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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.

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  • Why? Does economist correctlt predict current markets ang global economy trend? Commented Feb 28 at 17:33
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    Economics is not based on the assumption that people can make choices, it is based on the assumption that people's decisions follow statistical trends dependent on material factors. Whether there is some underlying determinism there or not is moot. But if you believe that economics assumes free choices, to the extent that it succeeds you should reconsider your beliefs, one way or the other. It is as in that anecdote about Bohr placing a horseshoe on his house, horseshoes bring you luck even if you do not believe in them.
    – Conifold
    Commented Feb 28 at 17:38
  • And even more than that, it is very often based on the (debatable) assumption of rationality, meaning that it is assumed that agents will make at any point the best choice given their knowledge. This is for example one of the assumptions behind the model of free market. Economics is on the contrary often based on some assumption of determinism as NotThatGuy explains well.
    – Johan
    Commented Mar 8 at 14:46
  • @Johan assumption of rational agents in models does not imply necessarily complete unconditional rationality. In other words a minority option has non-zero chance of being realized. So one does contradict the other.
    – Nikos M.
    Commented Mar 8 at 17:08
  • @NikosM. I may have caricatured a bit but in most cases, rationality used as a modelling tool is a firm step toward determinism of the agents of the models, isn't it?
    – Johan
    Commented Mar 8 at 19:52

8 Answers 8

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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).


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.

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  • +1 It's an objective fact that economics is counted among the social sciences. philosophy.stackexchange.com/questions/68722/…
    – J D
    Commented Mar 8 at 16:45
  • "That's my opinion on the matter, anyway." And is called compatibilism, I think.
    – rus9384
    Commented Mar 9 at 11:43
  • @rus9384 While I think people can make choices under determinism, I wouldn't call that "free will" (and therefore I wouldn't call myself a compatibilist), because that seems to implicitly add some validity to the existing concept of "free will" (libertarian free will), which is an idea that seems poorly defined and unjustified. But this just seems to be me having a semantic disagreement with compatibilists.
    – NotThatGuy
    Commented Mar 9 at 12:33
  • I don't think compatibilists agree with libertarian idea of free will. To them free seems to mean not imposed through threats, physical impossibility, etc.
    – rus9384
    Commented Mar 9 at 12:49
  • @rus9384 "I don't think compatibilists agree with libertarian idea of free will" - they don't (not necessarily, anyway), but I just mean that when compatibilists say "free will exists", that may be interpreted (especially by a layperson) as support for libertarianists saying "free will exists", even though that's using a different definition of "free will". "Free will" already has a definition (even if it's poor), and redefining it doesn't seem to serve much purpose other than to confuse, and console people that actually "free will" still exists, even though it's completely redefined.
    – NotThatGuy
    Commented Mar 9 at 13:24
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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.
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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.


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

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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.

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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 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 real-world justification.

Here is 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.

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, here and here for concepts 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.

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  • Good thing compatibilism is there to bridge the gap between economics and determinism then.
    – TKoL
    Commented Mar 8 at 15:47
  • @TKoL if compatibilism makes sense to you, what can I say..
    – Nikos M.
    Commented Mar 8 at 15:47
  • Compabilism makes sense to a significant majority of academic philosophers - if it doesn't make sense to you, you should at least consider the possibility that you just haven't had it framed in the right way for you yet.
    – TKoL
    Commented Mar 8 at 18:51
  • @TKoL similarly compatibilism does not make sense to a substantial group of incompatibilists
    – Nikos M.
    Commented Mar 8 at 19:00
  • Yes, many things that make sense don't make sense to a significant group of anybody. But, when it comes to ACADEMIC philosophers, I would actually wager a significant portion of non-compatibilists can at least understand the intuitions behind it. I'm not arguing compatibilism is TRUE here, mind you, I'm just encouraging you to read about it if it doesn't make sense to you. I have no intention of pressuring you to believe it. You can make sense of it and disagree with it.
    – TKoL
    Commented Mar 8 at 19:07
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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.

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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.

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  • Marxism as an economic theory does not necessarily endorse strict determinism. Determinism in this sense not only keeps the masses away from political struggle but also is not found to be true given other things we know. Instead it is argued that the major options of people are determined (and these only to a large extent) by the economic relations (the "base").
    – Nikos M.
    Commented Mar 9 at 8:06
  • See, for example, Parametric determinism and How to make no sense of Marx
    – Nikos M.
    Commented Mar 9 at 8:11
  • @Nikos M. - Personally I try to compare Marx's theories to other theories. In my late twenties I studied law with an intention to game the system, that is, to become a wealthy investor in the political context! But then I realized that the Richest Man in Babylon is just like a baby baboon but driven by symbolic human drama! I think each human develops a will: the effort to cause desired perceptions. I think these are symbolic desires that emerge during early life. Marx is just an intelligent ape who tried to describe how symbol-using apes alter the political and economic customs over time. Commented Mar 9 at 18:45
  • The system plays us all, unless we consciously realize it, react and collectively make something better out of it.
    – Nikos M.
    Commented Mar 9 at 19:07
  • @Nikos M. - How do we make something better of it individually and collectively? Psychologically the child either conforms to the social norm or wants to change the world! But no individual can change the world! In the context called The Behavior Window one either approves or does not approve the behavior of others in the dramatic context: youtu.be/szj93fquJ-g. Try to change the behavior of even one person when you do not approve of their behavior in some dramatic context it often requires the skill of an emotional martial artist! Collective action is bad when it punishes scapegoat(s). Commented Mar 9 at 19:39
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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.

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