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Mathematical Formalism and Political-Economic Content

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Human economic interactions spontaneously express themselves in the quantitative form of prices and transactions quantities. This
makes it difficult to avoid quantitative reasoning in political-economic research altogether

Mathematical methods, however, are only one moment in a layered process of theory generation in political economy, which starts from Schumpeterian vision, progresses to the identification of relevant abstractions, the development of mathematical and quantitative models, and the confrontation of theories with empirical data through statistical methods. Mathematical formalism is subject to the “garbage in, garbage out” principle; its conclusions can have no more validity than the assumptions supplied to the formalism. Samuelsonian mathematical economics and its general equilibrium variants imported optimization techniques from statistical physics to the problem of studying of full-information allocation, but neglected to include theories of statistical fluctuations in the resulting models. This encouraged the “Samuelsonian vice” of modifying the relevant abstract problems of political economy to fit available mathematical tools. The role of empirical research in disciplining theoretical speculation, on which the scientific tradition’s integrity rests, was undermined by specific limitations of nascent econometric methods, and usurped by ex cathedra methodological fiats of theorists. These developments systematically favored certain ideological predispositions of economics as a discipline. There is abundant room for New Thinking in political economy starting from the vision of the capitalist economy as a complex, adaptive system far from equilibrium, including the development of the theory of statistical fluctuations for economic interactions, redirection of macroeconomic and financial economics from path prediction toward an understanding of the qualitative properties of the system, introduction of constructive and computable methods into economic modeling, reconceptualization of the macroeconomy as a social coordination problem, and the critical reconstruction of econometric statistical methods from a Laplacian perspective. Interdisciplinary dialogue between political economists and researchers in substantively and methodologically related fields is essential to end the recent intellectual isolation of economics.