Callahan, ‘Economics and its Modes’ (1)

[Part one of a two three part commentary on Gene Callahan (2008), ‘Economics and its Modes’, Collingwood and British Idealism Studies, 14 (2), pp.128-57; part two is here, part three (in effect) here.  An article that has a title alluding to Oakeshott’s Experience and its Modes and an abstract that echoes the rhetoric of Collingwood’s early-ish article ‘Economics as a Philosophical Science’ – post bait to this blog or what?]

In this article, Callahan seeks to apply Oakeshott’s concept of ‘modes’ and ‘idioms’ to the problem of methodological diversity within economics, arguing for methodological pluralism to the extent of denying there to be one true economic methodology, but methodological monism to the extent that each methodology is considered to be appropriate to its own particular way of looking at economic phenomena.  In the present post I will offer a summary and (at times) constructive interpretation of Callahan’s argument; in the sequel, I will investigate it more critically.

So, the article begins by Callahan appealing to Schumpeter and other authorities for the idea that economics as a profession is riven by methodological divisions that it is unreasonable to expect will be done away with any time soon.  Asserting the concept of modality to be a plausible way of understanding matters, Callahan then provides a brief potted history of it from Descartes to Oakeshott through Kant, reading Oakeshott as a result according to the dominant ‘neo-Kantian’ interpretation of his metaphysics and epistemology.*

With respect to reporting what Oakeshott had to say on the matter, Callahan notes both the talk in Experience and its Modes of ‘modes’ of understanding and the talk in On Human Conduct of ‘orders’ and ‘idioms’ of (theoretical) inquiry.  In short, Oakeshott in the later book reformulates the earlier one’s distinction between the ‘modes’ of history and science as a distinction between two categorially distinct ‘orders’ of inquiry, the various human sciences then being construed as distinct ‘idioms’ premised upon the order of inquiry that postulates intelligence, and the various natural sciences (including, for Oakeshott, psychology) being construed as distinct ‘idioms’ premised upon the order of inquiry that postulates non-intelligent processes.  Callahan, then, seeks to apply this scheme to within a certain discipline, namely economics.

To that effect, Callahan’s first move is to gloss what Oakeshott himself explicitly said by appealing to various authorities in support of it; for example, Donald Davidson and his argument for the irreducibility of mental to physical descriptions is invoked to establish the reasonableness of Oakeshott’s claim for a categorial distinction between the two ‘orders’ of inquiry.  Perhaps slightly diverging from Oakeshott in emphasis if not substance though, Callahan quickly comes to concentrate as much upon the idea of ‘idioms’ of inquiry as he does ‘orders’.  Indeed, he seems to find the distinction quite important, making the rather strong-sounding claim that the concept of idioms allows a person to surmount Kuhn’s thesis (or apparent thesis) that paradigmatic change in science is essentially ‘irrational’ (p.137).**

Strong though this claim is, I have to say I find Callahan’s argument for it a bit weak though.  For, while he wants to say it is possible for the ideas and results of one idiom to be ‘translated’ into another, he doesn’t really show how it is so.  Instead, all he argues is that translation simply must be possible if genuinely cross-disciplinary research is to exist.  While true enough, this rather begs the question of whether such research actually does exist.  That is to say, perhaps all previous attempts at cross-disciplinary work have either simply failed, or ended up crossing wholly into the one mode, leaving behind the insights of the second discipline?  If so though, then Callahan’s claim for the necessity of translation becomes moot, constituting a transcendental argument about a castle in the air rather than any actual phenomenon.

On one level, I think the reference to Kuhn has only obscured matters, since while Kuhn’s problematic was to understand major presuppositional differences within a certain discipline over time, Callahan’s is to understand major presuppositional differences within a certain discipline in the present.  Nevertheless, an (albeit brief) reference Callahan makes to Collingwood’s An Essay on Metaphysics might suggest the following line of thought: where the postulates of an order of inquiry are ‘absolute’ presuppositions in Collingwoodian terms, and thus, not rationally debatable, those unique to a particular idiom (be this ‘idiom’ a certain paradigmatic phase in the history of a science or a certain methodological perspective in the present) are merely ‘relative’ presuppositions.  Assuming disputants argue within the same order of inquiry, then, it is logically possible that ideas and results of one idiom may be ‘translated’ into those of another, the shared absolute presuppositions acting as the necessary ‘bridgehead’.  Nevertheless, this line of thinking is only speculation on my part – Callahan himself may have something else in mind.

Moving on to economics specifically, Callahan then sets up a distinction between two distinct idioms or ‘modes’ of economics, namely ‘logical’ and ‘mathematical’ economics; later on, macroeconomics is added as a third idiom.  Basically, by ‘logical’ economics Callahan means Austrian economics and philosophies of action that (in Callahan’s not unreasonable view) share the problematic of Misesian ‘praxeology’; under the rubric of mathematical economics, in contrast, comes neo-classical theory and modelling.  Callahan illustrates the distinction with the following example:

For instance, the logical school attempts to illuminate how an actor’s efforts to improve her perceived circumstances as much as she is able to do, when occurring within a social context including several property, will result in prices for economic (scarce) goods. On the other hand, a neoclassical explanation, which will have at its core a mathematical model, will try to demonstrate why, under certain conditions that are taken as true by initial assumptions, a particular price will arise when some particular quantity of a good is brought to market (p.142; orig. emph.).

As for macroeconomics, under that label comes what is ordinarily called macroeconomics (strangely enough).  Callahan understands this mode as a relatively sociological one*** with practical aims, its practitioners seeking to provide knowledge useful to governmental actors.  With this characterisation, Callahan is possibly making tacit appeal to Oakeshott’s modal distinction between theory and practice, though he does not make this explicit and nothing immediately seems to hinge on it.

Anyhow, with his key distinctions made, Callahan’s next step is to both rebut the standard objection to neo-classical economists made by non-economists (namely, that they use unrealistic conceptions of both the person and social life) whilst still finding a kernel of truth in it, namely that neo-classical theorists frequently slip into writing as if their models were not merely ideal types, but accurate depictions of ‘the world of real human action’ (p.145).  The latter point Callahan glosses with the idea that when neo-classicals do make this slip, they should be understood as having come to employ the presuppositions of the logical idiom of economics in an incoherent fashion, and in particular, to employ the category of action and so the presupposition of individual choice.  That this is incoherent of them is because, in short,

A system of equations can neither exhibit intelligence nor make choices, and so any proposed explanation of its operation based on such concepts exhibits a categorical confusion (p.143).

Now at this point in his argument, and notwithstanding his earlier talk of the possibility of ‘translation’ between idioms, one might well be thinking that Callahan believes any two theoretical claims made in different modes of economics are by definition incommensurable.  This is not the case however.

In his own words, Callahan’s position here is that ‘the rigorous models formulated by mathematical economists can beneficially be used as foils to clarify and check the sort of reasoning that characterizes logical economics’ (p.145f).  In defence of this claim, Callahan quotes Mises to the effect that while even logical economists cannot do without the ideas of (for example) rest and equilibrium, they must be always be conscious of the ‘purely instrumental’ nature’ of such ideas (p.146).  In what way is it even logically possible for the ideal types of mathematical economics to ‘clarify’ and ‘check’ the work of the logical economist however?  After all, if they fail to presuppose the category of action (as they must, since this is not a category of mathematical economics itself), then surely they are of the order of inquiry that postulates not intelligence, but non-intelligent processes, and thus, are as irrelevant to logical economics as Oakeshott claimed the theories of biology or psychology are to ethics and even history?

While Callahan runs though his answer to this question a bit more quickly than one may have liked, his argument here is that a neo-classical model may become relevant to an Austrian economist once ‘translated’ as a logical end state of a tendency.  Given economic tendencies in real life will be permeated by the inherent contingency brought about by the fact of individual agency, the end should further be considered empirically impossible, or at least, extremely unlikely to ever come to fruition.

Now it is important to note, I think, that Callahan does not go on to argue that the results of logical economics may become relevant to mathematical economics – that is to say, he implies that the ‘translatability’ of the different ‘modes’ of economics only goes one way, viz., into the mode of logical economics.  Nevertheless, even the translatability he does allow for makes Callahan something of a ‘revisionist’ Oakeshottian.  For, what is being crossed in such ‘translation’ is not merely different idioms, but different orders (Callahan obscures this by using the term ‘modes’ to denote both orders and idioms, despite how it really only maps onto the former) – and that is unambiguously ruled out by Oakeshott himself, rightly or wrongly.****

More constructively, what Callahan is actually rather close to, in my view, is the Collingwood of the 1920s.  There are two parts to this.  So, in the first instance, where in Experience and its Modes Oakeshott claims that the different ‘modes’ of experience are all equally ‘abstract’ in their own ways, and thus, equally defective in their understanding of concrete reality, in Speculum Mentis Collingwood seeks to argue that the different ‘forms’ of experience he discusses (of art, religion, science, history and philosophy) are progressively less ‘abstract’, and thus, progressively less defective in their conception of reality, the standpoint of religion making for an immanent critique of the standpoint of art, the standpoint of science making for an immanent critique of the standpoint of religion, and so on.

By analogy, Callahan explicitly portrays logical economics as having a grasp on what economic reality actually looks like that mathematical economics, in its inherent abstraction, does not; and moreover, where the standpoint of logical economics for him provides for a secure immanent critique of mathematical economics, the standpoint of mathematical economics does not provide for a secure immanent critique of logical economics.  Similarly, where the Collingwood of the 1920s claims sociology and anthropology to be pseudo-naturalistic handmaidens to history, elucidating ‘hypothetical entities’ that serve a heuristic function for the historian, so Callahan argues likewise with respect to the relation of mathematical and macro economics to logical economics.

In sum then, while Callahan in the article under review does not ultimately make for a very good Oakeshottian, his Collingwoodian bona fides hold up rather well – whether he himself would prefer matters to be the other way round or not!

Notes

* This interpretation has been advocated in particular by Efraim Podoksik; for objections however, see Stephen Turner’s ‘Tradition and Cognitive Science: Oakeshott’s Undoing of the Kantian Mind’ (2003) and ‘The English Heidegger’ (2005).

** Callahan characterises the Kuhnian view as holding the choice of paradigms to be ‘irrational’ in being ‘based solely on political power, social structures, fads in thought, or any of the other, non-rational factors by which it has been said such issues are resolved’ (p.137).  This appeal to the stereotype of sociological accounts of scientific change being irrationalist ones is unfortunate I think.  For, and connected to this, an explanation that appeals to the pull of reasons external to the scientific problem in itself may still involve an appeal to reasons ‘internal’ to the agent as a concrete agent (a scientist is never just a scientist!), and thus, may still be a ‘rational’ explanation, explicable in the Collingwoodian terms of a casua quod (the agent’s belief that something is such) and causa ut (the agent having a certain purpose or end in view) rationalising a certain deed.

*** Well, his brief characterisation of macroeconomics as actually practiced (p.147) recalls to me the boilerplate textbook description of Durkheim’s ‘positivism’.

**** Oddly enough, in the final section of his article Callahan returns to Oakeshottian orthodoxy for the sake of arguing against Vernon Smith’s claim that many of Mises’ praxeological insights have been falsified by recent neuroscience.