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Theoretical and Applied Economics
No. 8 / 2014 (597)

Fundamental transfers

„The test of maturity for Economics is for it to achieve epistemological connections with the package of social sciences.”

The maturation of Economics is not attested - as claimed by modern belief - by the employment of Mathematics. The sense of the maturity should be given by the strengthening of Economics’ capacity to most adequately reflect the ineffable complexity and the inevitable volatility of the object of study.

Mathematics’ cognitive power is demonstrated by applying it to homogenous, time-neutral systems, with repetitive movement and linear causality. Mathematics itself continues to show immaturity when describing complex, dynamic and negative-feedback structures, such as economic systems. Moreover, Mathematics operates with quantitative reductions which distort the very essence of social processes.

The human phenomenon cannot be mathematicised. It may be possible for the anthropic part of the world to be quantified in some way, but we do not possess such an instrument yet. What can be mathematicised is the human labour, the artificial addition by which man complements the natural. But even this is achieved to a marginal degree, through indirect measurement. In distilling the essence of social phenomena Mathematics provides the relevant cognitive instruments for about a quarter of the way, with the whole truth being revealed by other means, forms and practices of human reasoning.

What Mathematics achieves in Economics is approximation, but without control over the error, without the power to predict, without measuring the uncertainty.

The error and the uncertainty found in the space of economicity defy the rational functions of Mathematics. The cognitive and operational utility of mathematical instruments is limited by the configuration of Economics between the fluid determinants of the motivations and the volatility of individual answers in the randamental action. The intellectual model of rational knowledge is inefficient in a universe which is constrained by conjecturally multi-stratified causes and by randomly dissipated consequences.

The accuracy of information, the consistency of cognitive patterns and the coherence of explanations cannot be attained by the mathematical method to an acceptable degree of relevance in Economics. The mix of advantages and disadvantages in the combination of resources is dependent on the subjectual, further widening the gap between Economics and Mathematics.

The test of maturity for Economics is for it to achieve epistemological connections with the package of social sciences. This indicates, on one hand, Economics’ escape from the cognitive cul-de-sac it has reached by following the path of Mechanical Physics after the adventure of breaking the corpus of Natural Philosophy in the Enlightenment, and on the other hand it signifies the return of the subjective dimension in the space of economicity by linking naturally with Anthropology, Psychology, Sociology etc.

Economics did not really take into consideration the basic theories of Biology without cautious adjustments. Evolutionism came into Economics through Sociology, via Spencer. The specifics of the problem-focus of Economics are mostly sociological. The notion of subsistence for example, which defines the space of economicity, has an indirect biological sense. When referring to needs we usually consider their cultural reflection, thus looking at them from a sociological perspective. In Economics needs are mostly interpreted from a distinctly human standpoint, which is not strictly biological. The guidelines for understanding the needs are in step with the alignments of the human condition: work, labour, action. The animal condition does not sit comfortably in Economics, as it only has sense when it is associated with survival, as a chronic state. Subsistence turns survival into a potential state.

Economics considers its fundamentals without looking at survival. Darwin deals with survival and when he talks about man in this context he does not go beyond instincts. Cultural resonance - the conscious, rational thought of the human condition - creates a cognitive turbulence when contemplated next to the human nature. However, things are hard to set apart. The human nature evolves on a cultural path, toward the fabrication of the artificial in its own nature, even by dislocating the natura naturans. The animal nature is natura naturans, it does not have its own culture (or artificial nature).

The place of conjunction between natura naturans and the artificial nature is simply the human nature. The fundaments of Economics are linked to this ineffable conjunction. In Economics the structuring of the conjunction is essential, above all as actional arrangements around the relationship (brilliantly studied by Jung) between the conscious and the unconscious, between Reason and Instinct. As a consequence of this constitution, Economics also follows the patterns of randamental finality through the un-mathematizable contribution of emotions, of the options based on non-logical fundamentals.

Kahneman and Tversky have explained the conditional algorithms resulting from a complicated relationship, that between fast and slow thought. One is fast because it belongs to the natural reflexes of survival (belonging to the animal or to the hunter) from a time without cultural memory, whereas the other is slow because it builds arguments, it employs reasoning, it optimizes and it calculates and it has been doing this since the Axial Era, while doing it with consistency for the past three centuries.

Rapid thought occurs naturally, without calculation; it wants everything at once and it can lose anything in the order of things, even irredeemably. This thought creates the frenzy of the hunter, which stirs the casino economy. It is responsible for the majority of decisions and it sits every time at the origin of excesses. Irrational exuberance and its opposite, panic, stem from this thought. Statistically, the economic phenomenology is three quarters of the way the product of this unquantifiable thought. Slow thought must be challenged, it demands costs before profit. It is the entrepreneurial calculation in taking the step in order to confront he invisible forces which make up the market.

The double typology of thought covers the territory of economicity integrally. Economics functions with both states of the human nature. Mathematics chooses rational thought. Biology is at home in with the first form of thought. The entire dialectics, which counts as the 1:1 scale of reality for the human phenomenon, is dealt with by Psychology seconded by Anthropology.

Sociology spans the interstices of the whole, as it has too - just like Economics - attempted alliances with Logic, Mathematics a.s.o. Quantitative sociology replays the fate of Astrology and, just like quantitative Economics, becomes a footnote of Mathematics.


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Fundamental transfers
Marin Dinu

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The Economicity. The Epistemic Landscape, Marin Dinu, 2016

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