We’re living in a time of absolutely unprecedented uncertainty,” she said. “There really is no reason for anyone in their twenties to imagine that their 401(k) is going to pay off in 50, 60 years the way it did for their parents. And I’m not saying they shouldn’t believe it. I’m just saying they have good reason not to”. WallstreetBets Poster

Why should I care about posterity? What has posterity ever done for me?

Attributed to Groucho Marx, but also credited to various eighteenth-century English figures

There is a wide range of reasons used to justify jumping into day trading, running from just wanting to make a quick buck to a nihilistic desire to blow the system up. One thing is sure, what goes up must come crashing down. This house of cards will fall and with it potentially the American economy and middle class with it experiencing another Great Depression worse than 1929. This will be the prelude to the next American Demagogue, perhaps even Trump 2024, and the end of any of hope of progressive change in America. Unless this angry mob psychology is swiftly redirected to political activism, such as outlawing short-selling and leveraged speculation and bringing transparency, fairness, and robust regulation to the stock market which can only be done by the regulatory subpoena power of the SEC more economic destruction is likely to follow the destruction already wrought by the pandemic and four long years of Grifting Trumpism.

We are investment bankers [and financial services like Robinhood]. We don’t care what happens in five years.

Vincent Dahinden, head of global structured products, Royal Bank of Scotland, Institutional Investor, 12 February 2004

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism which is not surprising, if I am right in thinking that the best brains of Wall Street have been in fact directed towards a different object. (Keynes 1936, 97)

These tendencies are a scarcely avoidable outcome of our having successfully organised ‘liquid’ investment markets. It is usually agreed that casinos should, in the public interest, be inaccessible and expensive. And perhaps the same is true of stock exchanges. That the sins of the London Stock Exchange are less than those of Wall Street may be due, not so much to differences in national character, as to the fact that to the average Englishman Throgmorton Street is, compared with Wall Street to the average American, inaccessible and very expensive. The jobber’s ‘turn’, the high brokerage charges and the heavy transfer tax payable to the Exchequer, which attend dealings on the London Stock Exchange, sufficiently diminish the liquidity of the market (although the practice of fortnightly accounts operates the other way) to rule out a large proportion of the transactions characteristic of Wall Street. The introduction of a substantial Government transfer tax on all transactions might prove the most serviceable reform available, with a view to mitigating the predominance of speculation over enterprise in the United States. (Keynes 1936, 97)

— J. M. Keynes, The General Theory of Employment, Interest and Money, 1936

~ ~ ~

I suppose this book started when I first heard the story of Sergey Aleynikov, the Russian computer programmer who had worked for Goldman Sachs and then, in the summer of 2009, after he’d quit his job, was arrested by the FBI and charged by the United States government with stealing Goldman Sachs’s computer code. I’d thought it strange, after the financial crisis, in which Goldman had played such an important role, that the only Goldman Sachs employee who had been charged with any sort of crime was the employee who had taken something from Goldman Sachs. I’d thought it even stranger that government prosecutors had argued that the Russian shouldn’t be freed on bail because the Goldman Sachs computer code, in the wrong hands, could be used to “manipulate markets in unfair ways.” (Goldman’s were the right hands? If Goldman Sachs was able to manipulate markets, could other banks do it, too?) But maybe the strangest aspect of the case was how difficult it appeared to be—for the few who attempted—to explain what the Russian had done. I don’t mean only what he had done wrong: I mean what he had done. His job. He was usually described as a “high-frequency trading programmer,” but that wasn’t an explanation. That was a term of art that, in the summer of 2009, most people, even on Wall Street, had never before heard. What was high-frequency trading? Why was the code that enabled Goldman Sachs to do it so important that, when it was discovered to have been copied by some employee, Goldman Sachs needed to call the FBI? If this code was at once so incredibly valuable and so dangerous to financial markets, how did a Russian who had worked for Goldman Sachs for a mere two years get his hands on it? (Lewis 2014, 40-53)

[I]n a room looking out at the World Trade Center site, at One Liberty Plaza … gathered a small army of shockingly well-informed people from every corner of Wall Street—big banks, the major stock exchanges, and high-frequency trading firms. Many of them had left high-paying jobs to declare war on Wall Street, which meant, among other things, attacking the very problem that the Russian computer programmer had been hired by Goldman Sachs to create. (Lewis 2014, 53-56)

(….) One moment all is well; the next, the value of the entire U.S. stock market has fallen 22.61 percent, and no one knows why. During the crash, some Wall Street brokers, to avoid the orders their customers wanted to place to sell stocks, simply declined to pick up their phones. It wasn’t the first time that Wall Street people had discredited themselves, but this time the authorities responded by changing the rules—making it easier for computers to do the jobs done by those imperfect people. The 1987 stock market crash set in motion a process—weak at first, stronger over the years—that has ended with computers entirely replacing the people. (Lewis 2014, 62-67)

Over the past decade, the financial markets have changed too rapidly for our mental picture of them to remain true to life. (Lewis 2014, 67)

(….) The U.S. stock market now trades inside black boxes, in heavily guarded buildings in New Jersey and Chicago. What goes on inside those black boxes is hard to say—the ticker tape that runs across the bottom of cable TV screens captures only the tiniest fraction of what occurs in the stock markets. The public reports of what happens inside the black boxes are fuzzy and unreliable—even an expert cannot say what exactly happens inside them, or when it happens, or why. The average investor has no hope of knowing, of course, even the little he needs to know. He logs onto his TD Ameritrade or E*Trade or Schwab account, enters a ticker symbol of some stock, and clicks an icon that says “Buy”: Then what? He may think he knows what happens after he presses the key on his computer keyboard, but, trust me, he does not. If he did, he’d think twice before he pressed it. (Lewis 2014, 72-78)

The world clings to its old mental picture of the stock market because it’s comforting; because it’s so hard to draw a picture of what has replaced it; and because the few people able to draw it for you have no [economic] interest in doing so. (Lewis 2014, 78-80)

Spotting the Spoof

I came to think of humans as a kind of Turing machine. I searched for stories which reinforced the parable. There were many of them. However, Üxküll’s tick story was the most impressive (Kindle Locations 884-887). (….) Üxküll’s tick and the Turing machine parable all fitted together in one idea (Kindle Locations 900-907). (….) We find an astonishing coincidence with my Turing machine parable of animal and human behaviors…. This is the most primitive case of the definition of the situation.

(Shiozawa et. al. (2019) Microfoundations of Evolutionary Economics. Kindle Locations 884-887, 900-907, 926-933. Springer Japan. Emphasis added.)

According to this view, individuals within an economy follow simple rules of thumb to determine their course of action. However, they adapt to their environment by changing the rules they use when these prove to be less successful. They are not irrational in that they do not act against their own interests, but they have neither the information nor the calculating capacity to ‘optimise’. Indeed, they are assumed to have limited and largely local information, and they modify their behaviour to improve their situation. Individuals in complexity models are neither assumed to understand how the economy works nor to consciously look for the ‘best choice’. The main preoccupation is not whether aggregate outcomes are efficient or not but rather with how all of these different individuals interacting with each other come to coordinate their behaviour. Giving individuals in a model simple rules to follow and allowing them to change them as they interact with others means thinking of them much more like particles or social insects. Mainstream economists often object to this approach, arguing that humans have intentions and aims which cannot be found in either inanimate particles or lower forms of life.

Kirman et. al. (2018, 95) in Rethinking Economics: An Introduction to Pluralist Economics, Routledge.

Even such purely academic theories as interpretations of human nature have profound practical consequences if disseminated widely enough. If we impress upon people that science has discovered that human beings are motivated only by the desire for material advantage, they will tend to live up to this expectation, and we shall have undermined their readiness to moved by impersonal ideals. By propagating the opposite view we might succeed in producing a larger number of idealists, but also help cynical exploiters to find easy victims. This specific issue, incidentally, is of immense actual importance, because it seems that the moral disorientation and fanatic nihilism which afflict modern youth have been stimulated by the popular brands of sociology and psychology [and economics] with their bias for overlooking the more inspiring achievements and focusing on the dismal average or even the subnormal. When, fraudulently basking in the glory of the exact sciences, the psychologists [, theoretical economists, etc.,] refuse to study anything but the most mechanical forms of behavior—often so mechanical that even rats have no chance to show their higher faculties—and then present their mostly trivial findings as the true picture of the human mind, they prompt people to regard themselves and others as automata, devoid of responsibility or worth, which can hardly remain without effect upon the tenor of social life. (….) Abstrusiveness need not impair a doctrine’s aptness for inducing or fortifying certain attitudes, as it may in fact help to inspire awe and obedience by ‘blinding people with science’.

— Andreski (1973, 33-35) in Social Sciences as Sorcery. Emphasis added.

Complexity theory comes with its own problems of over-reach and tractability. Context counts; any theory taken to far stretches credulity. The art is in spotting the spoof. It is true irony to watch the pot calling the kettle black! To wit, mainstream economists questioning the validity of complexity theories use of greedy reductionism — often for the sole purpose of mathematical tractability — when applied to human beings; just because mainstream economists also have unrealistic assumptions (i.e., homo economicus) that overly simplify human behavior and capabilities doesn’t invalidate such a critique. Just because the pot calls the kettle black doesn’t mean the kettle and the pot are not black. Building models of human behavior solely on rational expectations and/or “social insects” qua fitness climbing ticks means we are either Gods or Idiots. Neither Gödel nor Turing reduced creatively thinking human beings to mere Turing machines.

~ ~ ~

The best dialogues take place when each interlocutor speaks from her best self, without pretending to be something she is not. In their recent book Phishing for Phools: The Economics of Manipulation and Deception, Nobel Prize–winning economists George Akerlof and Robert Shiller expand the standard definition of “phishing.” In their usage, it goes beyond committing fraud on the Internet to indicate something older and more general: “getting people to do things that are in the interest of the phisherman” rather than their own. In much the same spirit, we would like to expand the meaning of another recent computer term, “spoofing,” which normally means impersonating someone else’s email name and address to deceive the recipient—a friend or family member of the person whose name is stolen—into doing something no one would do at the behest of a stranger. Spoofing in our usage also means something more general: pretending to represent one discipline or school when actually acting according to the norms of another. Like phishing, spoofing is meant to deceive, and so it is always useful to spot the spoof.

Students who take an English course under the impression they will be taught literature, and wind up being given lessons in politics that a political scientist would scoff at or in sociology that would mystify a sociologist, are being spoofed. Other forms of the humanities—or dehumanities, as we prefer to call them—spoof various scientific disciplines, from computer science to evolutionary biology and neurology. The longer the spoof deceives, the more disillusioned the student will be with what she takes to be the “humanities.” (Morson, Gary Saul. Cents and Sensibility (pp. 1-2). Princeton University Press. Kindle Edition.)

By the same token, when economists pretend to solve problems in ethics, culture, and social values in purely economic terms, they are spoofing other disciplines, although in this case the people most readily deceived are the economists themselves. We will examine various ways in which this happens and how, understandably enough, it earns economists a bad name among those who spot the spoof.

But many do not spot it. Gary Becker won a Nobel Prize largely for extending economics to the furthest reaches of human behavior, and the best-selling Freakonomics series popularizes this approach. What seems to many an economist to be a sincere effort to reach out to other disciplines strikes many practitioners of those fields as nothing short of imperialism, since economists expropriate topics rather than treat existing literatures and methods with the respect they deserve. Too often the economic approach to interdisciplinary work is that other fields have the questions and economics has the answers. (Morson, Gary Saul. Cents and Sensibility (pp. 2-3). Princeton University Press. Kindle Edition.)

As with the dehumanities, these efforts are not valueless. There is, after all, an economic aspect to many activities, including those we don’t usually think of in economic terms. People make choices about many things, and the rational choice model presumed by economists can help us understand how they do so, at least when they behave rationally—and even the worst curmudgeon acknowledges that people are sometimes rational! We have never seen anyone deliberately get into a longer line at a bank. (Morson, Gary Saul. Cents and Sensibility (p. 3). Princeton University Press. Kindle Edition.)

Even regarding ethics, economic models can help in one way, by indicating what is the most efficient allocation of resources. To be sure, one can question the usual economic definition of efficiency—in terms of maximizing the “economic surplus”—and one can question the establishment of goals in purely economic terms, but regardless of which goals one chooses, it pays to choose an efficient way, one that expends the least resources, to reach them. Wasting resources is never a good thing to do, because the resources wasted could have been put to some ethical purpose. The problem is that efficiency does not exhaust ethical questions, and the economic aspect of many problems is not the most important one. By pretending to solve ethical questions, economists wind up spoofing philosophers, theologians, and other ethicists. Economic rationality is indeed part of human nature, but by no means all of it.

For the rest of human nature, we need the humanities (and the humanistic social sciences). In our view, numerous aspects of life are best understood in terms of a dialogue between economics and the humanities—not the spoofs, but real economics and real humanities. (Morson, Gary Saul. Cents and Sensibility (pp. 3-4). Princeton University Press. Kindle Edition.)

Crystal Balls and Econometrics

The growth of economic knowledge over the past 200 years compares quite favourably with the growth of physical science in any arbitrary 200 year stretch of the dark ages or medieval period. But one is reminded of Mark Twain: “it ain’t what people don’t know that’s the problem; it’s what they know that just ain’t so.” Along with the accumulation of knowledge there has been a proliferation of abstract theorizing that is only too easy to misapply or apply to situations where it is inappropriate. The low power of empirical tests and indifference of too many people to empirical testing has allowed useless models to persist too. Ideology also plays a bigger part than it does in most sciences, especially in macroeconomics. So it is easy to point to cases where economists offered terrible advice. No reason to despair. Smith, Marx, Keynes, Kalecki, Simon and Minsky all advanced understanding somewhat while Marshall, Hicks and others clarified and formalized concepts. Macroeconomics took a wrong path and a sharp turn for the worse in the1970s and we are barely emerging now. Still, what is 50 years in the eye of history?

— Gerald Holtham on RWER Blog

The modern forecasting field, which emerged in the early twentieth century, had many points of origin in the previous century: in the field credit rating agencies, in the financial press, and in the blossoming fields of science—including meteorology, thermodynamics, and physics. The possibilities of scientific discovery and invention generated unbounded optimism among Victorian-era Americans. Scientific discoveries of all sorts, from the invention of the internal combustion engine to the insights of Darwin and Freud, seemed to promise a new and illuminating age just out of reach. (Friedman 2014, ix)

But forecasting also had deeper roots in the inherent wish of human beings to find certainty in life by knowing the future: What will I be when I grow up? Where will I live? What kind of work will I do? Will it be fulfilling? Will I marry? What will happen to my parents and other family members? To my country, to my job? To the economy in which I live? Forecasting addresses not just business issues but the deep-seated human wish to divine the future. It is the story of the near universal compulsion to avoid ambiguity and doubt and the refusal of the realities of life to satisfy that impulse. (Friedman 2014, ix)

Economic forecasting arose when it did because while the effort to introduce rationality—in the form of the scientific method—was emerging, the insatiable human longing for predictability persisted in the industrializing economy. Indeed, the early twentieth century saw a curious enlistment of science in a range of efforts to temper the uncertainty of the future. Reform movements, including good, bad, and ugly ones (like labor laws, Prohibition, and eugenics), envisioned a future improved through the application of science. So, too, forecasting attracted a spectrum of visionaries. Here were “seers,” such as the popular prophet Roger Babson, Wall Street entrepreneurs, like John Moody, and genuine academic scientists, such as Irving Fisher of Yale and Charles Jesse Bullock and Warren Persons of Harvard. (Friedman 2014, ix)

Customers of the new forecasting services often took these statistics-based predictions on faith. They wanted forecasts, John Moody noted, not discourses on the methods that produced them. Readers did not seek out detailed information on the accuracy of economic predictions, as long as forecasters proved to be right at least a portion of the time. The desire for any information that would illuminate the future was overwhelming, and subscribers to forecasting newsletters were willing to suspend reasoned judgment to gain comfort. This blend of rationality and anxiety, measurement and intuition, optimism and fear is the broad frame of the story and, not incidentally, why forecasters who were repeatedly proved mistaken, as all ultimately must be given enough time, still commanded attention and fee-paying clients. (Friedman 2014, x)

(….) Forecaster’s reliance on science and statistics as methods for accessing the future aligns their story with conventional narratives of modernity. The German sociologist Max Weber, for instance, argued that a key component of the modern worldview was a marked “disenchantment of the world,” as scientific rationality displaced older, magical, and “irrational” ways of understanding. Indeed, the forecasters … certainly saw themselves as systematic empiricists and logicians who promised to rescue the science of prediction from quacks and psychics. They sought, in the words of historian Jackson Lears, to “stabilize the sorcery of the market.” (Friedman 2014, 5)

The relationship between the forecasting industry and modernity was an ambivalent one, though. On the one hand, the early forecasters helped build key institutions (including Moody’s Investors Service and the National Bureau of Economic Research) and popularize new statistical tools, like leading indicators and indexes of industrial production. On the other hand, though all forecasters dressed their predictions in the garb of rationality (with graphs, numbers, and equations), their predictive accuracy was no more certain than a crystal ball. Moreover, despite efforts of forecasters to distance themselves from astrologers and popular conjurers, the emergence of scientific forecasting went hand in hand with rising popular interest in all manner of prediction. The general public, anxious for insights into an uncertain future, consumed forecasts indiscriminately. (Friedman 2014, 5)

Sack the Economists

And Disband the Departments of The Walking Dead

In 1994 Paul Ormerod published a book called The Death of Economics. He argued economists don’t know what they’re talking about. In 2001 Steve Keen published a book called Debunking Economics: the naked emperor of the social sciences, with a second edition in 2011 subtitled The naked emperor dethroned?. Keen also argued economists don’t know what they’re talking about. (Davies 2015, 1)

Neither of these books, nor quite a few others, has had the desired effect. Mainstream economics has sailed serenely on its way, declaiming, advising, berating, sternly lecturing, deciding, teaching, pontificating. Meanwhile half of Europe and many regions and groups in the United States are in depression, and fascism is making a comeback. The last big depression spawned Hitler. This one is promoting Golden Dawn in Greece and similar extremist movements elsewhere. In the anglophone world a fundamentalist right-wing ideology is enforcing an increasingly narrow political correctness centred on “free” markets and the right of the rich to do and say whatever they like. “Freedom”, but only for some, and without responsibility. (Davies 2015, 1-2)

Evidently Ormerod and Keen were too subtle. It’s true their books also get a bit technical at times, especially Keen’s, but then they were addressing the profession, trying to bring it to its senses, to reform it from the inside. That seems to have been their other mistake. They produced example after example of how mainstream ideas fail, but still they had no effect. I think the message was addressed to the wrong audience, and was just too subtle. Economics is naked and dead, but never mind the stink, just prop up the corpse and carry on. (Davies 2015, 2)

Oh, but look! The corpse is moving. It’s getting up and walking. Time to call in John Quiggin, author of Zombie Economics: how dead ideas still walk among us. Perhaps he’ll show us how to shoot it in the head, or whatever it takes to finally stop a zombie. (Davies 2015, 2)

Well, I think it’s clear we can’t be too subtle. We need to speak in plain English, to everyone, and get straight to the point. Economists don’t know what they’re talking about. We should remove economists from positions of power and influence. Get them out of treasuries, central banks, media, universities, where ever they spread their baleful ignorance. (Davies 2015, 2)

Economists don’t know how businesses work, they don’t know how financial markets work, they can’t begin to do elementary accounting, they don’t know where money comes from nor how banks work, they think private debt has no effect on the economy, their favourite theory is a laughably irrelevant abstraction and they never learnt that mathematics on its own is not science. They ignore well-known evidence that clearly contradicts their theories. (Davies 2015, 2-3)

Other academics should look into this discipline called economics that lurks in their midst. Practitioners of proper academic rigour, like historians, ecologists, physicists, psychologists, systems scientists, engineers, even lawyers, will be shocked. Academic economics is an incoherent grab bag of mathematical abstraction, assertion, failure to heed observations, misrepresentation of history and sources, rationalisation of archaic money-lending practices, and wishful thinking. It missed the computational boat that liberated other fields from old analytical mathematics and overly-restrictive assumptions. It is ignorant of major fields of modern knowledge in biology, ecology, psychology, anthropology, physics and systems science. (Davies 2015, 3)

Though many economists themselves may not realise it, economics is an ideology rationalised by a dog’s breakfast of superficial arguments and defended by dense thickets of jargon and arcane mathematics. The ideology is an old one: the rich and powerful know best, the rest of us are here to serve them. (Davies 2015, 3)

Origin of Animal Body Plans

Whether you can observe a thing or not depends on the theory which you use. It is the theory which decides what can be observed.

— Albert Einstein, 1926

[Gold reminds us we must not forget] … the striking reformation of evolutionary theory implied by the well-documented genetic and developmental homologies alone. De Robertis expresses this key argument in the final line of his 1997 article on the ancestry of segmentation: “The realization that all Bilateria are derived from a complex ancestor represents a major change in evolutionary thinking, suggesting that the constraints imposed by the previous history of species played a greater role in the outcome of animal evolution than anyone would have predicted until recently.” (Gould 2002: 1152) [De Robertis, E.M. 1997. The ancestory of segmentation. Nature 387: 25-26. See also, De Robertis, E.M., G. Oliver, and C.V.E. Wright. 1990. Homeobox genes and the vertebrate body plan. Scientific American, July, pp. 46-52; De Robertis, E.M., and Y. Sasai. 1996. A common plan for dorsoventral patterning in Bilateria. Nature 380: 37-40.]

(….) Hughes (2000, p. 65) has expressed this cardinal discovery of evo-devo in phyletic and paleontological terms: “It is hard to escape the suspicion that what we witness in the Cambrian is mainly tinkering with developmental systems already firmly established by the time these Cambrian beasts showed up.” (Gould 2002: 1155) [Hughes, N.C. 2000. The rocky road to Mendel’s play. Evol. and Develop. 2: 63-66.]

Gould, Stephen J. The Structure of Evolutionary Theory. Cambridge: Harvard University Press; 2002; p. 1152; 1155.

As it turns out, the miracle of complex life is more amazing, yet ironically simpler, than anyone ever expected. Researchers now know that life’s building materials are few, and they were “invented” near the dawn of animals. More specifically, a surprisingly small number of genes—”tool kit genes”—are the primary components for building all animals, and these genes emerged at a time before the Cambrian Explosion, some 600 million years ago. Thus the amazing diversity of the animal kingdom is the result of the flexibility of a small number of building blocks that have existed for eons.

This means, for example, that the gene that controls the formation of an arm on a human is the same gene that controls the formation of a wing on a bird, a fin on a fish, and a leg on a centipede, and that this gene has been around since the first animals grew the first appendage of any kind. Some prominent scientists have argued that if we could rewind the tape of life and start over again, the result would be a totally different world from that which exists today. They are wrong. Tool kit genes conserve the essence of animals, and they react to ecological cues in very consistent ways [emphasis added].

Carroll, Sean B. Endless Forms Most Beautiful: The New Science of Evo Devo. New York: Norton; 2005: Inside Dustjacket.

We now need to confront the question of whether the biological community or at least the large proportion of it has come to accept a theory of evolution that is based on a broadly parallel error. Our case studies on the action of natural selection all involve microevolutionary changes occurring within particular lineages hundreds of millions of years after the origin of the major body plans of which the species concerned represent variations. Many of these case-studies are well known, especially the evolution of industrial melanism in Biston (Bishop and Cook 1980), the evolution of pigmentation patterns in Cepaea (Jones, Leith and Rawlings 1977) and the evolution of Batesian mimicry in several lepidopterans (Turner 1977). Many paleontological case studies are also restricted to particular lineages, with studies on the horse (Simpson 1951; MacFadden 1992) and the mollusks of Lake Turkana (Williamson 1981) being among the best known. While such studies are usually transspecific, and therefore in the realm of ‘macroevolution’, they are only a very short distance in that direction from an origin-of-body-plans perspective. (Simpson (1944) used the term ‘mega-evolution’ for the biggest-scale evolutionary events such as body plan origins, but this term has not become widely adopted.)

So, this book is starting with an exhortation to the reader to believe that current evolutionary theory, based on natural selection and adaptation in present-day lineages is, at the very least, incomplete; and this exhortation is based on the drawing of a parallel between the processes of development and evolution. (Arthur 1997: 2-3)

(….) Regardless of timing of early [Cambrian] divergences, it appears that no phylum-level body plans have arisen in the animal kingdom in the last 500 my. This contrasts with the situation in plants, where teh angiosperm body plan arose relatively recently (probably about 130 my ago: see Hickey and Doyle 1977; Crane, Friis and Pederson 1995). Perhaps this difference relates to a difference in developmental-genetic control mechanisms in the two kingdoms, with some genes controlling the determination of animal body axes and other key processes of early ontogeny being more ‘generatively entrenched’ (Wimsatt 1986) than their nearest equivalents in plants. (Arthur 1997: 7)

(….) [O]ur current (neo-Darwinian) theory of evolution is incomplete…. In fact, neo-Darwinian theory is incomplete even when assessed against its own criteria. The essence of the neo-Darwinian view is that the evolutionary process is of a two-fold nature, involving the production of organismic novelties (of whatever sort) ultimately by mutation and the sieving of these by natural selection. (Arthur 1997: 9)

(….) The main problem with neo-Darwinism in its current form is that its theoretical structure is extremely lopsided. There has been sustained development of quantitative models of the action of selection, from the pioneering work of Fisher (1930), Haldane (1932) and Wright (1931) up to recent work such as that of Charlesworth (1994); while the mutational and developmental production of the variants being sieved by selection has continued to be treated by too many evolutionists as a ‘black box’, despite the numerous advances that have been made in developmental genetics in recent years. Essentially, the individual and population levels have been treated as quasi-independent. The fitness of mutant genotypes have been considered to be crucially important in models of selection, while the ways in which fitness effects are produced … have been largely disregarded. (Arthur 1997: 9-10)

This situation should of course be considered undesirable by all evolutionary biologists, including the strictest of neo-Darwinians, but how serious a problem the lack of a mutational/developmental component of evolutionary theory is perceived to be depends on the extent to which the ‘perceiver’ is a gradualist. If, despite the views put forward herein, all evolution proceeds through the accumulation of very minor variations — an extreme view popularized by Dawkins (1986) — then it may not be too much of a deficiency in the theory to simply assume that mutation perpetually generates morphologies that are slight variants on the existing form. But to anyone proposing the existence of one or more radical morphogenetic phases in evolution, the need for an adequate picture of the genetic architecture of development and of the ways in which this is altered by mutation becomes compelling. Hence the feelings of dissatisfaction that many evolutionary developmental biologists have with neo-Darwinism. There is nothing wrong with elaborate models of selection, but a detailed quantitative statement of how existing types are sorted and selectively eliminated (or held in a state of stable equilibrium) cannot pretend to be a complete theory. (Arthur 1997: 10)

Ironically, most of the alternative approaches to evolution that have proliferated in the last few decades have allowed the focus on destructive rather than creative forces to persist. The neutral theory of molecular evolution (Kimura 1983) — arguably within a broad neo-Darwinian world view — concentrates on the stochastic loss of neutral and nearly neutral alleles produced in an unspecified way by mutation. Punctuated equilibrium (Eldredge and Gould 1972) is a pattern, not a process, and may simply be a geological reflection of the standard neo-Darwinian mechanism of allopatric speciation, although some authors (e.g. Williamson 1981) have suggested otherwise…. (Arthur 1997: 10)

(….) The only approach [as of 1997, at the time of this writing] to evolution that has attempted to focus on creative forces has been that of Evolutionary Developmental Biology. I use this label (… Hall 1992) to cover the work of a heterogeneous group of biologists including, among others, von Baer (1828), Thompson (1917), de Beer (1930), Goldschmidt (1940), Waddington (1957), Gould (1977b [2002]), Raff and Kaufman (1983), Buss (1987), Arthur (1988), Thomson (1988) and Raff (1996). (Arthur 1997: 11)