Monday, February 16, 2015

Yanis Varoufakis on Postmodernism and Economic Methodology

Yanis Varoufakis, now Finance Minister of Greece, some years ago wrote a fascinating book review (see Varoufakis 2002a) of Postmodernism, Economics and Knowledge (2001), an edited collection of essays many of which defend Postmodernist epistemology as applied to economic theory.

In his review of the book, Varoufakis launches into a devastating attack on Postmodernism as any sort of viable epistemology or method for economic science.

His critique is taken from an earlier article (Varoufakis 2002c), and an online version of this with its comments on Postmodernism can be read here. I quote below from the online article, as well as referring to the full review.

Now admittedly I do not know whether Mr Varoufakis continues to hold the views he expressed in his 2002 paper, but they are still excellent criticisms, and I have not seen anything that would lead me to think he has repudiated them.

First, Varoufakis notes how Postmodernism shuns any group of people who believe that they have found objective truths, since such experts are deemed to be “privileging” their own “metanarrative” at the expense of other people’s narratives (Varoufakis 2002a: 389).

Although Varoufakis sees some merit in many of the papers in Postmodernism, Economics and Knowledge (2001), including what looks like a very interesting one by Philip Mirowski (2002), nevertheless his verdict on Postmodernism is damning.

Varoufakis notes that strong and effective advocates of neoclassical economics have existed for years and long before Postmodernism (Varoufakis 2002: 392). The Postmodern method demands an utter rejection of the view that modern capitalist economies can be regarded as coherent systems, since this would be a “metanarrative” (Varoufakis 2002a: 392). The question arises (though Varoufakis himself does not pose it): how is that compatible with Post Keynesian economics?

Worse, according to Varoufakis, the Postmodernist method has “no future” (Varoufakis 2002a: 393).

Why? Varoufakis argues as follows:
“… despite its considerable oeuvre, postmodern criticisms of economics are doomed to shrivel and be absorbed by mainstream economics; the predator turning into unsuspecting prey. I risk this prediction for two reasons.

First, postmodernists allow economics to parade as equally scientific as the natural sciences (albeit on the grounds that no discipline is truly scientific). They are right of course to think that all theory resembles religion, since it also seeks to give meaning to the practices and expectations of whole communities. However some theories are capable of transcending religion and approaching objectivity better than others. Nature’s habit of working independently of our beliefs about it means that the natural scientist can devise experiments which have the power disinterestedly to discard falsity and thus forge knowledge and progress. Society, on the other hand, is corrupted to the very marrow of its bones by our collective beliefs about it, and can therefore provide no objective test of social theory (the latter being part of the very web of beliefs that society is made of). Thus social theory, unlike thermodynamics, is condemned to remain untestable, and stuck in the realm of opinion. Economics valiantly attempts to extricate itself from this fate with a touching commitment to mathematics but, sadly, it only ends up as a religion with equations.

Postmodernity errs in thinking of this as the inevitable failure of all Modernist enterprises. It lambastes economists’ churlish reliance on an Outer Wall of Algebra and an Inner Wall of Statistics but overlooks their success at never even coming close to the nature and the dynamics of contemporary capitalism, thus shielding the latter from rational criticism. But such is the fate of all idealisms which give language an existence independent of the material conditions of social life and reproduction. If only postmodernist critics understood theology and mathematics a little better! Perhaps they would have recognised in economics the greatest proof that Modernity is saturated with its negation.

Which brings me to the second part of the argument: Postmodernity not only lets neoclassical economics off the hook but, more worryingly, reinforces it copiously before dissolving into it. Consider what the postmodern rejection of metanarratives means at the individual level: It means the loss of any capacity to scrutinise one's private urges rationally on the basis of some collectively constructed notion (or metanarrative) of the Good. Stripped of those capacities, the individual fragments into a community of selves, a bundle of ordinal preferences, and ends up with no one self whose preferences those are. In this Empire of Ordinal Preference the only possible data that social theory can go to work with are the differences in individual whims and freely chosen identities. These data are then, courtesy of their ordinal properties, impossible to compare across persons (for this would require a metanarrative) or procure a view of capitalism as a system. Thus in a fully-fledged postmodern schema, social relations are confined to interplay, voluntarism, tolerance and exchange; society is the playground where the latter unfold; and discussions of the General Will, exploitation and developmental freedom make no sense. Does this all sound familiar?

If it does the reason is that neoclassical economics went down that alley decades ago. ….

For Oscar Wilde the supreme vice was shallowness. For Postmodernity this is the New Jerusalem. Its playfulness allowed it to thrive in the friendlier waters of literary and cultural studies at a time when ‘margins’ were becoming central and classical stuffiness was going out of fashion. But now postmodernists have entered shark-infested territory. Neoclassical economics, another purveyor of shallowness, threatens to bend them to its will, gain strength from them and subsequently reinforce hierarchies more oppressive and totalising than those the postmodernists set out initially to dismantle.”
Varoufakis, Yanis. 2002. “Postmodernism: Conspiring with the Orthodoxy,” 10 June
http://evatt.org.au/news/postmodernism-conspiring-orthodoxy.html
Ouch! Varoufakis is saying that Postmodernist criticisms of neoclassical theory, by the intellectual vacuity of Postmodernism, will subtly blend into neoclassical economics.

Varoufakis also commits himself to a reality that has objectivity, and presumably objective truths, to which science can approach in its testable and falsifiable hypotheses and theories.

And, says Varoufakis, current popular and academic movements to reform economics should reject Postmodernism:
“In recent years many dissident voices had to adapt themselves to postmodern-speak in an attempt to be 'included' on the postmodern bandwagon. The PAE [Post-Autistic Economics] movement must release such voices from this obligation. Social criticism of economics must reclaim an awareness that to reject the scientific status of economics is not to reject science in general or to espouse postmodernism.

Indeed irony and ambiguity were utilised, long before Postmodernity, by thinkers eager to come to what a more confident past once knew as the truth. To re-establish irony, ambiguity and indeterminateness in the discourse of economists would be a triumph of the spirit. But it would not be a postmodern turn. For the latter has no monopoly on an appreciation of the radical indeterminacy of social processes (as Hegel would be all too eager to remind us) or the importance of not taking our selves, and our theories, too seriously. On the contrary, Postmodernity undermines itself by offering Modernity’s most awful purveyor another means of extending its dominance. ….

The postmodern turn will be chosen by pseudo-dissidents whose prime interests lie in acquiring a chic image; one that the self-effacing postmodern criticism is good at imparting. The less fashionable option of working towards historically grounded knowledge will appeal to the truly ‘unreasonable’ dissidents; those driven by an unbending commitment to a rational transformation of society.”
Varoufakis, Yanis. 2002. “Postmodernism: Conspiring with the Orthodoxy,” 10 June
http://evatt.org.au/news/postmodernism-conspiring-orthodoxy.html
Bravo! We can add to this John King’s (2002: 195–196) observations that Postmodernist epistemology is incompatible with core Post Keynesian principles, such as objective reality and objective truth, and even something as basic as Nicholas Kaldor’s “stylised facts” about modern capitalist economies.

BIBLIOGRAPHY
Cullenberg, Stephen, Amariglio, Jack and David Ruccio (eds.). 2001. Postmodernism, Economics and Knowledge. Routledge, London and New York.

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

Mirowski, Philip. 2001. “Refusing the Gift,” in Stephen Cullenberg, Jack Amariglio, and David Ruccio (eds.). Postmodernism, Economics and Knowledge. Routledge, London and New York. 431–458.

Varoufakis, Yanis. 2002a. “Deconstructing Homo Economicus? Reflections on Postmodernity’s Encounter with Neoclassical Economics” (review of Postmodernism, Economics and Knowledge), Journal of Economic Methodology 9.3: 389–396.

Varoufakis, Yanis. 2002b. “Postmodernism: Conspiring with the Orthodoxy,” 10 June
http://evatt.org.au/news/postmodernism-conspiring-orthodoxy.html

Varoufakis, Yanis. 2002c. “Why Critics of Economics can Ill-afford the ‘Postmodern Turn,’” Post-Autistic Economics Review 13 (May 2): article 1.

19 comments:

  1. It is so amazing that this guy is now the Finance Minister of Greece - wow!

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  2. His recent book on 'Modern Political Economy' is shot through with post-Marxian/post-structuralist arguments.

    Once again this seems to fall on your confusing 'postmodernism' with post-structuralism. This is a common rhetorical tactic and allows you to equate, say, what I write with some feminist nonsense.

    For example: Zizek attacks 'postmodern' tendencies all the time. But he is a Lacanian post-structuralist. Similarly Varoufakis adheres to a 'constructivist' epistemology (which you complain about and confuse with 'postmodernism') but then attacks what appears to be Lyotard's theories.

    You have to sort out which you don't like. But in order to do that you would have rather a lot of reading to do.

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    1. Phil,

      You say:

      "His recent book on 'Modern Political Economy' is shot through with post-Marxian/post-structuralist arguments."

      OK. That book is this:

      Yanis Varoufakis, Joseph Halevi, and Nicholas Theocaraki. 2011. Modern Political Economics : making Sense of the post-2008 World. Routledge, Abingdon, UK and New York.

      Right?

      On p. 298:
      There is a clear rejection of the idea that we cannot know anything about reality: the authors reject what they call truth "relativism", an idea which they explicitly identify with contemporary Postmodernism. In fact, they call it one of two "lethal enemies" that must be "evaded" (p. 298).

      Also, I do not see any reference to Lyotard or Foucualt anywhere in the book, via searches on Googlebooks.

      Now, if you say they endorse or are heavily influenced by poststructuralism, then what exactly are these poststructuralist ideas that Varoufakis supports, please?

      If he clearly rejects the Postmodernist idea (as he does above) that there is no objective truth, and the postmodernist claim that objective knowledge is not possible, then he cannot be endorsing pure or even a strong social constructivist epistemology. He clearly thinks there is an objective reality and objective truth to which science can approach.

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    2. You'll find the same rhetoric in, say, Zizek or Badiou.

      As for the book here are the relevant methodological quote:

      "Relativism, in its various guises (ranging from ancient Greek Sophism to contemporary
      Postmodernism) rejects theory as anything more than yet another (slightly more pompous);
      narrative. Determinism, on the other hand, stakes a claim to having reduced reality to its bare
      essentials; and then of having put it back together in the form of a ‘closed’ model of reality.
      Our brand of political economics appropriates the epithet modern to reflect (a) our disavowal
      of postmodern relativism and (b) our repudiation of determinism, primitive modernism’s
      trademark." (p298)

      "In Box 4.10 we summoned the dialectic as a device for overcoming unhelpful binary
      oppositions on the way to coming to grips with the underlying reality. We do the same here
      to suggest that capitalism is like the proverbial parallax stick and our models of it, the necessary
      errors, are different viewpoints. Each leads to an erroneous conclusion but when taken
      together they have the potential to become the raw materials which our Reason can synthesise
      into a decent grasp of reality." (p299)

      So, there you go: we cannot grasp at 'reality' directly and so must look at it from as many partial viewpoints as possible. This is an entirely post-structuralist view of knowledge.

      Just as there is no such thing as determinism in the social sciences. Again, this is the key lesson we draw from, say, Lacan (about whom I have had very positive discussions with Varoufakis).

      You confuse this with relativism. But that's because you are attacking strawmen and are not properly familiar with the theories.

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    3. P.S. Link to the book.

      http://digamo.free.fr/varouh11.pdf

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    4. This what they also say on p. 299:

      "The point of dipping into quantum mechanics is to demonstrate that to admit to radical
      indeterminacy is not to yield to the sirens of Postmodernism, whose objective is to lull us
      into a renouncement of the idea of a reality ‘out there’ and the loss of any ambition to
      approach it rationally.
      Just like physicists have not given up on their attempts to understand
      the microcosm of quanta, we have no intention of forfeiting the ambition to rationalise
      capitalism."


      So they say:
      (1) they reject Postmodernism
      (2) accept a reality "out there"
      (3) accept that we can approach it "rationally."

      Even the quote you use is consistent with this, since the context is economic complexity particularly in its future states.

      And they say:

      "Each leads to an erroneous conclusion but when taken together they have the potential to become the raw materials which our Reason can synthesise into a decent grasp of reality."

      So what they say here is that different models can be used as a basis for grasping at reality: a view that, quite frankly, suggests they do think we can at least in theory can get at objective truth.

      So, are we now to understand that the post-structuralist view of knowledge is:

      (1) a commitment to the view that there is an objective reality
      (2) a commitment to the view that we can approach it rationally.

      If this so, (1) also implies there is an objective truth about reality, even if cannot always get to it.

      Are (1) and (2) above ideas you accept?

      But this is all the opposite of what you have been portraying post-structuralism as for some days past.

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    5. And I'll add: if you really do think these are the basis of poststructuralist epistemology:

      (1) a commitment to the view that there is an objective reality
      (2) a commitment to the view that we can approach it rationally.

      I can concur. But it is but a short step to objective truth from here.

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    6. Big difference between the idea that there is an 'objective truth' and that we should approach reality from multiple viewpoints in order to get the best grasp we possibly can upon it. If you can't see the difference then you have some reading and/or thinking to do.

      If you do begin to appreciate the difference then you might be able to start seeing why I consider, say, Sheila Dow and Victoria Chick's methodological work as being effectively post-structuralist.

      I've also pushed Tony Lawson on this in private and he's basically concurred that this is in line with his own views and has admitted that if this is the general post-structuralist position then his writings fall in line with it.

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    7. But you have not given me a clear answer to my questions:

      (1) do you support the view that there is an objective reality?

      (2) do you support the view that we can approach it rationally?

      (3) do you think there are objective truths about objective reality, even if we cannot get to them and so therefore "we should approach reality from multiple viewpoints in order to get the best grasp we possibly can upon it"?

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    8. Quite frankly, the methodology of "we should approach reality from multiple viewpoints in order to get the best grasp we possibly can upon it" should be perfectly compatible with rejecting some view points as being grossly flawed and inaccurate representation of reality or false (such as the idea that all prices are flexible responsive to demand) and some views as accurate or true (such as "the majority of prices are mark-up prices largely unresponsive to demand").

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    9. You're confusing "rejecting some view points as being grossly flawed" with the idea that there is an "objective reality" that we can grasp. One does not follow from another.

      A viewpoint can only be flawed with respect to the ends it seeks to achieve.

      https://fixingtheeconomists.wordpress.com/2013/07/10/economics-as-social-organisation-why-we-should-all-be-relativists/

      The title and use of the term 'relativism' was meant to be provocative, before you start on that by the way...

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    10. The inference that there is an objective reality with objective truths follows inductively via inference to the best explanation from the overwhelming reality that some theories are extremely successful at doing things while some are worthless or almost completely worthless.

      In essence, there if there wasn't an objective reality with objective truths, the astonishing success of science would be (bizarrely) wholely accidental or some kind of miracle:

      Musgrave, Alan. 2006–2007. “The ‘Miracle Argument’ For Scientific Realism,” The
      Rutherford Journal
      2
      http://rutherfordjournal.org/article020108.html

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    11. The notion that there is a reality is very different from the notion that we can gain an 'objective truth' about this reality. That is what Varoufakis et al are disputing.

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    12. But he actually says science can come closer and closer to the truth:

      "First, postmodernists allow economics to parade as equally scientific as the natural sciences (albeit on the grounds that no discipline is truly scientific). They are right of course to think that all theory resembles religion, since it also seeks to give meaning to the practices and expectations of whole communities. However some theories are capable of transcending religion and approaching objectivity better than others. Nature’s habit of working independently of our beliefs about it means that the natural scientist can devise experiments which have the power disinterestedly to discard falsity and thus forge knowledge and progress."

      From what he says here, he seems to think natural sciences have come very close to truth and perhaps actually attain it in some areas.

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    13. (1) First they DO NOT say that we can obtain the truth.

      (2) Second, they are talking about NATURAL SCIENCE here where we can undertake REPEATED, CLOSED-ENDED EXPERIMENTS. Social science is not remotely like this.

      (3) Because of point (2) they are rejecting determinism altogether in social science and instead advocating a form of perspectivism akin to post-structuralism; at least, in its Lacanian, Deleuzian and Foucauldian forms.

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    14. (1) they may not say it explicitly but their words strongly imply they think this: sometimes the truth is obtained.

      (2) even this is a very important admission: the natural sciences are capable of "transcending religion and approaching objectivity better than others. Nature’s habit of working independently of our beliefs about it means that the natural scientist can devise experiments which have the power disinterestedly to discard falsity and thus forge knowledge and progress."

      (3) if Foucault really shunned truth relativism, and supported a type of "a form of perspectivism" that is an important point.

      Did he:

      (1) support the view that there is an objective reality?

      (2) support the view that natural sciences can approach the truth rationally?

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  3. LK
    I'm not sure a writer like Foucault would give an answer to your question which would satisfy you. Post-structuralists work in a post kantian 'critical' traditional which is not directly concerned with truth as a correspondance of mental and objective reprrsentations. Rather it seeks to get at truth by understanding the relation between a subject and her representations of the world. The Pomo stuff you rightly refute is derived from a strong idealism that denies a world independant of our ability to precieve it (no outdoors). This plays into neoliberal hands (no common world, no collective action). Perspectivism holds onto truth as movement between subjective stances (it tries to save the bath water of politics by not fussing about what the 'objective' baby is doing). Ole Bjerg wrote a good post-structuralist account of money using lacan called 'making money' which I think exemplifies this approach.

    Phil - when are you going back to your blog?

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    1. Thanks for your comment, but I am still unconvinced that perspectivism is a viable epistemological position.

      Its central claim appears to be: we cannot have descriptive completeness in our knowledge of the world and truth claims about it.

      Maybe not -- but that does not rule out getting many objectives truths in many areas.

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  4. This is gibberish. Dissolve into itself? Inner and outer walls? Special relativity -- being a theory -- is a religion because it privileges whole communities?

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