On the irrelevance of formal logic in economics
The mathematization of economics since WW II has made mainstream – neoclassical – economists more or less obsessed with formal, deductive- axiomatic models. Confronted with the critique that they do not solve real problems, they often react as Saint- Exupéry‘s Great Geographer, who, in response to the questions posed by The Little Prince, says that he is too occupied with his scientific work to be able to say anything about reality.
Confronting economic theory’s lack of relevance and ability to tackle real problems, one retreats into the wonderful world of economic models. One goes into the “shack of tools” – as my old mentor Erik Dahmén used to say – and stays there. While the economic problems in the world around us steadily increase, economists rather happily play along with the latest toys in the mathematical toolbox.
Modern mainstream economics is sure very rigorous – but if it’s rigorously wrong, who cares?
Instead of making formal logical argumentation based on deductive- axiomatic models the message, I think we are better served by economists who more than anything else try to contribute to solving real problems. And then the motto of John Maynard Keynes is more valid than ever:
” It is better to be vaguely right than precisely wrong ”
Source: Real-World Econ Rev blog, 15 Oct 15 https://rwer.wordpress.com/2015/10/15/on-the-irrelevance-of-formal-logic-in-economics/