Spiethoff’s economic styles and the current debate about pluralism in economics

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Abstract

The article concentrates on the methodological aspects of the economic styles approach by Arthur Spiethoff. As it will be shown, this approach shows a lot of characteristics typically attributed to social economics, evolutionary economics, Tony Lawson’s social ontology and, therefore, to heterodox economics in general. However, it can also add interesting insights to the current debate about economics. Among others, a re-interpretation of this approach can help to outgrow the duality of either deduction or induction still dominating the debate about economics. It can also provide a general framework for different economic approaches, including the established (so-called) mainstream approaches.

Posted for comments on 12 May 2017, 11:10 am.
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Comments (4)

  • Rafael Galvão de Almeida says:

    This article makes a good work on summarizing Spiethoff’s work and in presenting his definition of economic styles to people who never heard of him before (just like me and a lot of readers of this journal). So I will focus on the more general aspects and look at how you [the author] introduce[s] the issue.

    In the second paragraph, you introduce the idea of economic styles but by the end of it, all I can say is “then, what are economic styles?” I mean, it is more of a writing issue: you introduce “economic styles” and then you start to tell that it is part of the tradition of the German historical school (GHS) and wait until page 9 to define them. It felt like the topic changed from a dissertation about “what economic styles are” to “what the relevance of the GHS to this is”. For example, let’s take Douglass North’s definition of institutions as “institutions are the rules of the game” (North, 1990, p. 3). I will not discuss the correctness of this definition, but I place this here to show how institutions for North can be defined in one phrase. It would be good if you introduced a simple yet comprehensive definition of economic styles before going about its origins in the GHS. Since the term has been used by others than Spiethoff, it would be good to define what the common ground is among them, leaving the discussion on the differences for another time (since it is not the aim of the paper).

    And, speaking of the GHS, while a detailed research on the economic styles is beyond the scope of the article, I think a contextual note/paragraph would be good. For example, in page 5, note 4, you wrote that Spiethoff’s approach “clearly breathe the spirit of Carl Menger’s ‘exact method’.” Any undergraduate course in history of economic thought teaches the student that Schmoller and Menger were on opposite sides in the Methodensreit and this note seemed to imply that Spiethoff managed to synthetize both approaches, which is a topic for an entire new discussion. And since the economic styles approach is not well-known, it needs a better context than to say it belongs to the GHS tradition.
    I appreciate the clarifying points to determine the scope of the article. Such an unknown character in the history of economic thought can lead to lots of different questions that, in a sense, I have already asked in this review. The article shows no problems with all points, but point 2: if the economic styles has a forgotten character, then why was it? I mean, the approach clearly has applications for the pluralism, but if it was forgotten because of defects and weaknesses, they have to be taken in consideration in its modern applications; but if it was forgotten by bad timing or it just did not interest to the mainstream (I realized that Spiethoff’s articles in English were published more or less at the same time as Friedman’s (1953) article on methodology, what a coincidence, huh? Even the metaphor of a painting not a photo resonates with Friedman’s metaphor of an engine not a photo), then there is nothing that can be done. Redirecting to one of the secondary literature that discuss this can be good.

    A minor thing, but I wonder how the Gestalt theory relates to the complexity approach. Since “[E]conomic Gestalt theory considers the maximum number of relations in which the phenomenon to be investigated actually occurs”, it would be a good way to deal with the economic complexity approach.

    The use of a stereotypical vision of mainstream is a problem with heterodox economics (Dasgupta (2002), in spite of being full of sarcasm, is more or less correct in saying that some heterodox economists do not understand how processes of change occur in mainstream economics) is a problem that heterodox economists cannot afford to commit (in contrast to the opposite scenario, unfortunately) and the article does a good job of analyzing the mainstream using Spiethoff’s view. Once again the approach of overmatematization has also its critics in the mainstream itself (e.g. Romer, 2015), but this is a good discussion on how Spiethoff can complement Lawson’s perspective, since many consider Lawson’s perspective to be too radical. Especially because there are heterodox critiques of mainstream economics in the sense that it does not use too much math but too little math (e.g. Arthur, 1999) (not saying to incorporate them in the article, but that studying complexity based on Spiethoff’s economic styles can be a suggestion for future research – and as an anecdotal evidence, based on talks with a friend who is into econophysics, he said that physicians and mathematicians consider neoclassical mathematics mostly outdated and ignorable).

    Other minor concern is the use of approaches that might not be familiar with an international reader. Like the German Sozialökonomik (which is in the abstract with a slightly different name), I think that non-German speakers might not be familiar with this approach, unlike evolutionary economics (assuming that “German evolutionary economics” does not differentiate much from usual evolutionary economics, save for more emphasis on sociology), so an explanatory note would be good.

    One of the greatest points of the article is “the scientist is not free of interest, but the creation of economic styles is influenced by the scientist’s own impression about the entire economic life”. Economists must remember that economics is a moral science, values and interests will affect their research. It is better to put them on the table rather than try to hide them under a veil.

    In overall, I think that the paper should be published by Economic Thought. It manages to restore Arthur Spiethoff’s work on economic styles and its applications to a more plural economic science. However, the main issues with the paper are a better presentation of the concept of economic styles, make it more clear in the beginning of the article and to give the theory a better explained context in the history of economic thought. It also needs editing with language and writing structure issues.

    References

    Arthur, W. Brian. “Complexity and the economy.” science 284.5411 (1999): 107-109.
    Dasgupta, Partha. “Modern economics and its critics.” In: Mäki, Uskali (ed.). Fact and fiction in economics: Models, realism and social construction (2002): 57-89.
    Friedman, Milton. The methodology of positive economics. 1953. In: Hausman, Daniel (ed.) The philosophy of economics. 3rd edition. Cambridge: Cambridge University Press, (2008): 145-178.
    North, Douglass. Institutions, institutional change and economic performance. Cambridge: Cambridge University Press, 1990.
    Romer, Paul M. “Mathiness in the theory of economic growth.” The American Economic Review 105.5 (2015): 89-93.

    Rafael Galvão de Almeida
    PhD candidate, Federal University of Minas Gerais (UFMG, Brazil)

    • Sebastian Thieme says:

      Dear Rafael Galvão de Almeida!

      Firstly, I would like to thank you for having read the manuscript and your helpful comments. While I agree with most of your points, I prefer a slightly different perspective on some other things you mentioned. As a result, I would like to take your comment as an occasion for a reply.

      First (second paragraph), the introduction of economic styles:
      I absolutely agree with your criticism on the missing introductory definition of ‘economic style’, so I will follow our advice and incorporate an introductory one phrase definition. Your demanded hint about other authors working on economic styles and other economic styles definitions is given within the introduction (page 2), so I think further explanations are not necessary.

      Second (third paragraph): There are three points mentioned.
      Firstly, you refer to note 5 (page 4) for illustrating that you miss a contextual note and demand “a better context than to say it belongs to the GHS tradition.” I agree with you that the contextual background of the economic styles (e.g. GHS) could be further described with a few explanations (which I will do in a foot note).
      Secondly, you wrote that my reference to the Methodenstreit between Schmoller and Menger touches “a topic for an entire new discussion”. Although I agree with you that this is “a topic for an entire new discussion”, I think mentioning it is obligatory: I am sure that an (established) expert of the history of economic thought would criticize me for not at least mention the Methodenstreit. Additionally, I think mentioning it is necessary for illustrating the more or less everlasting character of the discussion about induction and deduction (such as illustrated by Tony Lawson’s texts).
      Thirdly, you would like to know more about: “if the economic styles has a forgotten character, then why was it?” It’s an interesting question, but I think this enters the ground of a new paper, so I clarified in point 2 (page 3): “Reasons that made Spiethoff’s approach forgotten today will also not be discussed.”

      I do not want to play down the importance of your question. However, it’s a multilayered topic, so I’m afraid of running the risk to point at a very different topic and drift away from the original topic of my paper. Note, all of your mentioned reasons (defects and weakness, bad timing etc.) are worth a detailed discussion. Moreover, think about Müller-Armack who was also working on economic styles and originally developed the concept of ‘Soziale Marktwirtschaft’: It’s a strange thing that Germany proudly refers to ‘Soziale Marktwirtschaft’ which can be associated with economic styles while the economic style character behind this concept is not represented in the German academics (no chair, no research program, hardly any articles about it etc.). In addition, as Hesse (2010) showed within his excellent history about economics in Germany after 1945, the German ‘economic community’ rejected the idea of economics in terms of humanities during the 1960s and 1970s. German economics rather chose the way of what economists call the ‘hard’ (‘natural’) sciences such as physics. Consequently, any economic approach close to humanities (such as the economic style approach) suffered non-interest or discrimination. (In fact, some economists migrate to sociology and the like.) On the one side, I agree with you that a footnote with secondary literature could give some hints for the self-study of interested readers. On the other side, I’m afraid that a few more words about it would cause confusion and/or false expectation (about the article’s content).

      (Anyway, a side remark about the photography metaphor: Spiethoff originally mentioned this in his article of the year 1932, i.e. before the article of Friedman (1957) that you mentioned.)

      Third (fourth paragraph), the ‘minor thing’ about the Gestalt theory and the complexity approach:
      You see some relations between the Gestalt theory and the complexity approaches. Unfortunately, up to this point I have not worked in detail on the complexity approaches. I just remember Arne Heise (2016) who wrote that there are substantial differences between (what he called) “mainstream complexity economics” and “heterodox complexity economics”. Consequently, I think the answer to your question needs the consideration of these differences, so it should rather be addressed in a future paper (as you already mentioned in your comment as well).

      Forth (sixth paragraph), another ‘minor thing’ about ‘Sozialökonomik’ and evolutionary economics:
      You raised doubt that international readers might be familiar with the approach/term ‘Sozialökonomik’. I would like to follow your advice and incorporate an explanatory foot note.
      According to ‘German evolutionary economics’, I have another opinion. I used the (differentiating) term to show that I mostly refer to German authors. By referring to these terms I want to avoid that my explanations are misleadingly generalized within the entire evolutionary economics. Furthermore, my impression is that there are some fundamental differences between a) the origins of evolutionary economics as they were described by the German authors Witt and Hermann-Pillath and b) how evolutionary economics is (mostly) practiced today. Consequently, my term ‘German evolutionary economics’ also addresses the theoretical, epistemological etc. grounds connected to the authors which I referred to.

      A final concluding remark: I’m glad that you highlight “that economics is a moral science, values and interests will affect their research.” I absolutely agree with you, but I would like to add that Spiethoff’s approach also gives a good reason to think about ‘how to manage different values and interests that affect our research’.

      Literature
      Heise, Arne (2016): Whither economic complexity? A new heterodox economic paradigm or just another variation within the mainstream? In: ZÖSS Discussion Papers, No. 58, https://www.wiso.uni-hamburg.de/fachbereich-sozoek/professuren/heise/zoess/publikationen/dp58.pdf
      Hesse, Jan-Otmar (2010): Wirtschaft als Wissenschaft. Die Volkswirtschaftslehre in der frühen Bundesrepublik. Frankfurt am Main and New York: Campus Verlag.

      Sebastian Thieme

  • Valerian Popkov says:

    Deep ontological reason for the pluralism of economic theories does not originate from a methodological pluralism, as is sometimes represented, and is linked to the principle of duality, manifesting itself whenever conducting of differentiation (see Spenser-Brown G. «Laws of Form»//BookMasters (Ashland,Ohio).1974)

    The distinction is determined by the separation of one state from another and describes the basic problem of separation of content and environment (content and context). Drawing a distinction, you can, and your opponents, to highlight some object or concept (content) about which you would like to find out the so-called truth, but the second side, which inevitably occurs when such a distinction (context) will almost certainly be different. And this second aspect allows each opponent to build a logically well-founded parcels, but the findings from them may not be the same. They are impossible to refute by means of formal logic, since the laws of logic by each party are not violated. Before I knew it, the researcher, whether he wants to or not wants, but is forced to one side forms: internal or external. Being on one side of the shape, internal and external observers may say, without contradiction, that nothing is certain only with respect to internal or external parties, respectively. Two descriptions of the two observers cannot be combined by means of logic synthesis in a general description, if not specified on which side of the form are observers. The differences in the texts should be, because observers on different sides of different forms perceive reality. To give the expression a sense, we must add to it an indicator of where the observer considers it (with external or internal sides). The second observer may not exist, so to speak, in the physical form; it can be designed in the acting observer for the coordination of meanings in the theory. In general case the maximum number of potential theories N when n distinctions can be determined by the formula N = 2 to the power 2n. If n = 1, then N = 4 or n = 2, so N = 8, and so on.

    Note that this is a potential opportunity – it may well be that not all the theory will be viable, but what is in our hands appears a tool of the construction of theories – is of great heuristic value.

  • Sheila Dow says:

    The purpose of this paper is to explore the methodological implication of Spiethoff’s ‘economic styles’ approach. Since this approach is not well known, and yet, as the paper shows, it connects with themes in the history of economic thought as well as modern concerns with economics, this is a valuable project. The paper contributes much in taking Spiethoff’s approach forward.

    Since Spiethoff’s approach is not well-known it needs to be introduced more clearly early on, providing some background information on Spiethoff and defining his approach in simple terms (before the detailed explanation which follows). It would also be helpful also to include early on some simple statements about how Spiethoff fits into the history of German economic thought.

    The scope for a full analysis is beyond what is possible for one paper. Space constraints will be familiar to readers and do not need elaboration (as on pages 2-3). It is helpful to have it set out what the paper does not address, but the tone on page 3 is overly defensive and could be downplayed relative to statements about what the paper does address. Since a lot of material is packed into the paper, much of it apparently new, it would be good to have an explicit statement of what is new.

    Some simplification is necessary for putting forward an argument. But it would be good to display more awareness that the critical realist objections to mathematics are not shared by all heterodox economists, who see mathematics as one contributor to a pluralist methodology; even Lawson accepts its usefulness as one of many methods. The heterodox objection is to deductive mathematics as the primary method of analysis. So who are the deductive heterodoxy (pages 17-18)?

    Similarly there have been important precedents for an abductive style of argument dating from the Newtonian experimental method and its adoption by the Scottish political economy school. J N Keynes’s hypothetico-deductive method is also relevant. Placing Spiethoff within this history of methodological thought would itself be a major project, clearly beyond the scope of the paper. But it would be good to be more clear about which were the new ideas contributed by Spiethoff. Similarly it would be good to reflect on weaknesses in his approach which might account for the lack of significant attention to it.

    Finally the connection between Spiethoff and pluralism is emphasised in the title, but it needs more explicit treatment. Since the conventional argument for methodological pluralism refers to ontology, it would be helpful to use this terminology as it applies to Spiethoff and pluralism (including Spiethoff’s adoption of the term ‘style’).

    As a matter of style, the numbering of series of points (as on page 2 and pages 17-19) is overused. Also it would be helpful to have a native English-speaker edit the expression.