Tuesday, October 06, 2009

“Primacy of Theory” – Hmm. Dan Klein Chimes In

Dan Klein sent me his thoughts on the discussion that has been taking place concerning Human Action. With his permission, I am posting them here:

"Reading Emily’s post, I find myself unsympathetic with her distinction between “economic theory” and “empirical economics” (or “applied economic theory”).

Continued below the fold.
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6 comments:

Roger said...

This is interesting stuff. FWIW I think Dan is sort of kind of right to caution us against the supposed primacy of theory, but wrong about the squirrel’s nuts.

Hayek's psychology says that all "concretes" are really "abstract." There are no (zero, zip, nada) original, "given" facts or sensations. Before the sensation can exist, you've gotta have a category for it and that category is "abstract." Period. The primacy of the abstract. It's very Kantian.

As Dan rightly notes, however, Hayek's point in this regard applies to "a squirrel’s perception of a nut" no less than to any human perception. It applies, in fact, to squirrel sensations no less than any human sensation. Thus, I don't think my different read on Hayek implies a different read on the primacy of *theory* in economics.

I said Dan is "sort of kind of " right to caution us against the primacy of *theory*. I think Emily is right that any "fact" presupposes a theory of sorts. So I might be closer to her than Dan in some philosophical sense. I don't know. But I would deny that we can therefore work up "praxeology" in the solitude of our Cartesian closet, then go out and apply it without any need to let "facts" correct our praxeology. I'll let Emily say whether she meant anything like that or not.

However that may be, I think we should realize that our formal economic theory replaces a pre-existing naive theory and that the process of replacement is one in which facts and theory engage in a dialogue. There is no lexicographical ordering here. I take this to be the main point of Dan's post. If so, I'll subscribe to it.

Roger Koppl

Daniel said...

Thanks to Roger for his valuable comment.

The more I think about it, the more I think the word "theory" shouldn't be used in the expansive way practiced by Mises, Emily, and to some extent Roger. I bet you won't find Hayek or Polanyi using "theory" in that expansive way.

Roger writes: "I think Emily is right that any 'fact' presupposes a theory of sorts."

I would say that any fact presupposes understandings, sensibilities, frameworks, schemes, underlying interpretation, etc.

To me it seems wise to think of "theory" as explanation. It would be incongruous to assert: "any fact presupposes an explanation".

My impetus is to challenge the notion that in Mises there is something about all this that is both worthwhile and distinctive. If Mises is championing "the primacy of theory," he is upholding something that is not even worthwhile. If, instead, he's just saying something like Hayek, Polanyi, and plenty others both before and after Mises, he is not distinctive.

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I read something true here and it was "Explanation is the base of everything" that's perfect because when we're in front of an audience we have to be able to create a good speech and making everything clear.

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