Markets and Social Structures: What Economics Gets Wrong - Part I

What are 'markets' and what are 'social structures' in a modern sense? And how do they interact with one another, if at all, in those types of society which contain them, such as capitalist or socialist societies? (In what follows I draw upon some ideas of David Schweickart, an American political philosopher and Marxist.)

'Markets', on the one hand, are sites or places in which things are exchanged for money between people who want to sell something for money and those who want to buy something for money. (In their most basic sense, however, 'markets' are nothing more than sites or places in which people come to exchange their respective wares with each other for something else that they don't have but want.) 'Social structures', on the other hand, are nothing but (in one sense) the ways in which various societies are structured or organised according to those who own and/or control the basic non-human means of production and those who don't. Accordingly, 'markets' and 'social structures' abide by certain 'institutional rules'. One rule of markets is that people who sell things to others for money get to keep the money, while those who buy things for money get to keep those things they've bought. One of the rules of a social structure is that those who own and/or control the non-human means of production get to decide not only how these non-human means of production are used but also who gets to keep whatever is produced by them, while those who don't own and/or control the non-human means of production can't do any of these things.

Now, armed with these two basic concepts, let's turn our attention to, firstly, modern capitalist society, which happens to be called other things, like the 'free enterprise system' or the 'market economy' (both of which are euphemisms for capitalism).

First, let's characterise the market and social structure aspects of a capitalist society.

In a capitalist society, the market is the means by which all sorts of things in various quantities are exchanged for a certain amount of money (price) as determined by the 'laws' of supply and demand. This all happens between what are called 'households' and 'firms'. (I here follow the standard account presented in the textbooks of mainstream neoclassical economics.) Firms, which are the 'producers' of society, sell their various products (goods and services) to households in what's called the consumer market, while households, which are the 'consumers' of society, sell their resources (like their labour and capital goods) to firms in what's called the resources markets. This is the 'circular flow' model of the market aspect of a capitalist system, as expounded in the textbooks of mainstream neoclassical economics. So, here we have a basic conception of the market aspect of a capitalist system.

What about its social structure aspect?

In a capitalist system, the social structure, as defined in terms of those who do and those who don't own and/or control the non-human means of production, is one which consists of two major social classes: the social class of capitalists and the social class of wage-workers. (I here follow both Marx's and Schweickart's accounts.) It's the capitalist class which happens to own and/or control the non-human means of production, while it's the class of wage-workers who don't. 

There are a couple of things which can be said here about this particular type of social structure.

First, since the capitalist class owns and/or controls the non-human means of production, the class of wage-workers, if they want to earn an income then they must sell their labour-power in the labour market to the capitalist class in exchange for wages.

Secondly, because of this market exchange between these two social classes, the class of wage-workers can be put to work and made to work as hard as necessary for the benefit of the capitalist class without being paid any extra than what was agreed to within the labour market. The net result of this situation is that the class of wage-workers produce a sufficient amount of goods to be sold in the market for (hopefully) a profit, which is consequently appropriated by the capitalist class. The latter can do this since they own and/or control the non-human means of production. They get to keep the 'fruits of labour'. (It's also their legal right to do so.)

This particular type of social structure of capitalism is held to be both an oppressive and exploitative one by those within the Marxist tradition of economics (something which is mostly disputed by modern economics, especially by the modern orthodox neoclassical school of economics).

This, then, is the basic social structure of the capitalist system.

So here we have a basic outline of the market and social structure aspects of a capitalist society. What are their connections to each other, if in fact there are any?

There are at least two possible ways of addressing this question. One way, is from a narrow conceptual perspective about what constitutes the subject matter of economics; the other way, is from a much broader ontological perspective in which the aim is to comprehend how all the essential parts bind together to form the whole that something is. For brevity, let's call the former the economic perspective and the latter the sociological or political economy perspective. (On this distinction, see my previous blog post.)

For modern mainstream economics, the sole subject matter of economics is the market place. For it, economics is all about what goes on in various markets in accordance with the 'economic laws' of supply and demand, and thus its focus is on how the quantities and prices of things are determined by such 'economic laws'. Furthermore, it's the view of modern mainstream economics that such types of economic activities can be theoretically analysed independently of the specific type of social structure which pertains to a capitalist society. This is apparent in how they exclude all notions of social classes from their economic models of markets and reduce everything down to the market exchanges between households and firms, which all occur within various degrees of 'budgetary constraints'. For modern mainstream economics, the social structure of a capitalist society can be taken for granted, but as far as the theoretical study of markets is concerned, it's irrelevant. The particular type of social structure of a capitalist society can play no theoretical role in how the various quantities and prices of things in markets are determined. To do this, you just need to invoke the 'economic laws' of supply and demand (which is, incidentally, ultimately rooted in an economic theory of consumer demand - the cornerstone of modern mainstream neoclassical economics). 

So, as can be gleaned here, this is an economic perspective. It's therefore the perspective of modern mainstream neoclassical economics. Modern mainstream neoclassical economics does not transverse into areas which it takes to be the proper domain of sociology or political philosophy, which is where a study of the underlying social structure of a capitalist society belongs. Their slogan is: let's not mix oil and water by including the social structure aspect of a capitalist society into economics, which is just the study of markets.

What about from a non-mainstream position in modern 'economics', such as Marx's (or Marxism in general)? Is there a shared economics perspective here, too? Or is it a sociological or political economy perspective, instead? The short answer is: the Marxist perspective is the latter, not the former - as I shall show in the next blog post on this topic. And furthermore, I shall show why that's a justifiable perspective, and consequently what's wrong with the the economics perspective of (above all) modern mainstream neoclassical economics.

An Addition to the Previous Blog Post

Modern orthodox neoclassical economics, as we shall also see, holds that the sole and legitimate theoretical subject matter of economics is 'the' market, and not the underlying social structures of a market economy. The latter belongs to the domain of sociology. Economics is about markets, while sociology is about social structures.

However, as we shall also see, 'markets' don't exist outside of society, which consequently means they don't exist independently of their 'social structures'. This would be like suggesting a heart for example could exist independently of the body. What a heart is and what it does is dependent upon its internal relations with other parts (or organs) of the body. Similarly, what a market is and how it functions is dependent upon its internal connections with the social structural parts of the overall body of society.

This is a very Marxian view of things, which has its philosophical roots in the 'dialectical' way of thinking about the world, as found in Hegel's philosophy. The short of it is: you can't look at the different parts of the whole  as if they're independent of one another; you have to look at them being interconnected and shaping each other. A human body, for instance, is the sum of all its parts. Similarly, society is also the sum of all its parts. Remove any of its parts, it ceases to be what it is - ie, it ceases to be that particular thing.

Addendum to Last Blog Post

As we'll see in future blog posts on modern mainstream economics, this methodological and epistemological approach of theirs coincides and/or parallels with a theoretical focus on the institution of the market at the expense of two other social institutions in, on the one hand, the ownership and control of the means of production (concentrated wealth and property), and, on the other, free wage-workers selling their labour-power in the market in exchange for a wage (wage-labour) - in short, the principal social structure of a capitalist market economy.

Question for Mainstream Economics

Since natural science endeavours to reveal the hidden causal foundations of the phenomena of the world, as well illustrated by the Ptolemy through to the Newton episode from the history of astronomy and physics example (in a previous blog post), why would modern orthodox neoclassical economics not seek to do the same thing in economics? In short, why doesn't it pursue a scientific realist approach in economics?

Given that scientific realism is the most plausible view of science within contemporary philosophy of science, it would be fair to say that modern orthodox neoclassical economics through its core Walrasian or general equilibrium theory of a perfectly competitive market economy is simply out of step with one of the main aims of contemporary science.

On this topic, let's put it like this. If doing Approach A is the best way of producing a fairly accurate and truthful account of something in terms of its underlying, hidden causal foundations, and there are no good reasons for not doing so, then one should do Approach A over any alternatives (from Approach B...Z). To not do so, would be to ignore some sound philosophical advice. Consequently, one would be pursuing an irrational approach to science.

To put it in metaphorical terms, it's like choosing not to use a torch when looking for your keys in a dark room at night. Clearly, you need a torch to do this kind of thing!

In light of this, we can at least say here that one of the reasons for modern orthodox neoclassical economics not choosing to follow the scientific realist approach of the natural sciences is because it irrationally ignores some good, sound philosophical reasons for doing so. As a result, it chooses the wrong scientific approach: a non-realist or idealist approach (as I've said before).

A Footnote to the Outward Form Versus Essence Blog Post about Capitalism

While it was the case that under the 'golden age' of capitalism (the 1950s) that the level of class inequality in income and wealth was lower (as well documented by Thomas Piketty in his book, Capital in the Twenty-First Century), there still was a significant level of class inequality in income and wealth; it didn't disappear! If it had, however, then capitalism would have ceased to function in accordance with its own inner-nature and logic. The reason for this is to be found in the causal foundations of the capitalist economic system in terms of the social power relation of production between capitalists and wage-workers (ie, between capital and labour), ie., a social institutional relation over who owns and controls the means of production, with the aim of making a monetary profit. As long as that social power relation of production (which is a class relation) is in place, you will always, to varying degrees, have class inequalities in income and wealth. Capitalism, if you accept Marx's account of it, has an in-built tendency toward growing class inequalities in income and wealth. The latter is an outward outcome of the casual essence of the economic system of capitalism. None of this should be forgotten in discussions about the 'golden age' of capitalism (the 1950s).

Once again, it's a failure to scientifically understand the capitalist economic system in terms of Marx's distinction between appearance and essence.

Anwar Shaikh's Theoretical Point, a Footnote: Part IV

Two things. First, the joke about mainstream economics should be re-read in light of the last blog post. Second, it should be clear with respect to modern economics that I take the modern orthodox neoclassical economists to be the Platonists of economics and the modern heterodox economists (like the Stiglitzes of economics) to be the Aristotelians of economics. The former are Platonists because they start with an idealist model of something which is then used to measure whether the real world matches up with it (does a real market economy like capitalism match up with the Walrasian or general equilibrium model of a perfectly competitive market economy?). The latter are Aristotelians because while they seek to give a more realistic picture of things, they nevertheless do so from the vantage point of an idealist/unrealistic model of something (they show that, for various 'market imperfection' reasons, a real market economy like capitalism can't possibly be anything like a perfectly competitive market economy). Importantly, they both reject starting with an actual picture of what's real, without any notions of perfection and/or imperfections. That is, they disregard the theoretical picture of a real market economy like capitalism which is based on real competition.

Anwar Shaikh's Theoretical Point, an Example from the History of Science: Part III

I here present a history of science example to support Shaikh's theoretical view that a modern theory of capitalism should be based on a conception of real competition, not either perfect competition or imperfect competition.

Let's first consider an episode from the scientific history of astronomy and physics in which via the respective scientific works of Kepler and Newton the heliocentric (ie, sun-centred) model of our solar system was firmly established.

The heliocentric model of our solar system basically depicts the Sun at the centre of our solar system (and the universe too) with all the known planets at the time (Mercury, Venus, Earth, Mars, Jupiter and Saturn) orbiting it in, as it was initially understood by Copernicus at the time, circular motions. This particular heliocentric model of our solar system (the Copernican model) was taken to be a fairly accurate representation of our solar system, based on the best available astronomical data of the time - ie, the empirical evidence that best supported the construction of such a model of our solar system. It was consequently held to be a better and more accurate representation of our solar system than its predecessor in the Ptolemaic model which had the Earth at the centre of our solar system, with the Moon, the Sun and all the known planets of the time orbiting it in a combination of circular and epi-circular motions. This model, it needs noting, was too based on the best available astronomical data of the time. Furthermore, it was also held to be a fairly accurate representation of our solar system, despite it being an incorrect or false model in the end.

The scientific work of Galileo's concerning the four phases of Venus and the moons of Jupiter all initially helped to establish that the Sun, and not the Earth, was at the centre of our solar system, and consequently it provided further empirical support for the Copernican heliocentric model of our solar system. However, it was no clinching argument, as it left untouched the issue about the lack of a stellar parallax, which was considered crucial to any acceptance of the Copernican heliocentric model of our solar system.

At about the same time there was also another competing model of our solar system, the Tycho Brahe model which had the Earth at the centre of our solar system with both the Moon and Sun orbiting it, while all the known planets of the time orbited about the Sun. It was a hybrid model of our solar system, ie, a cross between the heliocentric and geocentric models of our solar system. It, importantly, was based on the most up-to-date astronomical data of the time. Consequently, it could not be easily rejected. It thus aimed to be, just like the other two models of our solar system, a fairly accurate representation of it.

Given my brief account so far of this episode from the scientific history of astronomy and physics, it's clear that all these scientists were trying to give as practicably possible a fairly accurate representation of our solar system. Thus, they were all trying to make their respective scientific models of our solar system match up as practicably possible with the real solar system itself.

Significantly, then, all these physical scientists were pursuing a realist approach to the scientific study of our solar system (and the universe, too). They all started with the astronomical-empirical data of our solar system (and beyond) to guide them in the theoretical construction of their respective models of our solar system. Consequently, their respective scientific models of our solar system, regardless of how accurate or inaccurate they eventually proved to be, were grounded in reality, ie, a real-world solar system (and universe too).

Now, let's briefly consider how both Kepler and Newton firmly established the 'heliocentric' model of our solar system, which contains some crucial adjustments to the original Copernican conception of it.

Firstly, based on the detailed and precise astronomical-empirical data of Tycho Brahe, Kepler established that the real motions of the planets around the Sun were elliptical, not circular as Copernicus thought. Secondly, Newton was able to causally explain not only why the Sun was at the centre (or, to be precise, at the near-centre) of our solar system but also why and how the planets, including the Earth and its moon, orbited about the Sun elliptically. He does this by the first two laws of motion and his universal law of gravitation. All the planets of our solar system orbit about its centre of mass, which is near the centre of the Sun, because of a gravitational force which causes them all to constantly fall towards it while constantly flying away from it. Thus, they are all kept in a perpetual elliptical orbit about the Sun. (The Sun itself is also, it should be noted, orbiting about the actual centre of the solar system - its centre of mass).

So, on the basis of the Keplerian-Newtonian account of our solar system, we came to have a fairly accurate representation of our solar system. This causal model of our solar system was not only more accurate than the Copernican one itself, in the ways just outlined, but also a refutation of both the Ptolemaic and Tycho Brahe models of our solar system. The Earth was not at the centre of our solar system, the Sun is.

It can be concluded, therefore, that the Keplerian-Newtonian account of our solar system was the culmination point of a realist approach to science. The aim of science, in this regard, is to get our theories and models to match up as practicably possible with the real world. And one of the consequences of this is that it allows science to make more accurate predictions about things (as noted in another blog post).

This would seem, on prima facie grounds, to be a plausible, rational and even common sense approach in science if one of the aims of science is to get at the truth of the matter.

But most of all notice that in this episode from the history of science, the starting point of science is the real world itself!

Now, as a thought-experiment, let's suppose there is another group of physical scientists who were not trying to actually construct a realistic model of our solar system. Instead, let's suppose they were all interested in developing a modelled solar system which was based on a Platonic view of a perfect solar system. (Let's call them the 'Platonists'.) Let's say that such a solar system would consist of a stationary Earth at the centre of a giant crystal sphere, studded with bright stars which all revolved around it in a 24 hour cycle. Let's also suppose, in this order, that the Moon, the Sun, and the planets Mercury, Venus, Mars, Jupiter and Saturn all orbited about the Earth in perfect circles. Additionally, let's suppose that all these 'heavenly bodies' (as they may be called) are perfect spheres in themselves, and are self-propelling due to some kind of 'internal combustion engine'. And finally, let's suppose that these 'heavenly bodies' all orbit the Earth at a perfect speed and in perfect time so they don't cause any invisible ripples which will disrupt and/or displace the Earth's position at the centre of the solar system (and the universe too).

This then is a theoretical model of a perfect solar system (and universe too), as everything is in balance. It is one which is constructed independently of any astronomical-empirical data. It is, in short, a non-realist or an idealist conception of a solar system (and universe too). 

In addition, this model of a perfect solar system (and universe too) is subsequently used to determine whether the real solar system (and universe too) is either a perfect replication of it or an imperfect replication of it. This particular model of a perfect solar system (and universe too) is the model of a solar system (and universe too).

Now, armed with this model of a perfect solar system, these Platonist scientists turn to the actual solar system itself (and the universe as well). What do they find? Well, based on all the available astronomical-empirical data assembled and provided by the above-mentioned scientific realists (especially Kepler and Newton), they find that the Earth is not at the centre of our solar system (and universe) but the Sun instead! (Just to be clear here, the Sun of course is not really at the centre of the universe, but it is as far as these Platonists are concerned.) Furthermore, they find that all the planets, the Earth with its moon included, orbit about the Sun in ellipses of various astronomical shapes (some, like the Earth's, is nearer to a circular motion while Mercury's motion is very elliptical as well as never returning to the same point in its precession). Additionally, they find that the planets are not self-propelling in the way they conceive them to be, but are in fact kept in their orbits about the Sun due to a gravitational force acting between them and the Sun. Met with the reality of the situation, how do they respond to it? That is, how do they explain the divergence between their model of a perfect solar system (and universe) and the actual solar system itself (and universe too)? They claim, on the basis of their own ideal model of a prefect solar system (and universe), that the reason why the actual solar system (and universe) fails to be a perfect replica of their own ideal model is because of certain types of 'invisible ripples'. These 'invisible ripples' have interfered, according to them, with the running and order of what would otherwise be a perfect solar system (and universe). They are what cause, in particular, for the Earth and its moon to be displaced from the centre of the solar system (and universe) and to be consequently replaced by the Sun itself. These so-called invisible ripples are held to be 'astronomical imperfections' of the solar system (and universe). Thus, for them, the principle reason for why the actual solar system (and universe) fails to be an exact replica of the one depicted in their ideal model of a perfect solar system (and universe) is because it's full of certain types of astronomical imperfections. Accordingly, for them, if these particular types of astronomical imperfections were removed, then the actual solar system (and universe) would match up with their ideal model of a perfect solar system (and universe).

Let's also imagine another group of physical scientists, who go by the name of 'Aristotelians', since they are interested in developing a more realistic model of our solar system (and universe) than these Platonist scientists are. However, as their theoretical reference point, they do not take the Keplerian-Newtonian realist model; instead, they take the idealist or perfectionist model of the Platonists. So, briefly, what they find is that: (1) the actual solar system (and universe) is nothing like the perfect one of the Platonists, and (2) this is because in the real world there are in fact certain types of astronomical imperfections which prevent our actual solar system (and universe) from ever being anything like the ideal or perfect model of the Platonists. Their slogan, so to speak, is: The real world is an imperfect, not a perfect, one. That's life! That's reality! Get on with it, as best you can! So, for them, the 'real' in the sense of what they observe around them is something that's imperfect while for the Platonists the 'real' in the sense of their ideal conception of things is something that's perfect.

Now, in light of the real history of our scientific investigations of our solar system (and universe), how do these two hypothetical perspectives of the Platonists and Aristotelians hold up? On prima facie grounds, they do not. If it's been revealed by science that this is how our solar system (and universe) actually looks like and fundamentally works, that should be the end of the matter. This is primarily because such a scientific realist account of our solar system (and universe) basically matches up with the reality of things. Why would you want to impose (as the Platonists do) a make-believe theoretical framework which clearly doesn't fit the reality of things? That's just a theoretical imposition! Equally, why would you want to use (as the Aristotelians do) such an impositional make-believe framework to help you say that the real-world of things is simply imperfect? To deny or ignore the scientific realist approach here is simply to engage in an irrational, implausible and even a non-commonsense approach to the scientific study of the real world of things.

One more thing, with respect to the Aristotelian/imperfectionist stance about science: if they want to say their account of our solar system (and universe) is a more realistic one than the Platonists' model of it, why not just frame it in terms of the only viable account that we have of our solar system (and universe) in the first place? Why give credence to a patently obvious implausible approach to science and an imaginary theoretical picture of our solar system (and universe)? It simply leaves us hanging on to a picture of something that doesn't exist. It also leads to the drawing of a somewhat still inaccurate representation of our solar system (and universe) in the sense that it asserts that there are in fact 'astronomical imperfections', when according to the scientific realist picture of the Keplerian-Newtonian account there aren't any because they simply don't exist - and, anyway, it's non-sensical to talk theoretically in that way.

In the end, we can conclude (to put it in Shaikh's terms): there is just the real world - there is no perfect or imperfect worlds! It should be plain obvious, then, that you should always start, in science, with the real world of things, not some non-real or imaginary world of things. This is by the way a very empiricist point about knowledge: the basis of both commonsense and scientific knowledge is, as both John Locke and David Hume would say, the world of empirical observation. Also, it's Marx shared point with regards to science.

Thus, when it comes to the task of investigating modern capitalism along scientific lines and developing a scientific theory about it, then one should start with, as Shaikh does, a conception of real competition and not some sort of competing conceptions over perfect and imperfect competition. This is the scientific realist approach. It's the only one that makes plausible sense!

An Economic Joke

There's a well known joke about the core economic theories of modern orthodox neoclassical economics. When it's pointed out to neoclassical economists that their theories of a market economy fail to capture the workings of a real capitalist market economy, they respond with the following: the problem is not with our theories, but with reality - meaning that a real-world market economy like capitalism fails to behave as their models or theories predict. Thus, the implication is that the real world of an actual capitalist market economy must be fixed up in order for it to accurately reflect their 'sound' economic theories, rather than doing the opposite, which is to fix up their economic theories so they better reflect a real-world capitalist market economy.

This joke about the theories of modern orthodox neoclassical economics nevertheless captures the fundamental problem with modern mainstream economics: it's failure to see that science, in order for it to tell us something epistemically useful about the real world, must start from a theoretical point which is based on how the real world essentially is rather than a 'cooked up' version of an ideal world.

It's by this scientific approach that one is able to determine whether one's scientific theories of the real world represent as accurately as practicable the real world itself. If one's scientific theories of the real world fail to do so, then they either get revised until they match up with the reality of things, or they get abandoned altogether. However, what mustn't happen is that the would-be scientist ignores the real world itself, simply because it doesn't fit their theories about things. Apart from being bad-faith science, it simply doesn't get us any closer to the scientific truth of things - which presumably is one of the chief aims of science.

Capitalism: Outward Form Versus Essence

Here's something to think about concerning the essential nature of capitalism.

Many contemporary egalitarian liberals (like Stiglitz) hold that the 'golden age' of capitalism was the immediate post WWII period, especially the 1950s, since it was a time of very low unemployment if not 'full employment', economic growth, high union membership, and lower levels of economic inequalities in income and wealth. None of this needs disputing. In comparison, the present neoliberal era of capitalism, which roughly began in the late 1970s with, first, the election of Thatcher in the UK and, then, a little later with the election of Reagan in the US, is far from being a golden age of capitalism. This is largely because of, on the one hand, growing inequalities in income and wealth along class lines, meaning that a greater level of income and wealth has been going into the hands of the capitalist class at the expense of the broad working and so-called middle classes; and, on the other, the way the state has been maneuvered by the capitalist class to advance its own economic class interests at the expense of the economic interests of both the broad working and so-called middle classes. This neoliberal era of capitalism can nevertheless be summed up as a golden age for the capitalist class but not for the broad working and so-called middle classes. Indeed, with respect to the broad working class, with its twin burdens of increased labour intensity and stagnant wages, plus the ever-present threat of unemployment, it's certainly not a golden age for it.

Now, for egalitarian liberals, what's required is a rewinding of the neoliberal version of capitalism back to its post WWII golden age, as this would be a 'better' and 'fairer' form of capitalism. For this would fix everything, economically speaking.

But here's the rub. While outwardly speaking this would be a 'better' and 'fairer' form of capitalism, would the economic system of capitalism be essentially different at a fundamental class level? Given Marx's scientific analysis of capitalism in volume one of Capital, the answer is no. This is because capitalism at its essence is an economic system based on capitalist oppression and exploitation of wage-workers. Accordingly, capitalism cannot be what it is without this particular oppressive and exploitative class relation being in place, as it constitutes its very social foundations as a particular economic system.

So, the point is this, for egalitarian liberals (like Stiglitz). While one focuses on the outward form(s) of capitalism, it's a mistake to overlook its fundamental or essential class nature, as this is (if we accept Marx's scientific analysis of capitalism) the root causal source of all its outwardly looking problems - such as the growing inequalities in income and wealth between the different economic classes. Another way of putting this: one's only looking at the symptoms and not the causes. So, in order to properly address the symptoms, then (as is often said) one needs to address their root causes.

It should also be noted that egalitarian liberals are only interested in changing the outward forms of capitalism, not its inner-nature. Thus, whether intentionally or not, they are engaging in the preservation of an essentially oppressive and exploitative class system.

NB. This discussion of mine has been couched in terms of Marx's appearance/essence distinction, which at an ontological level is simply a distinction between how the phenomena of the world appears to us (appearance) and how they essentially are at their inner-core (essence). This distinction of Marx's also implies there is a discrepancy between the way things appear and what they essentially are; hence, appearance and essence don't coincide with one another. Finally, it's also an epistemological distinction in that the essence of the phenomena of the world is the causal foundation of how these phenomena of the world appear to us (a very Lockean conception).

Anwar Shaikh's Theoretical Point, an Interlude: Part II

What's the principal aim of scientific models and/or theories of the real world? Is it to develop an accurate representation of the real world in terms of its essential elements at both the underlying hidden causal structural level and its observable phenomenal level? Or is to develop a logically coherent picture, on the basis of a set of stringent assumptions, of an ideal world which can then be used as the basis for examining whether real-world examples of it match up with it?

As can be gleaned here, both questions presuppose different starting points: the former starts with the real world itself (hence a realist approach), while the latter starts with the non-real world or an ideal-world (hence a non-realist or idealist approach).

In the context of Shaikh's theoretical commentary, it's clear that he belongs to the realist camp since he begins his modern theory of capitalism with the conception of real competition, whereas modern orthodox neoclassical economics belongs to the non-realist or idealist camp since it starts with a conception of perfect competition instead.

So, it would already seem, on prima facie grounds, that starting with a conception of perfect competition is not going to get us any closer to an accurate, or fairly accurate, representation of a real-world capitalist market economy. So, if it's the stated scientific aim to in fact develop an accurate, or fairly accurate, representation of a real-world capitalist market economy then any school of modern economics should jettison from its theoretical work the notion of perfect competition.

With this said, let's now give some specific philosophical reasons for preferring Shaikh's real competition approach over the perfect competition approach of modern orthodox neoclassical economics.

Anwar Shaikh's Theoretical Point: Part I

In a number of earlier essays on Marx and neoclassical economics, his book Capitalism: Competition, Conflict, Crises, and a recent note on heterodox economics, Anwar Shaikh (who sees his economic work grounded in classical political economy, which means being based predominantly on the theories and methodological approaches of Smith, Ricardo and, particularly, Marx) has focused his attention on the nature of competition within a capitalist market economy. In so doing, he aims to show that the only viable notion of competition is one based on what he calls 'real competition' in contrast to what's called 'perfect' and 'imperfect' competition in both the orthodox and heterodox varieties of modern economics.

For Shaikh there's no such thing in a real capitalist market economy as either 'perfect' or 'imperfect' competition; there's just 'real competition'. This is because in such an economic system, capitalist firms don't operate as if they're price-takers; nor is there an absence of barriers to the entry and exit of markets by capitalist firms; nor are markets just comprised of many small capitalist firms each competing with each other over the sale of homogeneous products like wheat at the same price; and nor are there any lack of technological advantages which gives some capitalist firms a competitive edge over others. Instead, there's just fierce competition amongst different capitalist firms which engage in cost-cutting measures in order to gain an economic edge over their competitors, with the aim of making the greatest amount of profits at the expense of others. Thus capitalist firms are profit-seekers, not profit-receivers.

So, for Shaikh, real competition in a capitalist market economy is 'not like a ballet', as it's conceived in the model of perfect competition in neoclassical economics, but actually 'a war' with casualties. This consequently means that real competition produces a concentration of wealth in the hands of fewer but larger capitalist firms (a key theoretical claim of Marx's Capital Vol. 1). 

Now, according to neoclassical economics, the reason why a real capitalist market economy fails to emulate the model of perfect competition (which basically consists of many small capitalist firms competing with one another on a 'level playing field') is because of certain 'market imperfections' which impede it, like governmental regulations or labour union practices.

In contrast, however, non-neoclassical economists (like Stiglitz) hold that the perfect competition model can't be realised in a real capitalist market economy since such an economy is in fact comprised of such 'market imperfections'. It can't be otherwise. That is, there can't be such a thing as 'perfect competition', there can only be 'imperfect competition'. Thus, for non-neoclassical economists, a real capitalist market economy can't be perfect - at all!

(It should be noted that non-neoclassical economics seeks to be more realistic in its accounts of a real capitalist market economy, unlike neoclassical economics.)

Now, Shaikh rejects the respective models of competition and the respective approaches of both neoclassical and non-neoclassical economics. This is because both types of economics accept the model of perfect competition as a valid starting point to begin with. In the neoclassical economics case, it's the benchmark by which to measure the failings of a real capitalist market economy, while in the case of non-neoclassical economics it's the basis for saying that a real capitalist market economy isn't in any way at all like what's depicted in such a so-called model of perfect competition.

For Shaikh, this theoretical starting point is the wrong way of going about grasping the nature of a real capitalist market economy. It leads you up the wrong theoretical garden path, whereupon you draw the wrong theoretical conclusions - such as how the unemployment and poverty of the capitalist economic system is the result of certain types of 'market imperfections'. To avoid this theoretical outcome, you need to start from a different theoretical basis - one which is actually grounded in the real world to begin with.

Shaikh sums up his theoretical position at the end of his book, Capitalism, by saying that there can be no imperfection without perfection, but since there is no such thing as perfection, then there can't be any such thing as imperfection in the real world - hence there can only be the real, since that's all we have.

Now, it's my view here that Shaikh is right about all this: the starting point for a theoretical analysis of modern capitalism, in contrast to both neoclassical and heterodox economics, is a conception of real competition, not a conception of perfect competition.

In the next post I shall give a philosophical perspective on how and why we should accept Shaikh's theoretical point here.

The Platonic Ideal of Economics

The core theory of modern orthodox neoclassical economics is the Walrasian or general equilibrium theory of a perfectly competitive market economy. This is an economic system in which the supply and demand sides of all markets balance each other simultaneously and consequently clear at a 'general equilibrium' price - and in so doing produce both an optimal and efficient outcome in which no one can be made better off except by making at least one other person worse off. It's built on the basis of a specific set of stringent assumptions, such as rational economic agents with perfect information and perfect foreknowledge of the future, perfect competition, no externalities, complete markets (plus several others), which must all hold if the general equilibrium model of a perfectly competitive market economy is to be realised in a real market economy like capitalism.

This model of a market economy is theoretically construed by modern orthodox neoclassical economists as the ideal type of a market economy. It's what a real market economy like capitalism should strive to be if it's to be a highly optimal and efficient economic system.

For both modern orthodox neoclassical economics and its critics (like Joseph Stiglitz), there is nevertheless a discrepancy between this ideal type of a market economy and a real-world market economy like capitalism. There are many possible 'reasons' for this discrepancy between an ideal market economy and a real one like capitalism, such as various 'market imperfections' like 'imperfect information' and 'imperfect competition'. But for the time being, I will put these concerns aside in order to establish the theoretical status of this ideal model type of a market economy.

The best way to construe this ideal model type of a market economy is in Platonic terms.

In Plato's Theory of Forms or Ideas, there are perfect entities in the world which can only be known by the mind, which are called 'Forms' or 'Ideas'. So for Plato there is a Form or Idea for a circle, a sphere, a human being, numbers, morals, a political state, and just about anything else imaginable in the world of Forms or Ideas. As such, they are all archetypes of perfection. So, for instance, the Form or Idea of a circle is a perfect circle in which there are no irregularities in its circumference or shape. Similarly, there is a Form or Idea for a perfect political state, like in his Republic, in which there is a perfect political arrangement amongst all its members from the philosopher kings (the guardians and rulers of society) down to the plebeians and slaves (those who toil on behalf of others who own property). Thus Plato's Theory of Forms or Ideas purports to be a philosophical theory about what are the perfect archetypes of things.

Plato's Theory of Forms or Ideas is also the philosophical means by which to measure whether the real world, in all its human or non-human aspects, actually replicate its respective Forms or Ideas. For example, does a real circular thing replicate the Form or Idea of a perfect circle? Similarly, does an ancient Greek city-state replicate the Form or Idea of a perfect political state, like Plato's Republic?

(For a good concrete example of Platonic conceptions, think of Michelangelo's David. It's meant to be an ideal Form of a male human being, even though none of its anatomical proportions bear any relation to any real male human being. Nevertheless, it's held up as the perfect archetype of a male human being.)

Now, it is in similar terms that we can construe the Walrasian or general equilibrium theory of a perfectly competitive market economy in modern orthodox neoclassical economics. It too is a theory which purports to be a perfect conception of what an ideal market economy is (as spelt out in the above account of it). It does this on the basis of its specific set of stringent assumptions, which all trade in on a perfect notion of something. It is a conception which has only been developed at the level of theoretical ideas, ie, at a level independent of any empirical import from the real world. In that sense, it purports to be a pure theoretical model of a perfectly competitive market economy - nothing more. Hence, like Plato in his Republic, modern orthodox neoclassical economics also offers an ideal picture of something.

But this is not all. Like Plato's Theory of Forms or Ideas, especially in his Republic, modern orthodox neoclassical economics also uses this pure or ideal theoretical model of a perfectly competitive market economy to assess and/or measure whether a real market economy like capitalism replicates it.

So, it's in at least these two ways that we may construe the core Walrasian or general equilibrium model of modern orthodox neoclassical economics as being a Platonic conception. This is especially so given that it's conceived at the level of pure theoretical ideas, independently of any empirical import from a real-world market economy like capitalism.

As we will come to see in greater detail throughout these blog posts, the core theory of modern mainstream economics is both the ideal of what a market economy should look like and the benchmark by which to assess examples of a real-world market economy like capitalism.

Once again, we can ask the question here about whether this core model of mainstream economics is an accurate and/or realistic picture of a real market economy like capitalism? Or is it a piece of pure fantasy? Or is it simply a piece of social engineering, designed for a particular ideological purpose in the interests of, above all, a specific socio-economic class? Or is it none of these things, but just the work of a naive school of thought which, in terms of Plato's famous Allegory of the Cave, does not go beyond looking at the shadows cast on the walls of the cave by the flickering flames of the fire?

These are questions (and many others like them) which I shall take up in later blog posts, especially when examining the realism of the core assumptions of modern orthodox neoclassical economics and its 'as if' approach.

Economics' 'Elegant' Theories

One more thing regarding the last post. Modern orthodox neoclassical economics also needs to go beyond the construction of 'elegant' mathematical theories or models of a perfectly competitive market economy, from which it derives its questionable predictions about a real momentary market economy like capitalism - if it's to be of any use. That is to say, mathematical elegance is not enough to either justify or validate a 'scientific' theory, which is not to say that mathematics, as demonstrated in the hard natural sciences like physics and chemistry, is a dispensable tool (see Eugene Wigner's paper and A.C. Grayling's discussion of it in The Frontiers of Knowledge). A 'scientific' theory, as I've already pointed out in previous posts, needs to be of empirical substance. Anyway, the GFC is a recent case in point. As critics from Steve Keen through to Bill Mitchell, Michael Roberts and Anwar Shaikh have all pointed out, against the dismay of such 'Nobel' Laureates as Robert Lucas, it failed to predict it; indeed, it believed that such economic crises were things of the past. Therefore, it needs to properly think about how it goes about constructing a more realistic and accurate model/theory of a real market economy like capitalism. One obvious place to start is to fully take note of the theoretical and ideological critiques of both its core economic theory (the Walrasian or general equilibrium theory) and its underlying methodological approach (a la Milton Friedman). Also, it needs to properly consider the alternative theories within economics, especially its heterodox schools like post-Keynesianism and modern classical political economy based on the works of Smith, Ricardo and, especially, Marx  (as articulated by Anwar Shaikh). Of course, in doing all this, it will cease to be what it presently is; it would consequently have transformed itself into something that's non-orthodox and non-neoclassical.

By the way, the 'Nobel' prizes given in economics are not real Nobel Prizes; they're just the Swedish Bank Memorial Prizes in Honour of Alfred Nobel. It's a smart marketing exercise by the Swedish Bank to give some sort of scientific legitimacy to the field of economics by associating it with the real Nobel Prizes. Furthermore, most of these so-called prizes have been given to modern orthodox neoclassical economists (eg, Friedman and Lucas). Thus, it could be claimed (as it in fact is) they're mostly given to those types of economists who reflect the capitalist economic system as 'the best of all possible economic worlds'.

Scientific Truth Matters

As an addition to the previous post, it could be said that the truer your theory is, the more accurate and consistent are your predictions.

Think of the differences between Einstein's theory of general relativity and Newton's universal theory of gravity.

The former is considered to be a more accurate theory of our solar system and universe than the latter. This is because it takes gravity to be basically the curvature of space-time as causally shaped by massive objects like the Sun, rather than as some universal 'force' acting between objects of mass, say, between the Sun and planets. It is because of the curvature of space-time that the planets of our solar system orbit around the Sun rather than due to some sort of 'gravitational force'. As the Nobel Laureate in Physics Ted Wheeler says: massive objects (like the Sun) shape the curvature of the space-time fabric of the universe (the causal origin of gravity), while the space-time curvature of the fabric of the universe (gravity) determines the actual motions of planets around massive objects like the Sun.

The basis for the acceptance of Einstein's theory over Newton's was provided by (as is well known) Arthur Eddington's confirmation of it in 1919 when he confirmed one of the theory's central predictions - the bending of light from a hidden distant star around the Sun. This work of Eddington's established that light from a hidden distant star could only bend around the Sun if in fact the 'fabric' of space-time curved around the Sun itself; which in turn meant that the curvature of space-time (gravity) is causally shaped by a massive object, like the Sun.

Now, in light of this confirmation of Einstein's theory, Newton's is now considered to be a 'false' theory about our solar system and universe. At best, it's only approximately true, up to a point. This subsequently means that it's unable to fully explain and/or make precise predictions about everything. (This is not to say, though, it's a totally useless theory, as illustrated by the way NASA scientists used it in their calculations for sending astronauts to the moon.)

However, on the basis of Einstein's more accurate theory, it is possible to not only causally explain, for instance, changes in the precession of the planet Mercury (something which Newton's theory couldn't do) but also make very accurate predictions about, for example, changes in the precession of planets like Mercury (something which Newton's theory again couldn't do). Indeed, it's proven to be, even up to the very present, a highly successful theory on both an explanatory and predictive front, as demonstrated by its constant empirical confirmation - such as light being observed coming from behind black holes in 2021.

So, what this comparison between Einstein's and Newton's theories shows is that the soundness or the truthfulness of one's scientific theory matters, not only with respect to its causally explanatory powers but also with regards to (especially) its predictive accuracy.

This is, therefore, the lesson that defenders of modern orthodox neoclassical economics should take heed of. It's not enough to just think that economics need not worry about the soundness and/or truthfulness of its economic theories. A false economic theory can certainly give rise to false or inaccurate predictions, despite what a Milton Friedman might think. So scientific truth matters if your aim is to derive consistently accurate predictions about things, whether that be in the natural sciences like physics or in the social sciences like economics.

Addendum to Previous Post

It should be noted that, despite the original editor's interpretation of Copernicus's theory of the solar system, Copernicus himself would have thought that he was trying to present an accurate or plausible theoretical picture of the solar system. In short, he would have seen himself as attempting to provide a 'scientific realist' account of the solar system. Thus for him, the Sun was really at the centre of the solar system with all the planets orbiting about it in circular motion and with moons orbiting around certain planets like the Earth and Jupiter. He therefore would have thought that his account of the solar system was more accurate than Ptolemy's, which has the Earth as the centre of the solar system and all the planets and the Sun orbiting about it. And even, with respect to Ptolemy's account, despite it proving to be a false or inaccurate account of the solar system, he himself was nevertheless attempting to provide an accurate theoretical picture of the solar system, based on astronomical evidence. Also, it needs noting that while Copernicus's account of the solar system is more accurate than Ptolemy's, that doesn't mean it was 'the' right account of the solar system. This is particularly true in light of, initially, the Kepler-Newtonian account of the solar system and then, later, Einstein's account of it. Anyway, the basic point here is that Copernicus's work (along with Ptolemy's, whose work preceded his, and Tycho Brahe's, Galileo's, Kepler's, Newton's, and Einstein's, whose works all succeeded his) is scientific realist in orientation.

Thus, it needs noting here that while someone's scientific work may fail in the end to give a complete account of things along scientific realist lines, it doesn't mean the scientist in question is not a 'scientific realist' in terms of their scientific aims. They just haven't realised their scientific goals, that's all.

Again, this is one of the main differences between scientific realism and instrumentalism: the latter simply doesn't aim to discover the true state of things, unlike scientific realism; it aims only at making predictions, regardless of how false or inaccurate its theories are. While, on the other hand, scientific realism holds that in order to give a complete account of things, it's not enough to just come up with more or less accurate predictions about things, you also have to base them on sound theories - since the endgame is scientific truth.

Realism and Instrumentalism

A brief clarification about one of the main differences between realism and instrumentalism in science.

Realism in science holds that our scientific theories are true or approximately true descriptions of not only the underlying hidden causal structures of phenomena but also how they might give rise to the observable features  of various phenomena. So, for instance, the quantum mechanics account of matter is not only a true or approximately true description of what goes on at the hidden causal structure level of matter, but is also a true or approximately true description of how the observable features of matter are causally produced by the hidden quantum mechanical structure of matter.

Instrumentalism, on the other hand, denies that our scientific theories are true or approximately true descriptions of things in the ways just described above. As a result, it holds that scientific theories are nothing more than theoretical tools or instruments whose job is to help scientists with the task of ultimately making predictions about the observable phenomena of the world. So, for example, in the history of science the original editor of Copernicus's book on The Revolutions of the Planets construed Copernicus's theory of the solar system as being not a literally true description of it. Consequently, for this editor, Copernicus's scientific theory of the solar system is nothing more than a useful instrument for making predictions about the orbital positions of the planets and stars. Thus, according to instrumentalism, the goal of science is useful predictions, not descriptive (and explanatory) truth, which is akin to Pierre Duhem's instrumentalism.

As a footnote to this discussion, this is how we should look at the instrumentalist nature of modern orthodox neoclassical economics: its methodological approach to a theoretical study of a real market economy like capitalism is one in which it does not (a la Milton Friedman) seek to give a true or approximately true account of it, but only a useful predictive account of it instead.

Addendum to Previous Post

On the basis of what I said in the previous post, it follows that if a theory is based on unrealistic or fictitious assumptions then the theory, in terms of what it purports to represent, is equally an unrealistic or fictitious presentation of things. That's why the core general equilibrium theory of modern orthodox neoclassical economics is often called a fantasy or a piece of fiction by its critics, whether they be Keynesians like Joseph Stiglitz or post-Keynesians like Bill Mitchell or Marxists like John Weeks and Anwar Shaikh, to name just a few.

A Follow-Up: a Conceptual Distinction

Regarding my previous blog post, the following conceptual distinction might prove useful in how we look at what modern orthodox neoclassical economics is doing via its core general equilibrium theory of a perfectly competitive market economy.

To help us with this, consider the following comparison. (My example comes from the Keynesian-Marxist economist John Weeks.) The concept of a horse stands for real horses in nature. It's a general and abstract concept which stands for all the basic and common features shared by all horses in the real world of nature, like having four long sturdy legs with solid hoofs, a long vertical neck when standing up and/or running, a flowing mane and tail, and is a plant-eating animal. Of course, this concept of a horse leaves out all the specific features that belong to the many different individual horses roaming on the planet, such as differences in the colour of their coats and eyes, their teeth and hoofs, and their heights, etc. Nevertheless, on the basis of this general and abstract concept, we are able to pick out instances of real horses in the world of nature, despite the multiple distinguishing features that exist between them. Thus, our concept of a horse, while general and abstract, and (it must also be said) is not a literal description of some Platonic 'horse'  in the realm of 'Ideas', is nonetheless grounded in the real world of nature. It's not an imaginary conception of something. It actually refers to all those creatures in the natural world which display horse-like features. It is therefore a realistically based concept.

What about the concept of a unicorn, for a comparison? It too is a general and abstract concept which stands for not only all those 'creatures' with horse-like features but also 'those' with a single straight horn projecting from their forehead, which is what essentially distinguishes 'them' from horses in general.  The obvious difference is that while we might grasp what the concept of a unicorn stands for (its sense or meaning), it does not actually describe or refer to any real creature in the world of nature. (This is a very Lockean way of discussing things.) Consequently, unlike the concept of a horse, it is not grounded in the real world of nature; in short, it's not based in reality. In fact, it's nothing more than a fictitious concept since it's based on an imaginary figure - 'the unicorn'.

So, in light of this comparison between the two abstract, general concepts of a horse and a unicorn, we can distinguish between two types of abstract concepts: those which are realistically based and those which are non-realistically based. The former can simply be called realistic concepts while the latter can be called unrealistic or fictitious concepts.

With this conceptual distinction in mind, how should we view the conceptual status of the underlying assumptions of the core general equilibrium theory of modern orthodox neoclassical economics?

Well, we would have to say that they (ie, assumptions like rational economic agents and perfect competition) are nothing more than a bunch of fictitious abstract concepts rather than realistic ones, since they do not refer to anything that's actually real in the world of a capitalist market economy. Consequently, the core general equilibrium theory of modern orthodox neoclassical economics is based on a bunch of abstract fictitious concepts, similarly to how a fairytale about unicorns is based on a fictitious notion of something.

Despite what's been said here, there is (as is well known) a ready made methodological defence of the so-called scientific approach of modern orthodox neoclassical economics: the 'as if' defence of Milton Friedman in his 1953 essay, 'The Methodology of Positive Economics'. In future blog posts, I will discuss this methodological defence of modern orthodox neoclassical economics.

The Scientific Status of Economics: an Episode from the History of Science

Using an episode from the history of science, I want to shine some light on the underlying scientific status of modern orthodox neoclassical economics.

Proof of the existence or reality of atoms and molecules provides immense and crucial support for the atomic-molecular hypothesis of matter, for it allows scientists to develop valid scientific explanations of the various physical and chemical phenomena of the natural world on a sound theoretical and experimental basis – in short, on a sound empirical basis (and furthermore, it allows them to make valid predictions). In other words, without such proof of the existence or reality of atoms and molecules, scientists would have no choice but to think of their basic theories of the natural world in instrumentalist rather than realist terms (as evinced by the positions taken by Poincare and others). To illustrate the importance of this for the scientific project of developing fundamental knowledge of the natural world, consider the following example about God-type explanations of the natural world. If, say, it is hypothesised that the different sorts of metals in the natural world are formed as a result of God breathing out different fire-balls into the world, one for gold and another for copper, and this ‘scientific hypothesis of matter’ was then used to explain a myriad of other natural phenomena, then the question can be asked: why should such a hypothesis of matter be accepted as offering a realistic (i.e., correct) explanation of natural phenomena? Now, the only legitimate reason one could possibly provide for its acceptance is actual proof of the existence or reality of God Himself. For, if it is proven that God really exists, then we have a sound basis on which to accept the God-type hypothesis of matter. However, until that is done, then we have no sound basis, and consequently no good reason, for accepting the God-type hypothesis of matter; and moreover, we cannot help but view it as providing nothing more than an instrumentalist explanation of natural phenomena. So, the analogy with attempts at proving the existence or reality of God, in order to establish the truth of the God-type hypothesis of matter, helps to bring out how important it was to prove the existence or reality of atoms and molecules in the establishment and acceptance of the atomic-molecular hypothesis of matter. For proof of something’s existence – as long as it is properly done in a well-tested way – provides the best evidence for believing it to exist (as well as whatever else consequently follows from it).

With this history of science episode in mind, what is the scientific status of modern orthodox neoclassical economics? Is it a realist or instrumentalist enterprise?

The core theory of modern orthodox neoclassical economics (the dominant school of mainstream economics) is the Walrasian or general equilibrium theory of a perfectly competitive market economy. According to this theory, when there is a balance between supply and demand in all markets at the same time - from markets for consumer goods to markets for scarce resources (labour, land and capital goods) - then they will all clear simultaneously (in terms of specific quantities of goods and resources at a certain 'equilibrium' price). As a result, there will be no unsold consumer goods or unsold scarce resources. In addition, this model of a particular type of economy gives rise to what is called a 'non-trivial' result; it gives rise to an optimal state of economic affairs in which no one can be made better off without making someone else worse off. So, if you make someone else better off by making someone else worse off, then it's no longer an optimal economic state of affairs. In economics this is called a 'Pareto optimum'. This model accordingly predicts, amongst other things, that when a market economy like capitalism is in a general equilibrium state there will be no unemployment.

Now, this particular model of a perfectly competitive market economy is nevertheless based on a specific set of 'stringent' assumptions which must all hold for the model to get off the 'theoretical' ground and make 'valid' predictions about a real market economy like capitalism. Some of these 'stringent ' assumptions are the familiar ones of neoclassical microeconomics - like rational economic agents, perfect and complete information, perfect foresight, perfect competition, complete markets for all goods and resources, no externalities, and so on. (Stiglitz identifies at least 10 of them for the model to hold.)

However, as it turns out, none of these underlying assumptions of the theory actually hold in reality, ie, within a real market economy like capitalism. This is because, as is generally acknowledged by both neoclassical economists themselves and their critics, these various assumptions of the theory are in fact 'unrealistic' in the sense that they bear no relation to reality, ie, to any recognisable features of a real market economy like capitalism. Consequently, it cannot be claimed by the adherents to this theory that it is founded on a realistic basis. Nevertheless, this core theory of modern orthodox neoclassical economics is used as a basis for making predictions about a real market economy like capitalism, as well as providing explanations for why these predictions of theirs fail to come out. (I won't go in to all  the arguments and counter-arguments about how neoclassical economists attempt to explain themselves along lines, such as how the real economic world of capitalism is an imperfect copy of their general equilibrium theory or how their theory is nothing more than an 'as if' description of a market economy; I'll leave that for another blog post, or a series of them.) Since this is the case, it would be fair to assume here that modern orthodox neoclassical economics, via its core economic theory of general equilibrium, is an instrumentalist scientific enterprise, not a scientific realist one. Hence, its scientific status is an instrumentalist and not a realist one.

This, of course, raises the thorny question about whether we should accept the veracity of any of the various theoretical claims of modern orthodox neoclassical economics. In light of the above episode from the history of science, on prima facie grounds, we should not. If a theory is not based on sound premises, then it is (from both a logical and an epistemological point of view) hard to accept any of its claims about the real world. (Once again, I will explore these ideas in greater detail in other blog posts.)

Aside: It would seem, then, that the history of science (of the real sciences, that is) is a useful philosophical aid for making some philosophical points about things, which should not be forgotten when doing the philosophy of science.

First Post: Introduction (March 2022)

I am an Australian philosopher with a PhD from Flinders University (2019). My PhD thesis is entitled Marx and scientific realism: a Lockean perspective. It can be accessed at either https://theses.flinders.edu.au or https://www.researchgate.net or https://www.academia.edu (or simply google my name and thesis title). I am presently revising this thesis with the hope of eventually publishing it as a book.

My thesis essentially shows that Marx's critique of political economy in Capital Volume 1 is a precursor of contemporary scientific realism, which is the view in the philosophy of science that science not only aims to discover the essence of phenomena (their causal foundations) but is also, at times, successful in doing so. Furthermore, it shows that Marx's scientific realism is in line with the scientific realist tradition that is partly espoused by John Locke's empiricist philosophy. (His empiricist philosophy also partly espoused positivism, which in the philosophy of science is the view which holds that science can never discover the essence of phenomena, it can only reveal instead the regular connections between things.) Prior to establishing this claim, this thesis also shows that when it comes to the question about whether Locke's empiricist philosophy is the main basis of positivism, it shows that it isn't since Locke's empiricist philosophy is ambiguous about such a question. Instead, it shows that David Hume's empiricist philosophy is the true basis of positivism as all latter-day positivistic thinkers accepted his core epistemological principle that there can be no idea of anything unless it is based on an original impression of it. (See the abstract and preface to my thesis for a more expanded view of all this.)

This blog will serve many purposes. First and foremost, it will serve as a platform for drafting out (however rough and sketchy they may initially be) ideas and arguments based on my current research, particularly within the philosophy of economics (and test them against what others say via feedback). Second, it aims to provide a philosophical critique of the dominant school of modern economics - modern orthodox neoclassical economics - both in terms of its core theoretical model (the general equilibrium model of a perfectly competitive market economy) and its underlying methodology (the instrumentalism of Milton Friedman). Third, it will take a Marxist perspective, which is informed by the most up-to-date philosophical and economic positions within Marxism (such as systematic dialectics). Fourth, it will challenge some of our key assumptions about how we look at a modern capitalist society (such as whether we are nothing more than a bunch of competing utility-maximising individuals within a 'market economy' and social class is a redundant analytical concept). Fifth, it will always be informed by a scientific realist view when it comes to comparing different theories of capitalism, in particular, Marx's theory of capitalism with theories of capitalism in neoclassical economics over such things as unemployment, inequality, poverty, etc. Sixth, it is the underlying credo of this 'rough draft' blog that we should take the ideas which shape our thinking about our modern capitalist market society seriously (and definitely not take them for granted), and subject them to philosophical analysis whenever possible if we are to move beyond a superficial and platitudinous account of it. Anyway, these are some of the aims and aspirations of this blog.

As I post things on this blog, it is not my intention to do so on a daily basis; nor is it my intention to run an up-to-date commentary on all current affairs (which is already being done quite well by many others, whether by their own blogs - such as by Richard D. Wolff, David Harvey, Michael Hudson, Robert Paul Wolff, Steve Keen, Bill Mitchell, John Quiggan and Michael Roberts - or through various publications such as CounterPunch in the US). My goal is simply to engage in a serious theoretical discussion of material that arises out of both my current and future research interests, which nevertheless bear on the real world. For it is surely one of the myths or misconceptions that philosophy has nothing to say about the real world in which we all live (except perhaps for the dominant school of economics, modern orthodox neoclassical economics, which seems to serve the interests of the capitalist class).

So, I look forward to posting here and getting some feedback, in the pursuit of a truer or more accurate picture of things on the basis of philosophical reflection about our various worldviews.