Philosophers and economists rarely find themselves in the same room together. When they are forced to interact it usually generates more heat than light. Consider this rather unedifying debate between the Harvard philosopher Robert Nozick and the Yale economist and Nobel Laureate James Tobin:
Prof Tobin: […] there is a limit to the degree of inequality of opportunity and inequality of outcome which can be tolerated while maintaining the web of consent on which a democratic society rests. I read the other day that the president of Mobil oil Corporation gets a $1.5m salary per year. You compare that with the minimum wage and that's an immense differential […]
Prof Nozick: As for what the Mobil chairman earns, I assume that's something that Professor Tobin could take up with the stockholders of that company; if they are paying the chairman too much and somebody else can offer to do the same job as efficiently, then that's their business and not a concern of mine.
Prof Tobin: There's nothing more dangerous than a philosopher who's learned a little bit of economics
Prof Nozick: Unless it's an economist who hasn't learned any philosophy.
If Inequality is Inevitable what can be done about it?: A debate between James Tobin, Daniel Bell and Robert Nozick, New York Times, 03 January 1982, section 4, p. 5 The New York Times (nytimes.com)
On the question of the relative danger posed by the ‘unphilosophical economist’ and the ‘philosopher with economic pretensions’, I tend to come down on the side of Nozick. That said, his performance in the debate belies his own position, and leads me to question mine.
A more interesting example is the debate that occurred between the Italian philosopher Benedetto Croce and his compatriot Vilfredo Pareto in 1901. This exchange, which concerned the place of economics in relation to the other sciences, was conducted via a series of letters sent to the now defunct Giornale degli Economisti. Croce's stock has sunk considerably since then but at the time he was one of the most prominent philosophers in Europe. For English readers he has a small but enduring legacy in the aesthetic theories of R G Collingwood, one of Croce's most creative followers and a fine philosopher in his own right. Pareto, on the other hand, is now almost universally recognised as one of the greatest economists to have ever lived. The scale of his contributions to both economics and statistics is so massive that it has even overcome the general amnesia that many economists have about the history of their own field.
Indeed, these are deep historical waters for economics and some further context may help frame the debate. Twenty or so years earlier, a minor revolution occurred when the Austrian economist Carl Menger issued his pamphlet The Errors of Historicism in German Economics (1884). This marked the beginning of the so-called Methodenstreit or 'method-dispute' that would lead to the overthrow of the 'German Historical School' and the emergence of a new economics founded on the principles of marginalism. As often happens in the history of ideas, the notion of the centrality of marginal analysis was independently developed by a number of economists simultaneously, including William Stanley Jevons in Britain and Leon Walras in France. The combined effect of these 'marginal revolutions' was to fundamentally change the way economics understood its own methods and aims, shifting it away from history and philosophy, and toward the physical sciences. Pareto was one of the most eloquent proponents of this revolution, calling for the adoption by economists of models drawn from rational mechanics. His own theoretical work demonstrated both the plausibility and the fecundity of this approach.
From one angle, the Croce-Pareto correspondence can seem like a rear-guard battle fought between the retreating orthodoxy (Croce) and the avant-garde of an insurgent new science (Pareto). However this would be to mischaracterise Croce's position, which was equally distant from the historical school and Pareto's l‘economie pure. Croce initiates the debate by proposing that economics is best understood as a science of 'the practical activities of men in so far as they are considered as such, independent of any moral determination'. These 'practical activities' which make up the basic data of economics are all what Croce calls 'mental facts' as they involve the free choice of conscious human agents. Croce opposes mental facts (like choice) to natural facts (like motion), where no 'volition' is involved, and his whole approach to economics flows from this distinction. Natural facts can be described using the techniques of physics because the relevant feature of such facts are their regularities, which cannot be disturbed by the spontaneous power of free choice. For mental facts, on the other hand, 'the very possibility of the mechanical point of view is excluded, not as a thing which may or may not be abstracted from, but as a contradiction in terms'.
The effect of Croce's methodological severities is to create a field of investigation that is almost an empty set. That, at least, is Pareto's own argument in the debate. His two rejoinders to Croce are pleas for a sort of methodological pragmatism (or anarchism) which would grant to the scientist the freedom to study whatever he wants using whatever means available. The only thing that matters is finding the right equations to 'express the interdependence of all unrelated phenomena':
'It is useless to waste time on an a priori discussion of the efficacy of a method. One knows the good craftsman by his work. Instead of complaining so much about the method followed by others, those good people should find a better one themselves[…] They have found nothing up to now, and they are trying to wriggle out of it…'
Pareto, Vilfredo, and F. Priuli. “On The Economic Phenomenon: A Reply to Benedetto Croce.” Giornale Degli Economisti e Annali Di Economia, vol. 71(Anno 125), no. 2/3, 2012, pp.
Reading Pareto’s letters makes one wonder whether scientific revolutions are not created so much by ‘the appearance of anomalies’ in theories, as the philosopher of science Thomas Kuhn thought, but by a sort of boredom that sets in when a specific paradigm stops producing interesting questions. At that point a revolution is inevitable or the science grows moribund and dies off. I also suspect Pareto would have been in full agreement with the following passage from Albert Einstein's Autobiographical Notes, which beautifully summarises his own position:
'[…] the external conditions which are set for [the scientist] by the facts of experience, do not permit him to let himself be too much restricted in the construction of his conceptual world by the adherence to an epistemological system. He therefore must appear to the systematic epistemologist as a type of unscrupulous opportunist.'
Gutfreund, H., Renn, J., Einstein on Einstein: Autobiographical and Scientific Reflections, Princeton University Press (2020), p.152
In their confrontation over the question of methodology Pareto’s unscrupulous opportunism clearly prevailed over Croce’s systematising - and he was amply vindicated by the subsequent course of economic theory. Which is not to say that Pareto comes out of the conflict unscathed. On two connected points Croce's critique manages to bite. The first concerns what Croce calls the 'implied metaphysics' of Pareto's theories.
'[…] you will certainly be surprised if I tell you that the disagreement between us consists in your wish to introduce a metaphysical postulate into economic science; whereas I wish here to rule out every metaphysical postulate and to confine myself to the analysis of given facts. The accusation of being metaphysical will seem to you the last that could ever be brought against you. Your implied metaphysical postulate is, however, this: that the facts of man's activity are of the same nature as physical facts…'
Croce, Benedetto, et al. “On The Economic Principle: A Letter to Professor V. Pareto.” Giornale Degli Economisti e Annali Di Economia, vol. 71(Anno 125), no. 2/3, 2012
From here Croce delivers the only real rhetorical coup of the debate which should be quoted in full:
'The mathematicians who have a quick feeling for scientific procedure, have done much for economic science by reviving in it the dignity of abstract analysis, darkened and overwhelmed by the mass of anecdotes of the historical school. But, as it happens, they have also introduced into it the prejudice of their profession, and being, themselves students of the general conditions of the physical world, the particular prejudice that mathematics can take up in relation to economics - which is the science of man, of a form of the conscious activity of man - is the same attitude which it rightly takes up in relation to empirical natural science'
Croce, Benedetto, et al. “On The Economic Principle: A Letter to Professor V. Pareto.” Giornale Degli Economisti e Annali Di Economia, vol. 71(Anno 125), no. 2/3, 2012
Put another way, it is not the 'mathematisation' of economics that causes trouble, but a 'naïve' mathematisation that is insufficiently reflective to detect that it has exchanged one prejudice for another. On this point, Croce's critique is still unanswered.