Prolegomena 4

An Open Dialogue With Nobel Laureates In Economics - The Road To A Third Revolution In The Economic Science

Anghel N. Rugina,

Prolegomena 4: An Open Dialogue With Nobel Laureates In Economics - The Road To A Third Revolution In The Economic Science
Prolegomena 4, in its own way, is a continuation of the previous trilogy with the same title (1998, 2000 and 2001) but on a different platform and with its particular perspective. The previous trilogy attempted to present the essence of a new, more complete system of economic, monetary, financial, social and political order based on general stable equilibrium conditions. In Prolegomena 4 we enter a new territory of research, called “The History of Contemporary Economic Thought”, in the form of an open dialogue with Nobel Laureates in Economics starting with 1969, specifically in their Memorial Lecture delivered when they received the Prize in Economic Science, dedicated to the memory of Alfred Nobel.

During the Great Depression of the 1930s, we struggled through a global economic crisis, characterized by an open conflict between the economic and financial realities of that time and the dominant classical economic science, which was not wrong per se but rather imperfect, unfinished business. Two generations later, in 2001, we are again faced with a global crisis characterized by a similar conflict between the actual economic and financial realities and the now dominant modern school of Keynesian macroeconomics, which per se is not wrong in the short run. However, when used in the long run beyond its limit of normal efficiency, it may create, as it did, new, more complicated problems. Keynes called this “secular stagnation” and thought that his theory and policies would solve it, but now we see that it did not! It is enough to mention that the monetary policy of the USA has been changed ten times during ten months in 2001, yet the economy has not changed its course. Recently the National Bureau of Economic Research in the USA has announced that a recession had already begun in March, 2001 (see Boston Globe, 2001). In view of these conditions, it is legitimate to raise the question that something is deficient, not in order, in the House of Economics. Indeed, almost the whole of the twentieth century was dominated by a Great Methodological Argument similar to that in the physical sciences. It was, and still is, an open conflict in the sense that the results of modern macroeconomics are viewed as being contradictory to classical economics. In other words, the final results of macroeconomics are considered to be a better substitute for the results given by classical economics. The position of modern, Keynesian economics appears to be rather strong because of the fact that in the physical sciences – speaking methodologically – there is a similar situation. Consequently, we are dealing here with a crisis in methodology and in logic, “the queen of all sciences”, as John Stuart Mill called it.

Kurt Go¨del (1931) gave a signal that something was not in order in the house of modern, symbolic, mathematic logic as presented in Principia Mathematica (Whitehead and Russell, 1910). Go¨del, by formulating his now famous incompleteness-proof, actually did not solve anything from the substance of the argument. He only showed beyond doubt that modern formalist logic in application leads nowhere but to a dead end, to an impasse in which obviously we find ourselves today, not only in economics but in physical, natural sciences as well. Go¨del did not have the concept of the orientation table as applied also to logic, and, therefore, he provided only the proof that we are unable to confirm or to negate propositions of the Principia Mathematica type. He lacked the tools to see that his contribution actually was valid only for modern, formalist logic of truth-form but not classical logic of truth-content or any new logic of the future, which includes both truth-form and truth-content as a synthesis. When we finally developed and applied a new, more comprehensive type of logic, actually a sui generis synthesis between classical and modern logic which we called “Integrated Logic”, then the picture of the argument changed radically. The results of modern economics as well as modern physics were not contradictory but rather complementary to their classical sisters. By one stroke in logic and methodology, the Great Methodological Argument of the twentieth century has been solved, and we hope forever. But a warning is necessary. The wise Schumpeter used to say: “It is hard enough to discover a new concept or theorem, but sometimes it is even more difficult to convince the peers in the field that indeed you have discovered something new and valuable.” More detail about “Integrated Logic” can be found in: Rugina, (1998, 2000). Other problems in economics appear in a similar situation when the new concept of “Integrated Logic” is applied. A logical place where we can find an original source of new ideas and interpretations is in the lectures delivered by recipients of the Nobel Prize. This is why we decided to write “Prolegomena 4: An Open Dialogue with Nobel Laureates in Economics”, with the scope: the quest for more logical and empirical precision (evidence) in the present and future development of the economic science.

In point of evaluation during the dialogue, we chose a composite standard formed of 25 elements, i.e. concepts and theorems, where we thought there is a problem to be solved, partially or totally. The full clarification of the composite standard is provided in a rather long Introduction, entitled “New contributions to the science of economics”. Indeed, the composite standard is long because of the complex nature of the subject matter involved. With regard to the Introduction, we may recall the wise advice of Lord Keynes, which is as valid in 2002 as it was in 1936: The ideas which are here expressed so laboriously are extremely simple and should be obvious. The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our mind (Keynes, 1936).

We cannot close this Preface without expressing our thanks to Professor Barrie 0. Pettman, Baron of Bombie, Director of the International Institute of Social Economics, and Lady Maureen of Bombie, who understood and supported new ideas and new methods of how to solve old and new problems. Not less significant are the thanks to my life partner, Irene Aurelia Rugina, for her continuous interests, observations and editorial help in the preparation of this Prolegomena 4.

Anghel N. Rugina

Previously published in: International Journal of Social Economics, Volume 30, Number 4, 2003

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