Does determinism nullify the science of economics?

Question

The science of economics is based on the assumption that people can make choices. But, for someone like me who believes that the universe is deterministic, this assumption is false, or at least I believe it is false. So, then, does determinism nullify the science of economics? Or perhaps there is a way to rescue the science of economics even if determinism is true. I would be interested to read what philosophers have said about this issue.

Answer 1

The science of economics is based on the assumption that people can make choices

Is it?

Economics is based on the assumption observation that people behave in certain predictable ways, and that man-made systems function in certain consistent ways. And it tries to model this predictability and consistency.

If anything, economics / behavioural science is support for, and requires, at least some degree of determinism. Science wouldn't work on any level if trying to apply it to something that doesn't behave at least somewhat consistently given a similar state and similar environmental factors. The more deterministic something is, the more effectively and more comprehensively science can work when applied to it (although shortcomings of applying science to something may also just be due to a lack of human knowledge).

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If, on the other hand, you mean that studying it is pointless because the insights can't be used to get oneself or others to behave differently, because people can't "make choices", then that would just be wrong.

Firstly, I disagree that people can't "make choices" under determinism. Even if our choices are fully deterministic, we are still freely making them. We would not be free if we were non-deterministic beings, but our actions were deterministic. But deterministic beings can be said to be free as long as they aren't compelled to make a choice by some force outside of their own conscious thought (regardless of whether their own conscious thought is ultimately just a deterministic result of their biology and environment). That's my opinion on the matter, anyway.

Secondly, it's pretty clear that people often behave in certain ways in response to new information (and they wouldn't otherwise have behaved in that way). We're shown that by behavioural science, day-to-day life and just basic logic. Regardless of whether you'd call that "making choices", receiving new information can and does affect our behaviour, and therein would lie the use of studying economics and other scientific fields.

* There may be some disagreement about how scientific economics is, but I don't have much of an opinion about whether it's justified to put the label of "science" on it.

Answer 2

Your question muddies the water a little because it assumes that determinism entails a complete lack of free will (common consensus is that it doesn't), but here's 2 ideas:

Compatibilism - 'free will' from determinism, perhaps Emergent properties of complex systems (Strongly 'saves Economics'):

• This depends on what form of determinism is being discussed. If we are talking of behaviorism or psychological determinism, you might want to check out the aptly named 'behavioral' economics and Vernon L. Smith, which (to the best of my knowledge) accounts for psychological determinism (along the lines of Freud) and behaviorism (along the lines of B. F. Skinner). You could also read 'Free Will' by Sam Harris. If we are discussing other forms of determinism and decision making (for that matter this question could be extended throughout much of human science), it might be useful for you to read 'Freedom Evolves' by Daniel Dennett.

Pragmatics (Weakly 'saves Economics'):

• Alternatively, even if determinism were true at the most fundamental level, it may still be useful to employ the assumption of free will in practical contexts like economics. This is because treating individuals as though they have agency can lead to more effective models and predictions, regardless of the ultimate truth about determinism. This sums to accepting our Epistemological Limits for the pragmatic outcome.

Answer 3

does determinism nullify the science of

To someone making an empirical model, there's no difference between the statements "the system will behave as if [description]" and "[description]"; or between the statements "the system will behave such that [model] predicts measurements" and "[model]". Since humans obviously behave as if they have choices, there's not a problem.

Of course, like every other attempt to use reason, economics would be useless if economists and their audiences were unreasoning puppets whose every thought was bound in its most minute detail by intractable fate.

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Aside: note how the above sentence turns recursive, paralleling the liar paradox.

Answer 4

Existing models of economics only have to model people as if they are rational agents making choices, and this is only based on actual observation of how humans behave.

Most importantly this "as if" does not necessarily imply an ontological commitment to a determinism/free will position. Model is based only on how people seem to behave regardless of the underlying mechanics, if any.

That being said, many authors (see, for example, below) claim that free will is a necessary concept in all these sociological and economic models and this fact makes the denial of free will problematic to say the least. In other words it is too important a concept to be simply a theoretical artifact without being actually real.

[T]he human and social sciences – from anthropology and psychology to sociology and economics – support the non-reductionistic way of thinking, which represents humans not as mere physical systems, but as agents with goals and purposes, beliefs and desires, and explains human behavior on that basis. It would be impossible to make sense of human behavior in its breadth and richness if we did not understand humans in this way. And this understanding, in turn, vindicates agency, choice, and mental causation as central features of human beings..

[...]

I can conclude this post by summarizing my overall argument – an indispensability argument for free will. The argument has two premises:

Premise 1: Our best explanations of human behavior depict humans as choice-making agents: agents with goals and purposes, alternative possibilities to choose from, and causal control over their actions. This depiction is indispensable and compatible with the rest of science.

Premise 2: If postulating certain properties or entities is indispensable in our best explanations of a given phenomenon and compatible with the rest of science, then we are (at least provisionally) warranted in taking those properties or entities to be real.

Putting these two premises together, we arrive at my conclusion:

Conclusion: We are (at least provisionally) warranted in taking intentional agency, alternative possibilities, and causal control over one’s actions to be real phenomena.

This, in a nutshell, is the core of the naturalistic case for free will.

Christian List, The naturalistic case for free will, part 2

Here follows an argument that people to the extent that they are rational must have free will in the libertarian sense.

In this thesis, I give an a priori argument in defense of libertarian free will. I conclude that given certain presuppositions, the ability to do otherwise is a necessary requirement for substantive rationality; the ability to think and act in light of reasons. ‘Transcendental’ arguments to the effect that determinism is inconsistent with rationality are predominantly forwarded in a Kantian manner. Their incorporation into the framework of critical philosophy renders the ontological status of their claims problematic; rather than being claims about how the world really is, they end up being claims about how the mind must conceive of it. To make their ontological status more secure, I provide a rationalist framework that turns them from claims about how the mind must view the world into claims about the ontology of rational agents. In the first chapter, I make some preliminary remarks about reason, reasons and rationality and argue that an agent’s access to alternative possibilities is a necessary condition for being under the scope of normative reasons. In the second chapter, I motivate rationalism about a priori justification. In the third chapter, I present the rationalist argument for libertarian free will and defend it against objections. Several objections rest on a compatibilist understanding of an agent’s abilities. To undercut them, I devote the fourth chapter, in which I give a new argument for incompatibilism between free will and determinism, which I call the situatedness argument for incompatibilism. If the presuppositions of the thesis are granted and the situatedness argument works, then we may be justified in thinking that to the extent that we are substantively rational, we are free in the libertarian sense.

Stylianos Panagiotou, A rationalist argument for libertarian free will (Thesis)

Sidenote: It is argued that marxism as an economic theory is strictly deterministic. This is far from being the case. Marxism does not endorse strict determinism in this sense (which not only keeps the masses passive, but also is not compatible with other things we know about the world), but only in the sense that major economic options are fixed and again these only to a large extend (by the existing relations of production, the "base"), some space for change being open. See, for example, the concept of parametric determinism in marxist theory.

Dialectical determinism as opposed to mechanical, or formal-logical determinism, is also parametric determinism; it permits the adherent of historical materialism to understand the real place of human action in the way the historical process unfolds and the way the outcome of social crises is decided. Men and women indeed make their own history. The outcome of their actions is not mechanically predetermined. Most, if not all, historical crises have several possible outcomes, not innumerable fortuitous or arbitrary ones; that is why we use the expression 'parametric determinism' indicating several possibilities within a given set of parameters.

Ernest Mandel, How To Make No Sense of Marx, IV. Mechanical or parametric determinism

Answer 5

someone like me who believes that the universe is deterministic

In a deterministic universe there is no concept of belief and no concept of choice. Both concepts imply multiple possible alternatives and in determinism there are none.

Therefore your belief is an illogical one. You cannot believe that there is no such thing as belief. You cannot talk about choices, if you believe that there is no such thing.

Even if people were somehow unable to make choices by themselves, someone would have to make them anyway. A choice always requires a chooser. A selection made without a chooser is a random occurrence, which is also excluded from determinism.

Answer 6

In the sciences, determinism is about predictability and the amount and nature of the information needed to make those predictions accurately. Clearly, the amount of information an individual possess about a system, affects that persons ability to predict and make choices based on those predictions.

So, determinism is the ability to predict behavior when people choose freely. It does not restrict freedom, but in many cases, the amount of information required is prohibitive when making accurate predictions.

A classic example is the weather. Meteorologists, based on measurements and the proper use of those measurements, make future predictions about the weather. Based on those predictions, people make choices about what clothing they will use that day.

Meteorologists do not have a 100% prediction rate. The farther into the future they predict, the less likely it is to be accurate. The amount and precision of the measurements required makes long term predictions prohibitive. This knowledge also influences choices made.

Economics is a social science attempting to predict the behavior of people as a function of resources. Particularly, their behavior when necessary resources are scarce: Law of supply and demand. Unlike the weather, peoples economic choices directly influence the economy. But weather predictions are also an economic driver (snow shovels, salt, air conditioners, etc).

Determinism does not nullify meteorology and in a similar manner, economic science is not nullified.

Answer 7

Dialectical Materialism and Economic Determinism
Freedom of the Will and the Interpretation of Behavior

https://www.fau.edu/athenenoctua/pdfs/Estelio%20Iglesias.pdf

Marx's conception of economic determinism has a number of implications for what is generally understood as “freedom of the will”; the range of possible courses of action and belief are always already suggested by the environment from which they arise and flourish, and yet the choices we make among them are always, in one way or another, influenced and directed by our values, attitudes, and beliefs. But these, in turn, are determined and directed by the contingent environment in which we find ourselves, and for Marx, that environment itself arises from general economic conditions. Generally speaking, Marx does indeed reject the traditional idealistic assertion of libertarian free will that the human agent is capable of making choices and taking action independently of any external influence.

Answer 8

I think it is important not to mix apples and oranges. Things have different meaning when you look from above vs looking from below. And this applies to the direction of human history as well as to individual lives.

On a global scale, looking from above, you can clearly see certain developments/channels that determined the direction and pace of economic development in human history.

For example: Why was the steam engine invented and demonstrated by Archimedes never used in practice? Why did the Roman Empire not start the Industrial Revolution? Why did Incas not have the wheel? ...

On a personal scale, if you look from above and examine a person's life as a whole, you will be able to deduce certain deterministic patterns as well.