Occams Razor  
  
  
  
   Kevin Quinn wrote: "....The suggestion is that economic methodology cannot  
   but be historical." Whether this assessment is likely to appeal to people  
   depends in part on what is meant by the two terms 'economic methodology' and  
   'historical'.  
  
  
   1. Let us suppose that economics consists of three distinct parts such as  
   (1) economic history which describes economic events that have occurred, (2)  
   economic science which explains observed economic events within a framework  
   of causality and (3) economic art (or policy) which endeavors to bring about  
   changes in the economy by adopting certain practices. My sense is that  
   understanding the history and especially the policy parts of economics  
   cannot be done well without a good historical grounding, with a grasp of the  
   norms and practices of the people who were/are involved in the historical  
   events or in the formation of economic policies. But the science part may be  
   deliberately ahistorical, as it strives to reach universal causal principles  
   that are true regardless of time and place. This is because science must go  
   beyond history and explain historical history as well as future history.  
  
  
   I will give an example. The statement 'the buyer pays the seller' is a  
   theoretical  statement so far as it reveals a universal feature of the  
   economic event of exchange. No matter what the time or place is we cannot  
   have an exchange in which the buyer fails to pay the seller. Hence such a  
   statement is ripe to be part of economic science. In contrast, the modes and  
   means of payment have evolved greatly, and one cannot do justice to the  
   evolutionary story of payment without providing historical insights. Nor can  
   one possibly design a policy involving payments that does not take account  
   of the current norms and practices of the population for whom the policy is  
   to be designed.  
  
  
   2. If methodology is to be exclusively considered for science alone (though  
   history and policy must also have their own distinct methods), we are unable  
   to shake off the timeless principles of epistemology. Menger's long battle  
   with the historicists must come to mind in this regard. A new battle must be  
   waged,  it  seems,  against  the neo-historicists (who call themselves  
   econometricians) because they have failed to generate valid predictions no  
   matter how exhaustive their data basis for inductive inference is.  I will  
   phrase the problem in honor of Pat Gunning who loves to ask: who sets the  
   standards?  
  
  
   We  are able to communicate abstract ideas because our heads happen to  
   inherit something common to all of us in the biological make up. We have a  
   very common brain. The brain does not let us do certain things and also  
   compels us to do certain things with regard to thinking. Let us consider  
   Occam's Razor in this regard to see why this so-called norm is timeless, as  
   a prologue for the larger issue of principles of science.  
  
  
   Suppose that one is thinking about the problem of going from point of origin  
   A to point of destination B. One looks at the map and sees that there are  
   two alternatives. The first is a roughly straight and direct path from A to  
   B, while the second is a circuitous road that goes trough many complex turns  
   and twists and stretches. The brains habit is that it will tend to suppress  
   the memory or knowledge of the circuitous or more complex path. When one  
   wants  to  make a plan to go from A to B, the brain first presents the  
   straight path, and may even suppress the consciousness of the other path.  A  
   simpler theory is preferred by the brain, and we can do nothing against it.  
   It is not a historically determined practice of our tutored brain: it is the  
   behavior of the untutored brain which tutors us. This virtue of simplicity  
   is not acquired by training in norms of our peers: it is inherited in our  
   brains.  
  
  
   The tortured and hence tutored explanations, such as those advanced by  
   historicists, tend to be discarded by our brains despite tremendous peer  
   pressure to uphold the tattered legacy. May be our brains are lazy and do  
   not like to work harder at making sense of things with complex theories if  
   simpler ones are available. The large and growing chorus of opinion against  
   the mainstream is a reflection of this very primordial character of us: the  
   mainstream wants us to make too many assumptions and to indulge in too many  
   twists and stretches. It imposes to burdensome a set of beliefs, or asks us  
   to believe too much. It is too complex and labyrinthine such as Ptolemaic  
   astronomy was too complex compared to the Copernican.  
  
  
   Resorting to the timeless and homeless (placeless) principles of science  
   appeal not just to nutcases, but to the ordinary students.  Therefore I am  
   pretty  confident  that  no  matter  how  strongly the high priests of  
   neoclassical economics may oppose it, unified economics will be adopted in  
   place of the old quilts of self-contradiction patched by micro, macro, trade  
   and monetary theory. In unified economics, the theories of micro and macro  
   and trade and money are all the one and the same thing, and there is no room  
   for  self-contradiction  such as between micro and macro about what is  
   determined by equality of demand and supply (is it price, or is it income)  
   or whether trade is gainful or not (whether profit in equilibrium is zero).  
   In short, I am saying that the norms of science have some historical roots,  
   but those roots tend to be uprooted unless they are timeless. The historical  
   roots  of science are not sustainable roots, but the logical roots are  
   sustained. This is essentially because the job of science is to explain  
   history. Science must transcend history.  
  
  
   This is how I interpret the Kuhnian perspective on the evolution of science.  
   Historically shaped paradigms impose an unnecessary burden on the intellect  
   to believe in complex and tortured explanations. The reason the old paradigm  
   is  unable  to  provide  satisfactory  explanations of growing list of  
   unexplained phenomena it is supposed to explain is that it violates Occams  
   Razor by keeping a burdensome list of unnecessary assumption or exceptions,  
   twists and stretches that ought to be discarded. A simpler explanation gets  
   rid of unnecessary assumptions and yet covers a larger class of phenomena.  
   This is possible because the better explanation is closer to the essence of  
   the phenomena, and the essence is universal and hence covers a wider class.  
   The essence is by definition something that is both necessary and sufficient  
   to give rise to the phenomenon.  The old paradigms fault is that it keeps  
   unnecessary elements to explain something, and this unnecessary element is  
   the problem: to keep it, one must make extravagant assumptions, exceptions,  
   twists and stretches. But if one adheres to essentialism, one obeys the  
   brains dictum (Occams Razor) of discarding unnecessary elements.  
  
  
   Occams Razor may be the tool that brain applies to cut out the Creatively  
   Redundant Arbitrary Postulates (CRAP) that define the neoclassical paradigm  
   of economic science. An appeal to history will not save it. One may refer to  
   history to see why Fisher and Friedman and Lucas went in and out of fashion,  
   and why Keynes could not remain the Key to economic science.  
  
  
   Mohammad Gani