Automation and Future Unemployment

The impact of cheaper and more sophisticated forms of automation has recently been examined in this report by two researchers from Oxford University’s Programme on the Impacts of Future Technology:

Carl Benedikt Frey and Michael A. Osborne, “The Future of Employment: How Susceptible are Jobs to Computerisation?,” September 17, 2013.

Some summaries of the report can be read here:

Josh Lieberman, “Half Of U.S. Jobs Are At Risk Of Computerization: Which 10 Are The Least Safe?,” Isciencetimes.com, September 25, 2013.

Mark Hoffman, “Study: Half of All US Jobs Could Be at Risk of Computerisation,” Scienceworldreport.com, September 27, 2013.

“Nearly half of US jobs could be at risk of computerization, Oxford Martin School study shows,” September 19, 2013

Richard Eskow, “The Robots Are Coming – Now What?,” September 26, 2013.

Michael Snyder, “Oxford Professors: Robots And Computers Could Take Half Our Jobs Within The Next 20 Years,” September 29, 2013.

Their main conclusion is that 47% of US jobs might be lost owing to automation in twenty years, with similar trends in many other nations.

Also, they conclude:

“Our model predicts that most workers in transportation and logistics occupations, together with the bulk of office and administrative support workers, and labour in production occupations, are at risk. These findings are consistent with recent technological developments documented in the literature. More surprisingly, we find that a substantial share of employment in service occupations where most US job growth has occurred over the past decades …, are highly susceptible to computerisation. Additional support for this finding is provided by the recent growth in the market for service robots ... and the gradually diminishment of the comparative advantage of human labour in tasks involving mobility and dexterity.”
Carl Benedikt Frey and Michael A. Osborne, “The Future of Employment: How Susceptible are Jobs to Computerisation?,” September 17, 2013. pp. 43–44.

And also of interest was this part of the paper:

“Our paper is motivated by John Maynard Keynes’s frequently cited prediction of widespread technological unemployment ‘due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour’ (Keynes, 1933, p. 3). Indeed, over the past decades, computers have substituted for a number of jobs, including the functions of bookkeepers, cashiers and telephone operators … . More recently, the poor performance of labour markets across advanced economies has intensified the debate about technological unemployment among economists. While there is ongoing disagreement about the driving forces behind the persistently high unemployment rates, a number of scholars have pointed at computercontrolled equipment as a possible explanation for recent jobless growth.”
Carl Benedikt Frey and Michael A. Osborne, “The Future of Employment: How Susceptible are Jobs to Computerisation?,” September 17, 2013. pp. 43–44.

While it is absurd to deny that the surge in unemployment across the Western world since 2008 has been fundamentally caused by the aggregate demand shocks stemming from the Great Recession, nevertheless there would appear to be underlying structural unemployment problems caused by automation as well.

Market economies have no tendency to full employment equilibrium, and there is no necessary reason to think that the issue of structural unemployment will be solved by magic market solutions.

And there are also other issues: with the fall in prices and factor input costs, possible commodity deflation could put downward pressure on wages in other industries, which means debt deflationary problems as goods prices, wages, nominal debt and asset prices are grossly distorted in relation to one another.

The solution to these problems is: full employment macroeconomic policies, maintaining of a basic level of income for all (especially the unemployed), and policies to detect and deal with debt deflation.


BIBLIOGRAPHY
Keynes, J. M. 1933 [1930]. “Economic Possibilities for our Grandchildren,” in John Maynard Keynes, Essays in Persuasion. Macmillan, London. 358–373.

Frey, Carl Benedikt and Michael A. Osborne, “The Future of Employment: How Susceptible are Jobs to Computerisation?,” September 17, 2013.

Robert Murphy Should have Read his Mises

Robert Murphy attacks Obamacare and implies that the US is headed for nationalised healthcare system, but then states:

“Ludwig von Mises argued that the “mixed economy” was an unstable system, because each new government intervention would lead to undesirable consequences that would then invite further interventions.”
Robert Murphy, “ObamaCare Is Just a Stepping Stone to Nationalized Health Care,” Free Advice, 26 September.

Yet, in Human Action: A Treatise on Economics. The Scholar's Edition, Mises explicitly denies there is any such thing as a “mixed economy,” in a remarkable passage:

“The market economy must be strictly differentiated from the second thinkable—although not realizable—system of social cooperation under the division of labor: the system of social or governmental ownership of the means of production. This second system is commonly called socialism, communism, planned economy, or state capitalism. The market economy or capitalism, as it is usually called, and the socialist economy preclude one another. There is no mixture of the two systems possible or thinkable; there is no such thing as a mixed economy, a system that would be in part capitalistic and in part socialist. Production is directed by the market or by the decrees of a production tsar or a committee of production tsars.

If within a society based on private ownership by the means of production some of these means are publicly owned and operated—that is, owned and operated by the government or one of its agencies—this does not make for a mixed system which would combine socialism and capitalism. The fact that the state or municipalities own and operate some plants does not alter the characteristic features of the market economy. These publicly owned and operated enterprises are subject to the sovereignty of the market. They must fit themselves, as buyers of raw materials, equipment, and labor, and as sellers of goods and services, into the scheme of the market economy. They are subject to the laws of the market and thereby depend on the consumers who may or may not patronize them. They must strive for profits or, at least, to avoid losses. The government may cover losses of its plants or shops by drawing on public funds. But this neither eliminates nor mitigates the supremacy of the market; it merely shifts it to another sector. For the means for covering the losses must be raised by the imposition of taxes. But this taxation has its effects on the market and influences the economic structure according to the laws of the market. It is the operation of the market, and not the government collecting the taxes, that decides upon whom the incidence of the taxes falls and how they affect production and consumption. Thus the market, not a government bureau, determines the working of these publicly operated enterprises.

Nothing that is in any way connected with the operation of a market is in the praxeological or economic sense to be called socialism. The notion of socialism as conceived and defined by all socialists implies the absence of a market for factors of production and of prices of such factors.” (Mises 2008: 259–260).

According to the logic of this passage, a nationalised healthcare system would not even cause the US to have a “mixed economy” or cease to have a market economy, even if it were a non-profit system and subsidised from taxes.

Of course, maybe Murphy was thinking of Mises’s theory of the “hampered market economy” (Mises 2008: 712–857). Here Mises says that certain oppressive types of taxation, restriction of production, price distortions (such as price controls or minimum wage laws), central banking and credit expansion, confiscation and redistribution of income and total war hamper the market economy.

But even in these chapters Mises is often vague in the details: for example, Mises says that government taxes are appropriate when they take a “modest” amount of people’s income, but when they “grow beyond a moderate limit, they cease to be taxes and turn into devices for the destruction of the market economy” (Mises 2008: 733–734). But at what level of taxes does the transition occur?

In reality, the “hampered market” section of Human Action is one of the most incoherent and stupid set of arguments Mises ever made.

The overwhelming proof of this was given to us in the remarkable success of command economies in the West during both World War I and World War II. In these wars, Western nations like the UK, the US, Canada, Australia and New Zealand had moderate command economies with massive government planning of production, price controls, high taxes, and even monetisation of budget deficits. According to the logic of Mises, all Western command economies should have quickly simply descended into utter chaos and collapsed in WWI or WWII. The allied governments should have been incapable of planning production and winning the war. Needless to say, Mises’s theory of the “hampered market economy” and its inevitable collapse is totally and completely refuted by history. (And, notably, even the losing sides such as Germany and Japan had considerable success with command economies during the time when they had early military victories and access to resources.)

Yet, according to Mises, even moderate interventions that create a “hampered market” outside of wartime are unstable and will lead to chaos from which either socialism or capitalism will emerge. Mises’s whole theory sounds like a libertarian version of vulgar Marxism, where history is governed by “iron laws” and “historical necessity,” and in which historical contingency is thrown to the wind.

But history also shows us many examples in peacetime of what Mises called “hampered market” economies that never descended into totalitarian socialism and chaos, and either were stable (e.g., the UK in the 19th century even thought it had a central bank and credit expansion, post-WWII mixed economies, the high interventionists states of South Korea, Taiwan, Singapore, etc.) or even changed in ways that made them more laissez faire (e.g., the transition from mercantilist economies to those with free trade, the transition from mixed economies of the 1940s-1970s to neoliberalism).

And, above all, we can only notice how Mises’s comments in original passage above denying that there is any such thing as a “mixed economy” bizarrely contradict his comments on the “hampered market” economy.

How is it that nationalised industries run for profit or subsidised with taxes do “alter the characteristic features of the market economy,” but other interventions lead inevitably to socialism or chaos?

BIBLIOGRAPHY
Mises, L. 2008. Human Action: A Treatise on Economics. The Scholar's Edition. Mises Institute, Auburn, Ala.

Wicksell’s Natural Rate and Homogenous Capital

Colin Rogers points out an interesting assumption of Wicksell’s natural rate.

The concept of capital can be divided into two ideas:

(1) real capital, or the physical goods themselves, e.g., machines, tools, or raw materials, or
(2) capital defined in terms of a sum of exchange value (or in monetary terms). (Rogers 1989: 27).

Real capital in sense (1) can be measured in technical units, but that would mean that there would be as many technical units as there are types of capital goods (Rogers 1989: 28).

But in order to calculate the rate of interest (the return on capital), capital has to be measured in monetary terms.

Rogers continues:

“Apart from pointing out the technical necessity of defining capital in value terms, Wicksell also suggests that it is necessary for theoretical reasons; namely, that in equilibrium the rate of interest must be the same on all capital. This condition is, of course, the classical condition of long-period equilibrium defined in terms of a uniform rate of return on all assets. It is the notion of equilibrium employed by Wicksell to define the natural rate of interest. To define such an equilibrium, however, capital must be treated as a mobile homogeneous entity so that it may move between sectors to equalize the rate of interest/profit. Capital defined as value capital (financial capital) can fulfil this role but capital defined in technical or quantity terms cannot.” (Rogers 1989: 28).

It well known that Wicksell’s unique “natural rate of interest” was taken over by Mises and Hayek in their early formulations of the Austrian business cycle theory. In essence, the classic Austrian business cycle theory borrowed the “real” natural rate idea from Wicksell that required an assumption of homogeneous capital: something that modern Austrians are at pains to deny, since they accept (as Post Keynesians do) that capital is heterogeneous.

This is serious problem for Austrians. Austrians use a concept – the Wicksellian natural rate of interest – that is incompatible with their heterogeneous capital theory.

BIBLIOGRAPHY
Rogers, C. 1989. Money, Interest and Capital: A Study in the Foundations of Monetary Theory. Cambridge University Press, Cambridge.

An Observation on Deduction

Consider the following syllogism:

Major Premise: All elephants are grey.

Minor Premise: Nellie is an elephant.

Conclusion: Therefore Nellie is grey.

This is a formally valid syllogism, but it is unsound. The reason why it is unsound is that the major premise is false: while most elephants are grey, some albino elephants exist. If Nellie were a real life elephant that we have never seen before, there is the possibility that Nellie is an albino elephant, and not grey.

But how do we interpret the epistemological status of major premise?:

All elephants are grey.

If this is meant to assert information about the real world (that is, real world elephants), it must be synthetic a posteriori. We can establish its truth by experience, empirical evidence and inductive arguments.

In this case, as we saw, it is false, because albino elephants exist, and it is also logically possible, though improbable, that a genetic mutation might occur which makes an elephant some colour other than grey or white.

Nevertheless, one could also take “all elephants are grey” as an analytic a priori proposition. We can assert it as true, but only as an empty and hypothetical statement where elephants are arbitrarily defined as having the property “grey.” In this case, we do not care about real world elephants, because they are irrelevant to a purely tautologous proposition we have devised that asserts something merely as an imaginary definition, true by stipulation.

One could even claim that asserted of purely imaginary elephants that are grey by definition, even the conclusion is true, and the argument has necessary a priori truth in our imaginary world of purely grey elephants.

But, of course, what has happened is that we have rendered all the propositions and the whole argument vacuous, empty and tautologous, so that it says nothing necessary of the real world. The propositions and inference would be all true by arbitrary definition of terms, and necessary truth is a purely verbal construct.

And once applied to real world elephants, it all collapses and empirically we know the argument is unsound.

But we can even apply a similar type of analysis to a syllogism that is both valid and sound:

Major premise: All humans are mortal.

Minor premise: Socrates is a human.

Conclusion: Socrates is mortal.

Here both the major and minor premises are synthetic a posteriori and true in the sense that we can construct a set of inductive arguments, from empirical evidence, to the effect that it is extremely probable that all human beings are mortal, and it is extremely probable that the historical person we know as Socrates was human.

The conclusion is necessarily true, but only if the premises are true.

But, when the conclusion is applied to the historical person we know as Socrates as a synthetic a posteriori statement about him, the necessary, apodictic truth is not preserved. Why? The reason is that both the major and minor premises are synthetic a posteriori, and can only ever be highly probable but still fallible.

In order to question the truth of the premises, we have to think of some possibilities that are ridiculous or highly improbable, but nevertheless they are logically possible. Suppose it is possible for a genetic mutation to make a human being immortal in the sense of living without aging. Say Socrates was such a person. Say, his death was staged and he still lives to this day.

Suppose, as an even more outlandish idea, that Socrates was secretly visited by aliens or humans from the far future. Using science, they made him immortal and his death was only staged, so that he still lives.

Of course, these are all either outrageous or extremely unlikely possibilities, but the fact remains that synthetic a posteriori propositions can never be apodictically true: some doubt must remain.

When the syllogism above asserts that “Socrates is mortal” as its conclusion, one can speak of this truth as necessary, only if the premises are taken to be absolutely true.

But, just as in the first case above, we can see how this creates a necessary truth that is ultimately a logical construct (or de dicto necessity) because it banishes all doubt about the truth of the empirical premises and renders them analytic a priori.

Of course, these days, after the work of Putnam and Kripke, analytic philosophers are willing to recognise the existence of certain metaphysical (or de re) necessities, such as (1) identity statements involving proper names or definite descriptions and (2) scientific essences of certain natural kind phenomena, but I do not think this is inconsistent with my comments above on deduction.

Robert Skidelsky on Capitalism, Government and the Good Society

Though the talks and discussion afterwards involve many people, Robert Skidelsky gives his opinions from 21.50. This was a Liberty Fund event at Butler University on April 10, 2013 (not long after the death of Margaret Thatcher).

Steve Keen on the Law of Demand

In the last post, I raised the question whether the “law of demand” is (1) an analytic a priori or (2) synthetic a posteriori statement.

The conclusion that, to assert anything of the real world, it must be considered a synthetic a posteriori statement is a straightforward and logical requirement.

Nevertheless, how is the law of demand “proved” in neoclassical economics?

I review what Steve Keen says in Chapter 3 of Debunking Economics: The Naked Emperor Dethroned? (rev. edn. 2011). pp. 38–73.

The whole point of the law of demand is that the ceteris paribus assumption entails that all other factors except price are held constant: incomes, prices of other goods, fashions, expectations, information, preferences/tastes, population, the weather, etc.

A crucial question arises about the changes in income. Is this nominal income or real income? As Keen notes, a fall in the price of any one good increases real income and the ability to buy other goods (Keen 2011: 47). The important concepts here are the “income effect” and “substitution effect.”

The “substitution effect” is the substitution of one good for another that arises from changes in their relative prices but where the total utility of consumers is left constant (that is, if there were a compensating transfer of income). This is supposed to isolate the impact of a change in relative prices from the income effect. When a good’s price falls, demand for it increases partly because it is cheaper relative to other goods for which it is a substitute. Along with the income effect, this is supposed to explain why demand curves are downward sloping.

Keen explains:

“The always negative substitution effect is the phenomenon economists are trying to isolate with the demand curve, to establish what they call the ‘Law of Demand’ – that demand always increases when price falls. This ‘law’ is an essential element of the neoclassical model of how prices are set, which says that in competitive markets, supply will equal demand at the equilibrium price. For this model to work, it’s vital that there is only one price at which that happens, so it’s vital for the model that demand always increases as price falls (and similarly that supply always rises as price rises).

However the income effect can get in the way.

Economists thus found it necessary to search for a way to divide the impact of any change in price into the income effect and the substitution effect. If the income effect could be subtracted from a price change, this would leave the substitution effect as the pure impact on consumption of a change in relative prices. The problem is, though, that neither the ‘income effect’ nor the ‘substitution effect’ is directly observable: all we actually see is a consumer’s purchases changing as the price of a commodity changes.

Economists dreamt up a way of at least notionally subtracting the income effect from a price change, using indifference curves. The clue is that, with income fixed and price falling, the lower price lets a consumer enjoy a higher effective standard of living – which in their model was manifested by the consumer reaching a higher indifference curve.

Since, to an economist, the real object of individual behavior is utility maximization, and since any point on a single indifference curve generates the same utility as any other point, then in utility terms the consumer’s ‘psychic income’ is constant along this curve.

The substitution effect of a price fall could thus be isolated by ‘holding the consumer’s utility constant’ by keeping him to the same indifference curve, and rotating the budget constraint to reflect the new relative price regime. This amounts to reducing the consumer's income until such time as he can achieve the same level of satisfaction as before, but with a different combination of biscuits and bananas. Then the budget constraint is moved out to restore the consumer’s income to its actual level and, voile, we have separated the impact of a price change into the substitution and income effects.

The demand curve derived from neutralizing the income effect is known as the ‘Hicksian compensated demand curve,’ after both the person who first dreamed it up (the English economist John Hicks) and the procedure used. It finally establishes the ‘Law of Demand’ for a single, isolated consumer: the demand for a commodity will rise if its price falls. ….

Nonetheless, the end result is that desired by economists: increasing a product’s price will reduce a consumer’s demand for that product: an individual’s demand curve slopes downwards. The ‘Law of Demand’ holds for a single consumer.” (Keen 2011: 48–49).

But this “proof” seems devoid of any actual empirical demonstration that the law of demand is true. It is a theoretical or purely logical proof. In other words, it seems to be retreating into a world of analytic a priori statements and deduction, which can hardly prove a synthetic a posteriori statement.

And, when neoclassical economics moves from an abstract one person, two-commodity world to a two-person, two-community world (and anything even more complex), market demand curves do not necessarily obey the law of demand (Keen 2011: 51–53).

The Sonnenschein-Mantel-Debreu theorem (coined from the surnames of Gérard Debreu, Rolf Ricardo Mantel, and Hugo Freund Sonnenschein) describes the finding of higher-level neoclassical research literature itself that the law of demand does not necessarily apply to market demand curves (Keen 2011: 52; Gorman 1953; Debreu 1974; Sonnenschein 1972; Shafer and Sonnenschein 1982). As noted above, Steve Keen demonstrates how the law of demand can be proven only in the case of a single consumer (Keen 2011: 51). A market demand curve “can take any shape at all – except one that doubles back on itself” (Keen 2011: 52).

Attempts to prove that market demand curves will always behave like individual demand curves fail, and this was demonstrated when neoclassical economists were forced to state the conditions under which the law of demand could govern the behaviour of market demand curves. These conditions are as follows:

(1) that all Engel curves are straight lines;
This is tantamount to saying either that the ratio in which a person consumes goods must be fixed regardless of income, or that there is only one commodity in the economy.

(2) that the Engel curves of all consumers are parallel;
This is tantamount to saying either that all consumers have identical tastes, or that there is only one consumer. (Keen 2011: 54–55).

Empirically, we can see these conditions do not apply to any complex, real world economy. Both conditions are unrealistic, and demonstrate that

“… the real meaning of these two conditions [sc. is]: the Law of Demand will apply if, and only if, there is only one commodity and only one consumer. But in such a situation, the very idea of a ‘Law of Demand’ makes no sense. The whole purpose of the Law of Demand is to explain how relative prices are set, but if there is just one commodity and one consumer, then there can be no relative prices. We have a contradiction: we start from assuming that the Law of Demand applies, and then find that for this to be true, there can be only one commodity and one consumer – a situation in which the Law of Demand has no meaning.” (Keen 2011: 55).

Alternatively, one could also say that the law of demand is an analytic a priori statement that is informationally vacuous, and tells us nothing necessarily true of the real world, because it is a tautology.

Keen goes on to note that much of the literature on the law of demand and market demand curves:

“… was developed not to explain an empirically observed phenomenon, but to examine the logical coherence of an utterly abstract, non-empirical model of consumer behavior. Downward-sloping demand curves were therefore not an empirical regularity for which a theory was needed, but a belief that economists had about the nature of demand that the vast majority of them took for granted. Most of them continue to hold this belief, unaware that mathematically erudite economists have shown that it is false. Since the underlying discipline is non-empirical, there is no disconnect between theory and reality that might warn them that something is wrong with the theory.” (Keen 2011: 63).

The role of mathematics in neoclassical economics should be stressed here: pure mathematics is an analytic a priori system. So what we have is an unrealistic analytic a priori mathematised economics that assumes reality fits its theory – when the opposite is the case.

Finally, the finding that the aggregation of the demand curves of isolated consumers does not create a well-behaved market demand curve is an important instance of the concept of emergent properties and the fallacy of strong reductionism:

“despite its adherence to strong reductionism, neoclassical economics provides one of the best examples of emergent phenomena ever: the ‘Sonnenschein-Mantel-Debreu conditions’ … . This research proved that a market demand curve derived from the preferences of individual consumers who in isolation obeyed the Law of Demand – i.e., they had ‘downward-sloping demand curves’ – will not obey the Law of Demand: a market demand curve can have any shape at all.” (Keen 2011: 208).

In the end, the only satisfactory formulation of the “law of demand” is as a general empirical principle, or synthetic a posteriori statement, to the effect that for many goods (but not all), when the price falls, demand increases (though there are important exceptions).

And for many goods (but not all), when the price rises, demand falls (though there are important exceptions). But, at that point, one wonders why it should be called “a law” at all.

An equally important consequence is that there is no reason to assume equilibrium prices can be found in all markets, which further undermines the basis of neoclassical general equilibrium theory and the Austrian economic notion of effective economic coordination by flexible prices.

The technical “law of demand,” with its ceteris paribus condition, seems to remain a strange analytic a priori statement of marginal relevance to the real world, given that its proof consists in inventing an imaginary world with only one consumer and one commodity.


Useful Links
Syll, Lars P. 2012. “Please say after me – Sonnenschein-Mantel-Debreu,” Lars P. Syll, 21 July.

“‘Debunking Economics,’ Part I: Demand Curves Can Have Any Shape,” Unlearning Economics, June 25, 2012.

“Debunking Economics, Part XVII: Response to Criticisms (1/2),” Unlearning Economics, December 3, 2012.

Robert Vienneau, “Response to Comments on Steve Keen’s Work,” Thoughts on Economics, July 25, 2006.

Steve Keen, “Neoclassical Economists don’t understand Neoclassical Economics,” Debtdeflation.com, July 13th, 2011.

BIBLIOGRAPHY
Debreu, G. 1974. “Excess Demand Functions,” Journal of Mathematical Economics 1: 15–21.

Gorman, W. M. 1953. “Community Preference Fields,” Econometrica 21.1: 63–80.

Keen, Steve. 2011. Debunking Economics: The Naked Emperor Dethroned? (rev. and expanded edn). Zed Books, London and New York.

Mantel, R. 1976. “Homothetic Preferences and Community Excess Demand Functions,” Journal of Economic Theory 12: 197–201.

Shafer, W. and H. Sonnenschein. 1982. “Market Demand and Excess Demand Functions,” in K. Arrow and M. Intriligator (eds.), Handbook of Mathematical Economics (vol. 2). Elsevier, Amsterdam. 671–693.

Sippel, R. 1997. “An Experiment on the Pure Theory of Consumer Behaviour,” Economic Journal 107: 1431–1444.

Sonnenschein, H. 1972. “Market Excess Demand Functions,” Econometrica 40: 549–563.

What is the Epistemological Status of the Law of Demand?

The law of demand asserts that as the price of a good rises, ceteris paribus (other things being equal), the quantity demanded falls, and as the price of a good falls, ceteris paribus, the quantity demanded rises. That is, the price and quantity demanded are negatively inclined ceteris paribus.

The ceteris paribus assumption entails that all other factors except price are held constant: incomes, prices of other goods, fashions, expectations, information, preferences/tastes, population, the weather, etc.

What is the epistemological status of such a proposition? If analytic a priori, it must be regarded as true by virtue of the meanings of the terms used. But that entails that we simply define the “law of demand” to mean that as the price of a good rises, ceteris paribus, the quantity demanded falls, etc.

Such a necessary analytic a priori statement would be tautologous and informationally vacuous, and would tell us nothing necessarily true of the real world.

It follows that, if the law of demand were really understood this way, it could only be asserted of the real world by transformation into a synthetic a posteriori statement (as pure geometry is transformed into synthetic a posteriori propositions when asserted as empirical statements about real space).

But, at that point, one must ask: how is such an assertion proven? How do we prove that the law of demand is empirically true?

The history of how neoclassical economics has unsuccessfully attempted to prove the law of demand is told by Steve Keen in Debunking Economics: The Naked Emperor Dethroned? (rev. edn. 2011). pp. 38–73, though I will leave a review of this for another post.


BIBLIOGRAPHY
Keen, Steve. 2011. Debunking Economics: The Naked Emperor Dethroned? (rev. and expanded edn.). Zed Books, London and New York.

Strong Reductionism Failed in the Natural Sciences

This is noted by P. W. Anderson:

“The behavior of large and complex aggregates of elementary particles, it turns out, is not to be understood in terms of a simple extrapolation of the properties of a few particles. Instead, at each level of complexity entirely new properties appear, and the understanding of the new behaviors requires research which I think is as fundamental in its nature as any other.” (Anderson 1972: 393).

Macroscopic bodies in our universe that are subject to the same physical laws nevertheless display complex emergent properties in which the whole becomes more than just the sum of its parts, such as, for example, in superconductive materials, antiferromagnets, ferroelectrics, liquid crystals, DNA (Anderson 1972: 395) and, of course, human consciousness.

The same fallacy of strong reductionism and the equally flawed methodological individualism infect modern neoclassical economics, which seeks to reduce macroeconomic phenomena to the behaviour of isolated individual agents.

But macroeconomics cannot be reduced to microeconomics, and macroeconomics is an autonomous or semi-autonomous disciple in its own right, as John King has recently argued.

BIBLIOGRAPHY
Anderson, P. W. 1972. “More Is Different,” Science n.s. 177.4047: 393–396.

Lachmann on Speculative Markets and Economic Complexity

Ludwig Lachmann’s article “Speculative Markets and Economic Complexity” (1988) was written in the wake of the US stock market crash of 1987, and was meant to be defence of the market order. Lachmann, an Austrian economist, takes aim at those who stress “financial fragility,” a reference which was perhaps aimed at Hyman Minsky and his theories.

Lachmann divides markets into (1) ordinary markets and (2) speculative markets (Lachmann 1988: 7). In the “ordinary markets,” Lachmann sees a certain stability that is the result of underlying patterns of supply and demand, and the tendency for expectations to converge (Lachmann 1988: 7–8).

By contrast, speculative markets have an instability owing to the way in which market participants can quickly switch from being bears to bulls, and how “divergent expectations” are the very essence of such “speculative markets” (Lachmann 1988: 8). The latter is a crucial point because general equilibrium theory is dependent on the idea that expectations convergence over time, but that is not possible in speculative markets where, as in other areas of economic life, the future is unknowable. This is why speculative markets create a destabilising element in capitalist systems.

Strangely, while trying to defend markets, Lachmann ends up undermining the case for them in this article.

BIBLIOGRAPHY
Lachmann, L. M. 1988. “Speculative Markets and Economic Complexity,” Economic Affairs 8.2: 7–10.

Epistemology in Modern Analytic Philosophy: A Review

There are three fundamental epistemological categories with respect to propositions and knowledge in modern analytic philosophy:

(1) the “analytic” versus “synthetic” distinction
This is a distinction involving the semantic form of propositions. A sentence is analytic if and only if it is true solely by virtue of the meanings of terms used (Elugardo 1997: 13). Every sentence that is not analytic is synthetic;

(2) the notion of “necessity” versus “contingency”
This relates to the nature of truth and can be understood in (i) a metaphysical/ontological sense or (ii) a conceptual/verbal sense (or de dicto). A logically necessary truth in sense (ii) is not metaphysically necessary, but true only by virtue of the definitions of terms used;

(3) the a priori versus a posteriori distinction
This involves how a proposition is epistemologically known to be true or false. An a priori truth is known without appeal to experience, and an a posteriori truth is known by appeal to experience or empirical evidence.

With regard to analyticity, it is also possible to distinguish three types of analytic sentence, as follows:

(1) an explicit analyticity, such as “Bachelors are bachelors.” These can also be called “identity propositions” or “truths of logic”;

(2) an implicit analyticity, where the sentence is true by definition, e.g., “Bachelors are male.” Here we have a predicative proposition in which the predicate asserts something of a subject already containing that idea implicitly; and

(3) another type of analyticity where propositions are true in virtue of the meanings of the words used, but not true by definition: “Nothing is both red and green all over” or “whatever is coloured is extended.”

Types (1) and (2) describe what is called “Frege analyticity” (Boghossian 1997) in the following senses:

“A sentence is analytic if and only if either (i) it is a logical truth, or (ii) it can be converted into a logical truth by substitution of synonymous expressions, salve veritate, and formally valid inferences.” (Elugardo 1997: 15).

All “Frege analytic” truths are known a priori.

But type (3) above describes a kind of analyticity that is wider in sense than (1) or (2), and the epistemological status of (3) was once held to be synthetic a priori (Elugardo 1997: 15). Today many would say it is analytic a priori, but a type that Boghossian (2008: 203) calls “Carnap analyticity” (after the logical positivist Rudolf Carnap).

In 1951, Quine (1951) attacked the analytic–synthetic distinction. Elugardo (1997: 15) argues that Quine admitted the existence of “Frege analytic” truths in sense (1), but thought that even these logical truths are open to revision. But Quine also argued that Frege analyticity in sense (2) is untenable. Quine’s rejection of this type of analytic statement is derived from his unwillingness to accept any definition of “synonymy” that is circular (in that it relies in turn on the concept of “analyticity” for its definition), and because of his verbal behaviourism.

But Quine’s attack on Frege analyticity is controversial. Many modern analytic philosophers think Quine did not succeed in his arguments, and that analyticity does indeed exist (Grice and Strawson 1956; Putnam 1962 and 1975; Quinton 1967; Glock 1996 and 2003; Nimtz 2003). Nor it is surprising that modern Rationalists support the existence of Frege analyticity (Katz 1967; Chomsky 1988).

Quine also argued against the logical positivist view that verification of a single synthetic proposition is possible by empirical evidence and without the need for verifying other sentences. For Quine, every synthetic proposition relies on and presupposes a number of other sentences, a view which lead to Quine’s confirmation holism and the Quine-Duhem thesis.

Thus knowledge is an interconnected “web of belief,” and those beliefs at the core are only the most difficult to give up, while those at the periphery are easy to give up. Nevertheless, all beliefs are capable in principle of being given up and none immune to revision (Elugardo 1997: 14). Philosophers have continued to debate this view too.

Such were the main controversies in analytic philosophy on epistemology until the 1970s. Until the 1970s, most analytic philosophers thought that all necessary truths are a priori and all contingent truths are a posteriori. Then Saul Kripke argued that the three concepts above are distinct, and that there are actually “necessary a posteriori” truths, such as, for example, the statement that “water is truly H₂O.”

Kripke introduced a revolution in analytic metaphysics and epistemology, and he also argued that scientifically true identities are necessary a posteriori truths (Elugardo 1997: 12).

Kripke also contended that there is such a thing as “contingent a priori” truth, but the existence of this type of truth is still disputed.

Links
“The Return of Metaphysics into Analytic Philosophy,” August 29, 2013.

“Epistemology and Kinds of Knowledge,” July 25, 2013.

“Schwartz’s A Brief History of Analytic Philosophy: from Russell to Rawls: Chapter 3,” August 25, 2013.

“Quine and the Analytic–Synthetic Distinction,” August 24, 2013.

“Schwartz’s A Brief History of Analytic Philosophy: from Russell to Rawls: Chapter 2,” August 23, 2013.

“Schwartz’s A Brief History of Analytic Philosophy: From Russell to Rawls: Chapter 1,” August 22, 2013.

BIBLIOGRAPHY
Boghossian, Paul. 1996. “Analyticity Reconsidered,” Nous 30: 360–391.

Boghossian, Paul. 1997. “Analyticity,” in B. Hale and C. Wright (eds.), A Companion to the Philosophy of Language. Basil Blackwell, Oxford. 331–368.

Boghossian, Paul. 2008. “Analyticity Reconsidered,” in Paul A. Boghossian, Content and Justification: Philosophical Papers. Clarendon Press, Oxford. 195–224.

Chomsky, Noam. 1988. Language and Problems of Knowledge: The Managua Lectures. MIT Press, Cambridge, Mass. and London.

Elugardo, R. 1997. “Analytic/Synthetic, Necessary/Contingent, and a priori/a posteriori: Distinction,” in Peter V. Lamarque (ed.), Concise Encyclopedia of Philosophy of Language. Pergamon, New York. 10–19.

Frege, Gottlob. 1986. The Foundations of Arithmetic (2nd rev. edn.). Basil Blackwell, Oxford.

Glock, Hans-Johann. 1996. “Necessity and Normativity,” in Hans Sluga and David G. Stern (eds.). The Cambridge Companion to Wittgenstein. Cambridge University Press, Cambridge and New York. 198–225.

Glock, Hans-Johann. 2003. Quine and Davidson on Language, Thought and Reality. Cambridge University Press, Cambridge.

Grice, H. P. and P. F. Strawson. 1956. “In Defence of a Dogma,” Philosophical Review 65: 141–158.

Horwich, Paul. 1992. “Chomsky versus Quine on the Analytic-Synthetic Distinction,” Proceedings of the Aristotelian Society n.s. 92: 95–108.

Katz, Jerrold J. 1967. “Some Remarks on Quine on Analyticity,” Journal of Philosophy 64: 36–52.

Katz, Jerrold J. 2010. “Analyticity,” in Jonathan Dancy, Ernest Sosa and Matthias Steup (eds.), A Companion to Epistemology (2nd edn.). Blackwell, Malden, MA and Oxford. 224–230.

Nimtz, C. 2003. “Analytic Truths – Still Harmless After All These Years?,” in H. J. Glock, K. Gluer, and G. Keil (eds.), Fifty Years of Quine’s ‘Two Dogmas’. Rodopi, Amsterdam and New York. 91–118.

Pap, Arthur. 1958. Semantics and Necessary Truth: An Inquiry into the Foundations of Analytic Philosophy. Yale University Press, New Haven.

Popper, Karl. 1957. “Philosophy of Science: A Personal Report,” in C. A. Mace (ed.), British Philosophy in the Mid-Century: A Cambridge Symposium. Macmillan, New York. 155–191.

Putnam, H. 1962. “The Analytic and the Synthetic,” Minnesota Studies in the Philosophy of Science 3: 358–397.

Putnam, Hilary. 1975. “The Analytic and the Synthetic,” Hilary Putnam, Mind, Language, and Reality. Cambridge University Press, Cambridge. 33–69.

Quine, Willard Van Orman. 1951. “Two Dogmas of Empiricism,” Philosophical Review 60: 20–43.

Quine, Willard Van Orman. 1960. Word and Object. M.I.T. Press, Massachusetts.

Quine, Willard Van Orman. 1981. “Two Dogmas of Empiricism,” in From a Logical Point of View. Harvard University Press, Cambridge, MA. 20–46.

Quine, Willard Van Orman. 1991. “Two Dogmas in Retrospect,” Canadian Journal of Philosophy 21.3: 265–274.

Quinton, Anthony. 1963–1964. “The ‘a priori’ and the Analytic,” Proceedings of the Aristotelian Society n.s. 64: 31–54.

Quinton, Anthony. 1967. “The ‘a priori’ and the Analytic,” in P. F. Strawson (ed.), Philosophical Logic. Oxford University Press, Oxford. 107–128.

Watkins, J. W. N. 1957. “Between Analytic and Empirical,” Philosophy 32.121: 112–131.

Bibliography on Post Keynesian Methodology

Having looked at Austrian economic methodology recently, I will turn to the Post Keynesian methodology in coming weeks, and I provide a bibliography below of sources on methodological issues in Post Keynesian economics.

In essence, there are three, partly overlapping, methodologies proposed for Post Keynesian economics:

(1) Critical realism;

(2) the Babylonian approach of Sheila Dow (1990; 1996), and

(3) Paul Davidson’s (1996) “generalising” methodology.

BIBLIOGRAPHY
Anderson, P. W. 1972. “More Is Different,” Science n.s. 177.4047: 393–396.

Beed, Clive. 1991. “Philosophy of Science and Contemporary Economics: An Overview,” Journal of Post Keynesian Economics 13.4: 459–494.

Bhaskar, Roy. 2008. A Realist Theory of Science (2nd edn.), Verso, London.

Brown, A. “Critical Realism,” in J. E. King (ed.), The Elgar Companion to Post Keynesian Economics (2nd edn.). Edward Elgar, Cheltenham. 121–126.

Brown, Andrew. 2000–2001. “A Comment on Dow’s ‘Post Keynesianism and Critical Realism: What Is the Connection?,’” Journal of Post Keynesian Economics 23.2: 349–355.

Colander, David, Holt, Richard P.F. and J. Barkley Rosser Jr. 2007–2008. “Live and Dead Issues in the Methodology of Economics,” Journal of Post Keynesian Economics 30.2: 303–312.

Davis, J. B. 1987. “Three Principles of Post Keynesian Methodology,” Journal of Post Keynesian Economics 9.4: 552–564.

Davidson, Paul. 1996. “Reality and Economic Theory,” Journal of Post Keynesian Economics 18.4: 479–508.

Dow, Sheila C. 1982. “Neoclassical Tautologies and the Cambridge Controversies: Reply,” Journal of Post Keynesian Economics 5.1: 132–134.

Dow, Sheila C. 1982–1983. “Substantive Mountains and Methodological Molehills: A Rejoinder,” Journal of Post Keynesian Economics 5.2: 304–330.

Dow, Sheila C. 1990. “Beyond Dualism,” Cambridge Journal of Economics 14.2: 143–157.

Dow, Sheila C. 1990. “Post Keynesianism as Political Economy: A Methodological Discussion,” Review of Political Economy 2.3: 345–358.

Dow, Sheila C. 1996. The Methodology of Macroeconomic Thought: A Conceptual Analysis of Schools of Thought in Economics. Edward Elgar, Cheltenham.

Dow, Sheila C. 1999. “Post Keynesianism and Critical Realism: What Is the Connection?,” Journal of Post Keynesian Economics 22.1: 15–33.

Dow, Sheila C. 2001. “Post Keynesian Methodology,” in Richard P.F. Holt and Steven Pressman (eds.), A New Guide to Post-Keynesian Economics. Routledge, London and New York. 11–20.

Dow, Sheila C. 2003. “Understanding the Relationship between Mathematics and Economics,” Journal of Post Keynesian Economics 25.4: 547–560.

Dow, Sheila C. 2004. “Structured Pluralism,” Journal of Economic Methodology 11.3: 275–290.

Dow, Sheila C. 2005. “Axioms and Babylonian Thought: A Reply,” Journal of Post Keynesian Economics 27.3: 385–391.

Dow, Sheila. 2012. “Babylonian Mode of Thought,” in J. E. King (ed.), The Elgar Companion to Post Keynesian Economics (2nd edn.). Edward Elgar, Cheltenham. 15–19.

Dow, Sheila. 2013. “Methodology and post-Keynesian Economics,” in G. C. Harcourt and Peter Kriesler (eds.). The Oxford Handbook of Post-Keynesian Economics, Volume 2. Critiques and Methodology. Oxford University Press, Oxford and New York.

Dunn, S. P. 2008. The ‘Uncertain’ Foundations of Post Keynesian Economics. Routledge, London.

Fullbrook, Edward. 2009. Ontology and Economics: Tony Lawson and his Critics. Routledge, New York.

Harcourt, G. C. and P. A. Riach (eds), 1997. A “Second Edition” of The General Theory (Vol. 1), Routledge, London.

Harcourt, G. C. and P. A. Riach (eds), 1997. A “Second Edition” of The General Theory (Vol. 2), Routledge, London.

Jespersen, Jesper. 2009. Macroeconomic Methodology: A Post-Keynesian Perspective. Edward Elgar, Cheltenham, Glos. and Northampton, MA.

Jespersen, Jesper. 2012. “Macroeconomic Methodology”, in J. E. King (ed.), The Elgar Companion to Post Keynesian Economics (2nd edn.). Edward Elgar, Cheltenham. 379–383.

Katzner, Donald W. 2003. “Why Mathematics in Economics?,” Journal of Post Keynesian Economics 25.4: 561–574.

King, J. E. 2002. A History of Post Keynesian Economics since 1936, Edward Elgar Publishing, Cheltenham, UK and Northampton, MA.

King, J. E. 2005. “Unwarping the Record: A Reply to Paul Davidson,” Journal of Post Keynesian Economics 27.3: 377–384.

Lavoie, Marc. “History and Methods of Post-Keynesian Economics,” in Eckhard Hein and Engelbert Stockhammer (eds.), A Modern Guide to Keynesian Macroeconomics and Economic Policies. Edward Elgar, Cheltenham. 2011.

Lawson, Tony. 1994. “The Nature of Post Keynesianism and Its Links to Other Traditions: A Realist Perspective,” Journal of Post Keynesian Economics 16.4: 503–538.

Lawson, Tony. 1997. Economics and Reality. Routledge, London.

Lawson, Tony. 1999. “Connections and Distinctions: Post Keynesianism and Critical Realism,” Journal of Post Keynesian Economics 22.1: 3–14.

Lawson, Tony. 2003. Reorienting Economics. Routledge, London.

Lawson, Tony. 2006. “The Nature of Heterodox Economics,” Cambridge Journal of Economics 30: 483–505.

Lawson, Tony and H. Pesaran (eds.). 1989. Keynes’ Economics: Methodological Issues. Routledge, London.

Lewis, Paul and Jochen Runde. 1999. “A Critical Realist Perspective on Paul Davidson’s Methodological Writings on- and Rhetorical Strategy for- Post Keynesian Economics,” Journal of Post Keynesian Economics 22.1: 35–56.

Loasby, B. J. 1984. “On Scientific Method,” Journal of Post Keynesian Economics 6.3: 394–410.

Martins, Nuno Ornelas. 2009. “Sen's Capability Approach and Post Keynesianism: Similarities, Distinctions, and the Cambridge Tradition,” Journal of Post Keynesian Economics 31.4: 691–706.

McKenna, Edward J. and Diane C. Zannoni. 1999. “Post Keynesian Economics and Critical Realism: A Reply to Parsons,” Journal of Post Keynesian Economics 22.1: 57–70.

Parsons, Stephen D. 1996. “Post Keynesian Realism and Keynes’ General Theory,” Journal of Post Keynesian Economics 18.3: 419–441.

Phelps, Michael G. 1980. “Laments, Ancient and Modern: Keynes on Mathematical and Econometric Methodology,” Journal of Post Keynesian Economics 2.4: 482–493.

Popper, Karl R. 1978. “Three Worlds,” The Tanner Lecture on Human Values, Delivered at the University of Michigan, April 7, 1978.
www.thee-online.com/Documents/Popper-3Worlds.pdf‎

Popper, Karl R. 1979. Objective Knowledge: An Evolutionary Approach (rev. edn.). Clarendon Press, Oxford.

Rotheim, Roy J. 1999. “Post Keynesian Economics and Realist Philosophy,” Journal of Post Keynesian Economics 22.1: 71–103.

Ruccio, David F. 1991. “Postmodernism and Economics,” Journal of Post Keynesian Economics 13.4: 495–510.

Sardoni, Claudio. 1989–1990. “Chapter 18 of the General Theory: Its Methodological Importance,” Journal of Post Keynesian Economics 12.2: 293–307.

Walters, Bernard and David Young. 1997. “On the Coherence of Post-Keynesian Economics,” Scottish Journal of Political Economy 44.3: 329–349.

Walters, Bernard and David Young. 1999. “Is Critical Realism the Appropriate Basis for Post Keynesianism?,” Journal of Post Keynesian Economics 22.1: 105–123.

Wiles, Peter. 1979–1980. “Ideology, Methodology, and Neoclassical Economics,” Journal of Post Keynesian Economics 2.2: 155–180.

Mises was Confused about the Analytic–Synthetic Distinction

The evidence is here in Mises’s The Ultimate Foundation of Economic Science: An Essay on Method (1962):

“Praxeology is a priori. All its theorems are products of deductive reasoning that starts from the category of action. The questions whether the judgments of praxeology are to be called analytic or synthetic and whether or not its procedure is to be qualified as ‘merely’ tautological are of verbal interest only.

What praxeology asserts with regard to human action in general is strictly valid without any exception for every action. There is action and there is the absence of action, but there is nothing in between. Every action is an attempt to exchange one state of affairs for another, and everything that praxeology affirms with regard to exchange refers strictly to it. In dealing with every action we encounter the fundamental concepts end and means, success or failure, profit or loss, costs. An exchange can be either direct or indirect, i.e., effected through the interposition of an intermediary stage. Whether a definite action was indirect exchange has to be determined by experience. But if it was indirect exchange, then all that praxeology says about indirect exchange in general strictly applies to it.

Every theorem of praxeology is deduced by logical reasoning from the category of action. It partakes of the apodictic certainty provided by logical reasoning that starts from an a priori category.

Into the chain of praxeological reasoning the praxeologist introduces certain assumptions concerning the conditions of the environment in which an action takes place. Then he tries to find out how these special conditions affect the result to which his reasoning must lead. The question whether or not the real conditions of the external world correspond to these assumptions is to be answered by experience. But if the answer is in the affirmative, all the conclusions drawn by logically correct praxeological reasoning strictly describe what is going on in reality.” (Mises 1962: 44–45).

Mises’s main epistemological concern is to maintain the a priori status of praxeology.

But his remarkable statement is here:

“The questions whether the judgments of praxeology are to be called analytic or synthetic and whether or not its procedure is to be qualified as ‘merely’ tautological are of verbal interest only.”

According to Mises, whether praxeological theorems or derived theories are “synthetic” or “analytic” is of “verbal interest only.” That is an incredibly ignorant statement, because if praxeological theorems say anything necessarily true of the real world, as Mises says in many other passages (Mises 2008: 39), then they must be synthetic, not analytic.

Mises is logically committed to defending the synthetic a priori status of praxeology, but was so confused that he dismissed the first of these concepts as merely of “verbal interest,” when the synthetic nature of any praxeological theorem ought to be a straightforward consequence of his epistemology.

This confusion, or lack of interest in the analytic or synthetic distinction, mostly likely explains his equally confused discussion of Euclidean geometry in Human Action (Mises 2008: 38).

BIBLIOGRAPHY
Mises, Ludwig von. 1962. The Ultimate Foundation of Economic Science: An Essay on Method. Van Nostrand, Princeton, N.J.

Mises, Ludwig von. 2008. Human Action: A Treatise on Economics. The Scholar’s Edition. Mises Institute, Auburn, Ala.

Mises on Kant and Praxeology

Robert Murphy is currently positing a peculiar interpretation of Mises’s economic epistemology (discussed here and in the comments section of the post). Murphy argues that Mises thought Euclidean geometry is analytic a priori but at the same time provides real necessary knowledge of the external world. Murphy also implies that Mises did not really adopt Kant’s concept of synthetic a priori knowledge in his view of praxeology.

The debate all stems from Mises’s confusion about basic epistemological concepts such as analyticity, a confusion identified by Hans Albert (1999: 131–132).

And this passage from Mises’s The Ultimate Foundation of Economic Science: An Essay on Method (1962) shows that his view of praxeology is indeed indebted to Kant:

“There are two branches of the sciences of human action, praxeology on the one hand, history on the other hand.

Praxeology is a priori. It starts from the a priori category of action and develops out of it all that it contains. For practical reasons praxeology does not as a rule pay much attention to those problems that are of no use for the study of the reality of man’s action, but restricts its work to those problems that are necessary for the elucidation of what is going on in reality. Its intent is to deal with action taking place under conditions that acting man has to face. This does not alter the purely aprioristic character of praxeology. It merely circumscribes the field that the individual praxeologists customarily choose for their work. They refer to experience only in order to separate those problems that are of interest for the study of man as he really is and acts from other problems that offer a merely academic interest. The answer to the question whether or not definite theorems of praxeology apply to a definite problem of action depends on the establishment of the fact whether or not the special assumptions that characterize this theorem are of any value for the cognition of reality. To be sure, it does not depend on the answer to the question whether or not these assumptions correspond to the real state of affairs that the praxeologists want to investigate. The imaginary constructions that are the main—or, as some people would rather say, the only—mental tool of praxeology describe conditions that can never be present in the reality of action. Yet they are indispensable for conceiving what is going on in this reality. Even the most bigoted advocates of an empiricist interpretation of the methods of economics employ the imaginary construction of an evenly rotating economy (static equilibrium), although such a state of human affairs can never be realized.

Following in the wake of Kant’s analyses, philosophers raised the question: How can the human mind, by aprioristic thinking, deal with the reality of the external world? As far as praxeology is concerned, the answer is obvious. Both, a priori thinking and reasoning on the one hand and human action on the other, are manifestations of the human mind. The logical structure of the human mind creates the reality of action. Reason and action are congeneric and homogeneous, two aspects of the same phenomenon. In this sense we may apply to praxeology the dictum of Empedocles γνῶσις τοῦ ὁμοίου τῷ ὁμοίῳ.

Some authors have raised the rather shallow question how a praxeologist would react to an experience contradicting theorems of his aprioristic doctrine. The answer is: in the same way in which a mathematician will react to the ‘experience’ that there is no difference between two apples and seven apples or a logician to the ‘experience’ that A and non-A are identical. Experience concerning human action presupposes the category of human action and all that derives from it. If one does not refer to the system of the praxeological a priori, one must not and cannot talk of action, but merely of events that are to be described in terms of the natural sciences. Awareness of the problems with which the sciences of human action are concerned is conditioned by familiarity with the a priori categories of praxeology. Incidentally, we may also remark that any experience in the field of human action is specifically historical experience, i.e., the experience of complex phenomena, which can never falsify any theorem
in the way a laboratory experiment can do with regard to the statements of the natural sciences.” (Mises 1962: 41–42).

For Mises, the human mind has Kantian a priori categories and presumably Kant’s two “pure forms of cognition/intuition” (namely, space and time).

But for Kant humans could not know necessary truth of the true external world (what Kant called the “thing-in-itself” or the world of “noumena”). Rather, Kant thought that necessary and universal truth exists in the human world of the “objects of our experience” or the “phenomena,” or what modern philosophers might call the world of “sense data” in our minds. Nevertheless, this world of “phenomena” was “empirically real” for Kant (as well as “transcendentally ideal”). So Kantian synthetic a priori appears to be confined to the world of “phenomena,” not of the external world of “noumena”.

Mises dispenses with this, and thinks that human categories and a priori thought provide real knowledge of an external world (or what Kant called the “thing-in-itself”).

The trouble with Mises’s view is that Kant’s a priori “categories” and “pure forms,” to the extent that any of them exist, are innate biological and contingent traits of the human mind given to us by Darwinian evolution.

The modern discipline of “evolutionary epistemology” has shown convincingly that such traits are not epistemologically a priori:

“Konrad Lorenz [a evolutionary epistemologist] …. is famous for reinterpreting Kant’s synthetic a priori claims. No longer are the inborn categories regarded as evidently true, rather, they are understood to be “ontogenetically a priori and phylogenetically a posteriori.” This means that an individual organism is born with innate dispositions. These innate dispositions are acquired phylogenetically, through the evolution of the species, by means of the mechanism of natural selection. Most importantly, these dispositions are fallible, because they are the result of selection, not instruction. That is, these dispositions are adaptations, and natural selection only weeds out maladaptive organisms, which results in the survival of the adaptive ones. ….

According to Lorenz, and contrary to Kant, the thing in itself (Das Ding an Sich) is knowable through the categories of the knower, not the characteristics of the thing in itself, and selection results in a partial isomorphism through adaptation. …. Thus, through adaptation, there is a correspondence between our images of the world and the world in itself, or between organism and environment, or between theories and the world. This is of course not a 1-to-1 correspondence; our image of a tree is not like a real tree, but because our cognitive apparatus is adapted to the world, there is a partial isomorphism between the two. Adaptations thus become a description of the world in a biological language.”
Gontier, “Evolutionary Epistemology,” Internet Encyclopedia of Philosophy, 2006
http://www.iep.utm.edu/evo-epis/

Nevertheless, human innate cognitive and psychological traits do not provide us with necessarily true and a priori knowledge of the external world: some of our mental traits and “categories” are partially isomorphic but others can be fallible and mistaken. Ultimately, they are all a posteriori and contingent.

A second point is that this passage above also shows that Mises rejects, and perhaps does not even understand, the distinction between (1) analytic a priori pure mathematics and geometry and (2) synthetic a posteriori applied mathematics and geometry.

And, for Mises, both mathematics and praxeology are a priori and also provide real necessary knowledge of reality. That entails that Mises saw these things as Kantian synthetic a priori knowledge.

Links
Gontier, “Evolutionary Epistemology,” Internet Encyclopedia of Philosophy, 2006
http://www.iep.utm.edu/evo-epis/

“Evolutionary Epistemology,” Stanford Encyclopedia of Philosophy, 2001 (rev. 2012)
http://plato.stanford.edu/entries/epistemology-evolutionary/


BIBLIOGRAPHY
Albert, H. 1999. Between Social Science, Religion and Politics: Essays in Critical Rationalism. Rodopi, Amsterdam.

Mises, Ludwig von. 1962. The Ultimate Foundation of Economic Science: An Essay on Method. Van Nostrand, Princeton, N.J.

Hoppe on Euclidean Geometry, Part 2

Hoppe makes a series of bad arguments in his attempts to defend the concept of synthetic a priori knowledge:

“Further, the old rationalist claims that Euclidean geometry is a priori yet incorporates empirical knowledge about space becomes supported, too, in view of our insight into the praxeological constraints on knowledge. Since the discovery of non-Euclidean geometries and in particular since Einstein’s relativistic theory of gravitation, the prevailing position regarding geometry is once again empiricist and formalist. It conceives of geometry as either being part of empirical, a posteriori physics, or as being empirically meaningless formalisms. That geometry is either mere play or forever subject to empirical testing seems to be irreconcilable with the fact that Euclidean geometry is the foundation of engineering and construction, and that nobody in those fields ever thinks of such propositions as only hypothetically true. Recognizing knowledge as praxeologically constrained explains why the empiricist-formalist view is incorrect and why the empirical success of Euclidean geometry is no mere accident. Spatial knowledge is also included in the meaning of action. Action is the employment of a physical body in space. Without acting there could be no knowledge of spatial relations and no measurement. Measuring relates something to a standard. Without standards, there is no measurement, and there is no measurement which could ever falsify the standard. Evidently, the ultimate standard must be provided by the norms underlying the construction of bodily movements in space and the construction of measurement instruments by means of one’s body and in accordance with the principles of spatial constructions embodied in it. Euclidean geometry, as again Paul Lorenzen in particular has explained, is no more and no less than the reconstruction of the ideal norms underlying our construction of such homogeneous basic forms as points, lines, planes and distances which are in a more or less perfect but always perfectible way incorporated or realized in even our most primitive instruments of spatial measurements such as a measuring rod. Naturally, these norms and normative implications cannot be falsified by the result of any empirical measurement. On the contrary, their cognitive validity is substantiated by the fact that it is they that make physical measurements in space possible. Any actual measurement must already presuppose the validity of the norms leading to the construction of one’s measurement standards. It is in this sense that geometry is an a priori science and must simultaneously be regarded as an empirically meaningful discipline because it is not only the very precondition for any empirical spatial description, but it is also the precondition for any active orientation in space.” (Hoppe 2006: 287–288).

I have already dealt with the argument that “Euclidean geometry is the foundation of engineering and construction, and that nobody in those fields ever thinks of such propositions as only hypothetically true” in my post here. The fact that Euclidean geometry is highly useful in engineering and construction does not refute the epistemological status of applied geometry as synthetic a posteriori. And that people in “engineering and construction” might never think of Euclidean geometry as “only hypothetically true” or a mere approximation is irrelevant: it commits an appeal to invalid authority.

The second substantive point that Hoppe makes is that “Euclidean geometry … is no more and no less than the reconstruction of the ideal norms underlying our construction of such homogeneous basic forms as points, lines, planes and distances.” But geometry in that sense is analytic a priori and to assert that pure geometry cannot be refuted by experience is to assert a truth that even empiricists agree with.

Thirdly, the fact that we make measurements of real space – even non-Euclidean space – using Euclidean geometry and tools constructed with Euclidean geometry as a basis does not prove that Euclidean geometry is a universally and necessarily true theory of real space throughout the universe known a priori.

For example, a two-valued classical logic can be used to show that certain events described by quantum mechanics are not strictly subject to that same classical logic: rather, a non-classical logic is required for the quantum world. But the fact that we use two-valued classical logic as a basis for this does not prove that classical logic is a universally and necessarily true logic throughout all levels of reality in the universe. All that is presupposed is that classical logic is valid and sound in a specific domain: that of the ordinary macroscopic world that human beings inhabit. But even its validity in that domain must be ultimately judged a contingent fact about the universe.

Next, even though scientific instruments are constructed with Euclidean geometry (see Hoppe 2006: 288, n. 23), this does not prove what Hoppe thinks it does. That such instruments are indeed very useful is explained by the fact that Euclidean geometry is an approximation of the geometry of space in a limited domain: that is, a domain where there is only slight curvature of space in small dimensions and involving bodies of relatively small mass and negligible acceleration. But this is a contingent and a posteriori fact about the universe, not a necessary and a priori one.

We could in fact design and construct the same, or even better, tools or scientific instruments using non-Euclidean geometry, but the use of Euclidean geometry provides an easier shortcut because Euclidean geometry is a good approximation of limited small areas of space within the universe – a universe which nevertheless has a non-Euclidean geometry.

Rudolf Carnap explains:

“Our instruments occupy such tiny parts of space that the question of how our space deviates from Euclidean geometry does not enter into their construction. Consider, for example, a surveyor’s instrument for measuring angles. It contains a circle divided into 360 equal parts, but it is such a small circle that, even if space deviated from the Euclidean to a degree that Gauss hoped he could measure (a much greater degree than the deviation in relativity theory), it would still have no effect on the construction of this circle. In small regions of space, Euclidean geometry would still hold with very high approximation. This is sometimes expressed by saying that non-Euclidean space has a Euclidean structure in small environments. From a strict mathematical standpoint, it is a matter of a limit. The smaller the region of space, the closer its structure gets to the Euclidean. But our laboratory instruments occupy such minute portions of space that we can completely disregard any influence non-Euclidean space might have on their construction.” (Carnap 1966: 149).

But all these observations are empirical discoveries, not a priori truths.

BIBLIOGRAPHY
Carnap, Rudolf. 1966. Philosophical Foundations of Physics: An Introduction to the Philosophy of Science (ed. Martin Gardner). Basic Books, New York and London.

Hoppe, Hans-Hermann. 2006. The Economics and Ethics of Private Property: Studies in Political Economy and Philosophy (2nd edn.), Ludwig von Mises Institute, Auburn, Ala.

Robert Murphy gets Mises’s Epistemology Wrong

Over at his blog, Robert Murphy is involved in a new Methodenstreit, and selectively quotes a passage from Mises that demonstrates that Murphy himself does not properly understand Mises’s epistemology:

Robert Murphy, “Mises on A Priori Reasoning,” Free Advice, 12 September.

That is underscored by this comment of his later in the post:

“I was going to be snotty about it, but that would be unfair since many Misesians thought Mises was making synthetic a priori propositions. But, look at literally the sentence right before the one you quoted. Mises wrote:

‘This theorem is a tautology, its deduction results in an analytic judgment. Nonetheless nobody would contend that geometry in general and the theorem of Pythagoras in particular do not enlarge our knowledge.’

So Mises is here saying that the Pythagorean theorem is an analytic a priori statement.”
http://consultingbyrpm.com/blog/2013/09/mises-on-a-priori-reasoning.html#comment-73618

First, let us imagine (for the sake of argument) that Mises was really saying that praxeology and Euclidean geometry are analytic a priori. What are the consequences of that?

As analytic a priori systems, neither praxeology nor Euclidean geometry can provide us with any necessarily true knowledge of the real world known a priori. The instant either is asserted as true of the real world, both become synthetic a posteriori and must be judged true or false empirically.

But, if that were true, this has destroyed praxeology as the system imagined by Mises as providing necessarily true knowledge of the real world known a priori:

“Praxeology is a theoretical and systematic, not a historical, science. Its scope is human action as such, irrespective of all environmental, accidental, and individual circumstances of the concrete acts. Its cognition is purely formal and general without reference to the material content and the particular features of the actual case. It aims at knowledge valid for all instances in which the conditions exactly correspond to those implied in its assumptions and inferences. Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification and falsification on the ground of experience and facts. They are both logically and temporally antecedent to any comprehension of historical facts. They are a necessary requirement of any intellectual grasp of historical events” (Mises 2008: 32).

Mises is saying here that praxeology is not just an analytic a priori system. First, he is saying that it is not open to verification and falsification on the grounds of experience (or a posteriori), but can be known a priori. Secondly, it also provides necessarily true knowledge of the real world that cannot be refuted by empirical evidence (“It aims at knowledge valid for all instances in which the conditions exactly correspond to those implied in its assumptions and inferences”).

The only way it can do this is if the theorems of praxeology are synthetic a priori.

Murphy has badly misinterpreted Mises. If Mises really thought that praxeology was merely analytic a priori, then the Mises quote I have just cited above makes no sense. Mises’s epistemology would be hopelessly contradictory and self-refuting.

Secondly, let us return to the original passage Murphy quotes in his post.

But let us quote it in its entirety and with full context:

“Aprioristic reasoning is purely conceptual and deductive. It cannot produce anything else but tautologies and analytic judgments. All its implications are logically derived from the premises and were already contained in them. Hence, according to a popular objection, it cannot add anything to our knowledge.

All geometrical theorems are already implied in the axioms. The concept of a rectangular triangle already implies the theorem of Pythagoras. This theorem is a tautology, its deduction results in an analytic judgment. Nonetheless nobody would contend that geometry in general and the theorem of Pythagoras in particular do not enlarge our knowledge. Cognition from purely deductive reasoning is also creative and opens for our mind access to previously barred spheres. The significant task of aprioristic reasoning is on the one hand to bring into relief all that is implied in the categories, concepts, and premises and, on the other hand, to show what they do not imply. It is its vocation to render manifest and obvious what was hidden and unknown before.

In the concept of money all the theorems of monetary theory are already implied. The quantity theory does not add to our knowledge anything which is not virtually contained in the concept of money. It transforms, develops, and unfolds; it only analyzes and is therefore tautological like the theorem of Pythagoras in relation to the concept of the rectangular triangle. However, nobody would deny the cognitive value of the quantity theory. To a mind not enlightened by economic reasoning it remains unknown. A long line of abortive attempts to solve the problems concerned shows that it was certainly not easy to attain the present state of knowledge.

It is not a deficiency of the system of aprioristic science that it does not convey to us full cognition of reality. Its concepts and theorems are mental tools opening the approach to a complete grasp of reality; they are, to be sure, not in themselves already the totality of factual knowledge about all things. Theory and the comprehension of living and changing reality are not in opposition to one another. Without theory, the general aprioristic science of human action, there is no comprehension of the reality of human action.

The relation between reason and experience has long been one of the fundamental philosophical problems. Like all other problems of the critique of knowledge, philosophers have approached it only with reference to the natural sciences. They have ignored the sciences of human action. Their contributions have been useless for praxeology.

It is customary in the treatment of the epistemological problems of economics to adopt one of the solutions suggested for the natural sciences. Some authors recommend Poincaré’s conventionalism. They regard the premises of economic reasoning as a matter of linguistic or postulational convention. Others prefer to acquiesce in ideas advanced by Einstein. Einstein raises the question: ‘How can mathematics, a product of human reason that does not depend on any experience, so exquisitely fit the objects of reality? Is human reason able to discover, unaided by experience through pure reasoning the features of real things?’ And his answer is: ‘As far as the theorems of mathematics refer to reality, they are not certain, and as far as they are certain, they do not refer to reality.’

However, the sciences of human action differ radically from the natural sciences. All authors eager to construct an epistemological system of the sciences of human action according to the pattern of the natural sciences err lamentably.

The real thing which is the subject matter of praxeology, human action, stems from the same source as human reasoning. Action and reason are congeneric and homogeneous; they may even be called two different aspects of the same thing. That reason has the power to make clear through pure ratiocination the essential features of action is a consequence of the fact that action is an offshoot of reason. The theorems attained by correct praxeological reasoning are not only perfectly certain and incontestable, like the correct mathematical theorems. They refer, moreover, with the full rigidity of their apodictic certainty and incontestability to the reality of action as it appears in life and history. Praxeology conveys exact and precise knowledge of real things.” (Mises 2008: 38–39).

First, it is quite clear here that Mises is rejecting the “popular objection” he refers to in paragraph 1. Mises is saying that Euclidean geometry provides real knowledge about the external world, despite being a system of tautologies derived by deduction from the axioms. He is implying that Euclidean geometry is Kantian synthetic a priori knowledge (because Mises cannot properly distinguish between (1) analytic a priori pure geometry and (2) synthetic a posteriori applied geometry).

Secondly, although it is poorly expressed, Mises appears to be thinking of synthetic a priori knowledge when he says that:

“In the concept of money all the theorems of monetary theory are already implied. The quantity theory does not add to our knowledge anything which is not virtually contained in the concept of money. It transforms, develops, and unfolds; it only analyzes and is therefore tautological like the theorem of Pythagoras in relation to the concept of the rectangular triangle. However, nobody would deny the cognitive value of the quantity theory.”

Mises cannot seriously believe that his monetary theory provides no necessary knowledge of reality, and it seems that he is referring to the synthetic character of these theories by his reference above to “the cognitive value of the quantity theory.”

Next, Mises is very clear in rejecting the analytic a priori character of praxeology when he rejects (1) Poincaré’s conventionalism and (2) Einstein’s view of mathematics as being divided into (a) pure mathematics (which is necessarily true) and (b) applied mathematics (which is only true of the real world contingently).

The final paragraph of Mises clinches my argument:

The theorems attained by correct praxeological reasoning are not only perfectly certain and incontestable, like the correct mathematical theorems. They refer, moreover, with the full rigidity of their apodictic certainty and incontestability to the reality of action as it appears in life and history. Praxeology conveys exact and precise knowledge of real things.” (Mises 2008: 39).

This entails that praxeological theorems are necessarily and absolutely true, and are known a priori, but also yield necessary knowledge of the real world. That is nothing but Kantian synthetic a priori knowledge.

And, finally, if Mises did not think that praxeological theorems were synthetic a priori, why is Mises desperate to defend the existence of synthetic a priori in The Ultimate Foundation of Economic Science: An Essay on Method (1962)?:

“The essence of logical positivism is to deny the cognitive value of a priori knowledge by pointing out that all a priori propositions are merely analytic. They do not provide new information, but are merely verbal or tautological, asserting what has already been implied in the definitions and premises. Only experience can lead to synthetic propositions. There is an obvious objection against this doctrine, viz., that this proposition that there are no synthetic a priori propositions is in itself a — as the present writer thinks, false — synthetic a priori proposition, for it can manifestly not be established by experience.

The whole controversy is, however, meaningless when applied to praxeology. It refers essentially to geometry. Its present state, especially its treatment by logical positivism, has been deeply influenced by the shock that Western philosophy received from the discovery of non-Euclidian geometries. Before Bolyai and Lobachevsky, geometry was, in the eyes of the philosophers, the paragon of perfect science; it was assumed that it provided unshakable certainty forever and for everybody. To proceed also in other branches of knowledge more geometrico was the great ideal of truth-seekers. All traditional epistemological concepts began to totter when the attempts to construct non-Euclidian geometries succeeded.

Yet praxeology is not geometry. It is the worst of all superstitions to assume that the epistemological characteristics of one branch of knowledge must necessarily be applicable to any other branch. In dealing with the epistemology of the sciences of human action, one must not take one’s cue from geometry, mechanics, or any other science.

The assumptions of Euclid were once considered as self-evidently true. Present-day epistemology looks upon them as freely chosen postulates, the starting point of a hypothetical chain of reasoning. Whatever this may mean, it has no reference at all to the problems of praxeology.” (Mises 1962: 5).

In other words, the collapse of Euclidian geometry as synthetic a priori knowledge does not apply to the synthetic a priori status of praxeology!

This, if nothing else, is breathtaking in its pig-headed unwillingness to reconsider the epistemology status of praxeology given the fall of Euclidian geometry as the paradigmatic case of synthetic a priori knowledge.

I will just end by noting that part of the problem we face in interpreting Mises is that Mises hismelf was not always clear, and was probably confused about basic epistemological concepts, as his critic Hans Albert has noted:

“Mises gives a Kantian answer to the question of how the a priori character of praxeological knowledge and its apodictic certainty is to be explained. This knowledge apparently can be reduced to the logical structure of the human mind which is supposed to be the basis for thought and action. ... On the one hand he seems to suggest that he is introducing with his principle of action a synthetic a priori proposition, as he ascribes informational content to the principle. On the other hand, he declares the question of whether the respective propositions are synthetic or analytic to be purely verbal and therefore uninteresting. This seems to show that he was not aware of the connection between analyticity and informational vacuity. He permanently compares his allegedly a priori knowledge with logical and mathematical knowledge and gives such a description of the respective propositions and their mode of derivation that one comes to suspect them to be analytic. He confounds the analytical character of propositions with the logical character of the relationships between propositions in a deduction. But the fact that particular propositions are deducible from particular sets of premises does not render them analytic. For instance, in physics propositions from geometry get an empirical interpretation, and, interpreted in this way, they are synthetic. But propositions which are the result of the ‘logical unfolding’ of certain concepts contain no information. They are analytic not because they are derived, but because they follow from definitions which do not carry information themselves. When Mises tells us that the concept of money already implies all theorems of the theory of money, the alleged certainty of the basis of this derivation does not help him to establish a nonvacuous economic theory. The theory of money as he envisages it here would be without informational content and could not be used to explain anything.” (Albert 1999: 131–132).

BIBLIOGRAPHY
Albert, H. 1999. Between Social Science, Religion and Politics: Essays in Critical Rationalism. Rodopi, Amsterdam.

Mises, Ludwig von. 1962. The Ultimate Foundation of Economic Science: An Essay on Method. Van Nostrand, Princeton, N.J.

Mises, L. von. 2008. Human Action: A Treatise on Economics. The Scholar’s Edition. Mises Institute, Auburn, Ala.

New York Times on Wynne Godley

The New York Times has an interesting article about Wynne Godley and his predictions of the global economic crisis of 2008:

Jonathan Schlefer, “Embracing Wynne Godley, an Economist Who Modeled the Crisis,” New York Times, September 10, 2013.

Missing from the article is the plain fact that Wynne Godley was essentially working in the non-neoclassical, Post Keynesian tradition.

Chomsky’s Rationalism

Noam Chomsky has been influential both in modern linguistics, cognitive science and philosophy, but it is curious that he has been a critic of empiricism and an advocate of a type of “Rationalism” (that is, in the technical philosophical sense) (Schwartz 2012: 180).

Two important aspects of this Rationalism were (1) the view that human beings are not blank slates as in radical (and mistaken) empiricism, and (2) the observation that human language learning in children appears to be an innate biological trait, with universal syntactic structures (Schwartz 2012: 180–181).

The latter view was brought out in Chomsky’s now famous 1959 review of B. F. Skinner’s Verbal Behavior, where Chomsky attacked Skinner’s behaviourism and effectively discredited that theory (Schwartz 2012: 181). (A related point is that Quine’s linguistic behaviourism as a basis for rejecting analyticity was also undermined.)

It is obvious that a human biologically endowed language faculty seems to bear some similarity to Platonic ideals or Kantian categories and synthetic a priori knowledge. Nevertheless, that conclusion would be a mistake.

Arguably, the innate language faculty of humans, far from vindicating Kant’s synthetic a priori, is the result of Darwinian evolution, and has, in evolutionary terms, been acquired a posteriori – a biological structure shaped by reality and adaptive selection.

But a highly useful and successful trait or propensity to interpret the world in a particular way, given to us by evolution, does not lead to a priori knowledge in the traditional epistemological sense, a point which even Chomsky hints at in his discussion of the human capacity for doing science:

“Some have argued that [sc. the human science-forming capacity] … is not blind luck but rather a product of Darwinian evolution. The outstanding American philosopher Charles Sanders Peirce, who presented an account of science construction in terms similar to those just outlined, argued in this vein. His point was that through ordinary processes of natural selection our mental capacities evolved so as to be able to deal with the problems that arise in the world of experience. But this argument is not compelling. It is possible to imagine that chimpanzees have an innate fear of snakes because those who lacked this genetically determined property did not survive to reproduce, but one hardly argue that humans have the capacity to discover quantum theory for similar reasons. The experience that shaped the course of evolution offers no hint of the problems to be faced in the sciences, and ability to solve these problems could hardly have been a factor in evolution.

We cannot appeal to this deus ex machina to explain the convergence of our ideas and the truth about the world. Rather, it is largely a lucky accident that there is such a (partial) convergence, so it seems.

The human science-forming capacity, like other biological systems, has its scope and limits, as a matter of necessity. We can be confident that some problems will lie beyond the limits, however the science-forming capacity is supplemented by appropriate background information.” (Chomsky 1988: 158).

I think Chomsky goes too far here in asserting that our innate capacities – for instance, our propensity for inductive reasoning – give “no hint of the problems to be faced in the sciences.” On the contrary, human inductive reasoning (if it stems partly from an innate propensity) seems to have much to do with the ability to do science, though it is a fallible process.

Nevertheless, our linguistic abilities and propensity for creating language conforming to syntactic and grammatical rules have the properties of an abstract deductive system (Schwartz 2012: 182), but this does not give necessary a priori knowledge in the traditional sense:

“It is important to note that Chomsky’s language learners do not know particular propositions describing a universal grammar. They have a set of innate capacities or dispositions which enable and determine their language development. Chomsky gives us a theory of innate learning capacities or structures rather than a theory of innate knowledge. His view does not support the Innate Knowledge thesis as rationalists have traditionally understood it. As one commentator puts it, ‘Chomsky’s principles ... are innate neither in the sense that we are explicitly aware of them, nor in the sense that we have a disposition to recognize their truth as obvious under appropriate circumstances. And hence it is by no means clear that Chomsky is correct in seeing his theory as following the traditional rationalist account of the acquisition of knowledge.’”
“Rationalism vs. Empiricism,” Stanford Encyclopedia of Philosophy, 2004 (rev. 2013)
http://plato.stanford.edu/entries/rationalism-empiricism/

Some of these issues are brought out in this interview with (a young!) Chomsky by Bryan Magee.




Links
“Rationalism vs. Empiricism,” Stanford Encyclopedia of Philosophy, 2004 (rev. 2013)
http://plato.stanford.edu/entries/rationalism-empiricism/

Nathalie Gontier, “Evolutionary Epistemology,” Internet Encyclopedia of Philosophy, 2006
http://www.iep.utm.edu/evo-epis/

“Evolutionary Epistemology,” Stanford Encyclopedia of Philosophy, 2001 (rev. 2012)
http://plato.stanford.edu/entries/epistemology-evolutionary/


BIBLIOGRAPHY
Chomsky, Noam. 1988. Language and Problems of Knowledge: The Managua Lectures. MIT Press, Cambridge, Mass and London.

Cottingham, John. 1988. The Rationalists. Oxford University Press, Oxford and New York.

Horwich, Paul. 1992. “Chomsky versus Quine on the Analytic-Synthetic Distinction,” Proceedings of the Aristotelian Society n.s. 92: 95–108.

Schwartz, Stephen P. 2012. A Brief History of Analytic Philosophy: From Russell to Rawls. Wiley-Blackwell, Chichester, UK.