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Subject:
From:
James Ahiakpor <[log in to unmask]>
Reply To:
Societies for the History of Economics <[log in to unmask]>
Date:
Wed, 18 May 2011 12:18:26 -0700
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The more I read Dave's explanations of his claims about doing the 
science of economics as apart from the art of economics, the more 
displeased I get.  Haven't we learned since John Stuart Mill's essay on 
method and countless restatements in textbooks that confronting 
hypotheses with facts (data) to evaluate evaluate or select between them 
is the appropriate scientific method?  How is it that Dave can still 
declare that economic science cannot tell how to control inflation?  He 
writes:
> But say that government is specific about its inflation goal--to achieve a certain level of inflation as defined by some measure, can we then provide a scientific answer. I believe not. You might do it by the way Abba Lerner and I suggested--creating property rights in prices, and establishing a market in changes in prices, thereby eliminating inflation. You might do it by price control; you might do it by limiting aggregate demand, or a variety of other ways. Each has advantages and disadvantages that go far beyond economic issues or economic theory, which is what I meant by the issues being vague. In my view,  economic science cannot answer what method we should use to control inflation.
What is the meaning of "creating property rights in prices"?  When and 
where have price controls curbed inflation?  What is the source of 
"aggregate demand" so that controlling it, independently of a central 
bank's money creation would curb inflation?  Haven't we learned anything 
since David Hume's Essay on Money that increases in the quantity of 
money (the modern equivalence of a central bank's currency) in excess of 
its demand only raises the price level ultimately, and from which we get 
inflation?  Dave's definition of science as the statement of how things 
work should lead to his evaluating his alternative theories of inflation 
by empirical evidence.  Indeed, careful deductive reasoning affirms the 
quantity theory of money as the reliable principle from which to account 
for inflation.  I think historians of economics invite their being 
ignored as practitioners of economic science by their refusal to 
recognize that.

James Ahiakpor

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