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Finally, I would argue that the whole intellectual foundation of NCE, resting as it does on assertion of axioms and deduction of consequences, is adequate to support a science based analysis of the existing behavior of the economy. While I agree with you that we need a system capable of dealing with moral and political implications, to me it does not follow that such a system flows more reasonably from an axiomatic, deductive system than from an observational and inductive approach more typical of the evolutionary sciences.

I think there's a lot of truth in this statement, and behavioral economics approaches like that of Robert Schiller of the Case-Schiller housing index offer a hopeful new way of thinking about these things for many new economists.

The axiomatic approaches are derived from the fact that economics is an evolved species of the field of moral philosophy, not of natural philsophy (i.e, natural science).  And abstract axiomatic arguments are the stock and trade of philosophy (not just theoretical physics), as anyone who has tried to read Wittgenstein can attest.

Policy implications taken from economic analysis therefore are, by definition, moral arguments, and, rightly or wrongly, an argument that can connect a moral argument to one observable in nature simply carries more weight in political discourse because it provides a clearer narrative regarding what people might collectively do about problems, thus encouraging better cooperation to do it. (Why? Because political discourse is an entirely moral discourse too.)  

Arguments that allow for more ambiguity between the moral sphere and the naturally observable one just aren't very useful in getting a group of people to all get on the same page and coordinate their activities toward the same end, even if they are objectively more true.

NCE has been able to assert a compelling, widely held moral claim about humanity -- that of individual liberty and the primacy of the individual over the community within a narrative of rights (which is so compelling because of the self-evidence that only individuals can experience our own, unique deaths -- the community cannot experience it for us).  Once accepted as a given that individual liberty takes precedence over community outcomes, ceteris paribus, the set of implications from observable outcomes is naturally reduced to the Venn diagram of the intersection of the set of observable outcomes and the set of morally acceptable outcomes (i.e., that individual liberty is upheld first and foremost). This allows for essentially algebraically eliminating a lot of things that actually do occur but should not be allowed to occur, thus providing the means of apparently solving social conundrums in neat, mathematical arguments for which economics is both famous and infamous.

by santiago on Fri Oct 28th, 2011 at 11:55:11 AM EST
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