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REVOLUTIONS IN SCIENCE AND PHILOSOPHY

A funny thing happened on the way to the Temple of Science. Just as neoclassicism and institutionalism were vying to be the sole legitimate claimant of the mantle of science, science itself changed dramatically. First in the theory of relativity, and then more dramatically in quantum mechanics and cosmology, physics was severely warping the complacent vision of natural law. The particularly Laplacean notion of rigid determinism came unstuck, and the prosaic conception of percepts or sense-data got lost in a whole sequence of counterintuitive and perverse accounts of space, time, discontinuity, and the interaction of the observer with the natural phenomenon. Eternal verities, such as the conservation of energy and the suprahistorical character of physical law were progressively undermined (Mirowski 1989). Things got so bad that physicists started going around telling people that there could be such a thing as a free lunch.11 The amazing thing is that much of this drift had been anticipated by Peirce as part of his hypothesis that natural law was itself the product of an evolutionary process.

Philosophers of science felt the tremors under their feet in the 1960s. Analytical philosophy of science had not only been subject to devastating internal criticism, but historians of science such as Thomas Kuhn, Paul Forman, Richard Westfall and others were demonstrating that respected scientists of the past did not conform to the strict positivist code of correct scientific behaviour. Perhaps because they were historians, they grew more curious about the hermeneutic aspects of scientific behaviour. As Kuhn wrote, about scientists:

When reading the works of an important thinker, look first for the apparent absurdities in the text and ask yourself how a sensible person could have written them. When you find an answer, I continue, when those passages make sense, then you may find that more central passages, ones you previously thought you understood, have changed their meaning.

(Kuhn 1977, p. xii)

Now, if we have difficulties in understanding the paradigm scientists sanctioned by our culture, it is but a short step to assert that the contemporaries of pivotal scientists also had problems of interpretation and understanding their peers. Explicit rules of deduction and induction could not be expected to resolve this problem in all situations, and as a result the entire Cartesian portrayal of science came unravelled for philosophers (Suppe 1977; Laudan 1984; Rorty 1979, 1986).

By the 1980s, it was common to find historians, philosophers, and sociologists of science employing hermeneutic techniques (Latour and Woolgar 1979; KnorrCetina and Mulkay 1983; Radnitzky 1973; Ackermann 1985). This development in turn encouraged philosophers to rediscover Peirce and resuscitate the pragmatist tradition in America. Writers such as Richard Rorty, Richard Bernstein, and Karl Apel have put pragmatism back on the philosophical map,

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proposing to reunite a theory of language and social interaction with a theory of scientific inquiry. As Rorty has written of the new pragmatism:

[it] is the same as the method of utopian politics or revolutionary science (as opposed to parliamentary politics or normal science). The method is to redescribe lots and lots of things in new ways, until you have created a pattern of linguistic behavior which will tempt the rising generation to adopt it, thereby causing them to look for appropriate new forms of nonlinguistic behavior—e.g., the adoption of new scientific equipment or new social institutions. Philosophy, on this model, does not work piece by piece, analyzing concept after concept, or testing thesis after thesis. Rather, it works holistically and pragmatically…. It does not pretend to have a better candidate for doing the same old things which we did when we spoke the old way. Rather, it suggests that we might want to stop doing those things and do something else.

(Rorty 1986, p. 4)

The irony of this revival was that the legitimate heirs of the tradition of Peirce in economics were basically unaware of it, remaining wedded to the Cartesian conception of science, which bartered away their legitimacy to neoclassical economics. Although many institutionalist economists maintained a lively interest in philosophical issues, they tended to get sidetracked into such controversies as the meaning of Milton Friedman’s essay on ‘The methodology of positive economics’ (an article so incoherent that it could support any reading), or else into behaviouralism of a mechanistic cast, which neutralized all hermeneutic problems of interpretation.

Worst of all, the lavish praise of science which had been a hallmark of institutionalism from the 1930s to the 1960s grew more and more an embarrassment, both because of the overt scientism of neoclassical theory, and because of the increasing scepticism about the competence and benevolence of the technocrat in a society where the very institution of science seemed an instrument of subjugation and a juggernaut careering out of control. The tragedy was that Institutionalism had lost sight of its bearings, making the mistake of pretending to be a better candidate for doing the same old things which were done when speaking the same old language. In consequence, the research agenda had been set by the neoclassical economists. It was a nowin situation.

THE MODERN REVIVAL OF A PRAGMATIST

INSTITUTIONALIST ECONOMICS

There is one more nod to be made in the direction of the DMD thesis, and that is to discuss certain nascent hopeful trends in institutional economics. As the vortex model suggests, one might expect that profound transmutations of our ‘natural’ concepts would be felt (perhaps with a lag) in the construction of social theory. I

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should like to argue that this is indeed the case in some recent institutionalist economic research, and that one might extrapolate from present trends to anticipate a full-scale repudiation of Cartesian philosophy of science and an increased reliance on hermeneutic conceptions of the economic actor as well as the role of the economic researcher.

Twentieth-century innovations in physical science have come quite a distance in denying a mechanically determinate world, reinterpreting our ideas of limitation and scarcity, and filling us with disquiet at the boundlessness of chance, chaos, and emergent novelty. Science is making us rudely aware of our role in constructing the world, or as Rorty puts it, ‘making truth’. If the DMD thesis is any guide, then we should expect that this progressive awakening should eventually show up in economics. Because neoclassical economics is irreparably committed to the imitation of nineteenth-century physics, the DMD thesis predicts that it will find itself progressively isolated from cultural conceptions, defending an increasingly reactionary conception of ‘natural order’ as mechanically deterministic and static. Institutional economics, on the other hand, with its Peircian pedigree, should be well-positioned to participate in the reconstruction of economic theory from a hermeneutic perspective. This reconstruction is not merely wishful thinking; there are signs that it is already well under way.

The revitalized Institutionalist tradition cannot consist of a return to Peirce: too much has happened in the interim, in science, philosophy, and economics for that to be a practical course of action. None the less, Peirce and his work might serve as a symbol of the central concept of institutional economics, the idea of collective rationality. The primary lesson of Peirce’s philosophy of science is that the validity of science is not encapsulated in a ‘method’ for all time, and that our criteria of knowledge will always be bound up with the constitution of the community of inquiry. Further, this will not just be true for ‘science’ writ small, but for all human endeavour. Consequently, the philosophical definition of an ‘institution’ (with a bow towards Commons) should be ‘collective rationality in pursuit of individual rationality’. This does not imply a reversion to a Hegelian Geist or Bergsonian élan vital; it is not an idealism. Institutions can be understood as socially constructed invariants which provide the actors who participate in them with the means and resources to cope with change and diversity; this is the non-mechanistic definition of individual rationality (Mirowski 1988, 1990).

A prodigious body of institutionalist economic theory can be systematized around this philosophical conception of an institution. We have already mentioned Commons’ discussions of transactions as a semiotics of economic trades, as well as his portrayal of value as the outcome of a long history of negotiation in the legal system. There is also Mitchell’s gem of an essay on money in economic history, which suggests that money itself is a socially constructed invariant which is intended to stabilize the concept of price, but which inadvertently transforms the very idea of freedom.

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Yet it is in more modern writings that one can observe the impact of a hermeneutic philosophy upon economic theory. Wilbur and Harrison (1978) have proposed the vocabulary of ‘pattern models’ in order to highlight the evolutionary and holistic themes in recent applied work in institutional economics. Samuels (1978) has surveyed the alternative portrayal of information and preferences in many articles in the Journal of Economic Issues. The role of mathematics in obscuring the hermeneutic problem of interpretation has been explored with great insight by Dennis (1982).

But more importantly, hermeneutic considerations are beginning to show up in the actual theoretical portrayal of the social actors and their problems. The idea of rule creation as the outcome of a constrained maximization problem has been critiqued with great subtlety by Field (1979, 1984). The proliferation of solution concepts in game theory has been interpreted by Mirowski (1986a) as the breakdown of the mechanistic notion of individual rationality, which had been already anticipated in the philosophy of Peirce and Wittgenstein. Randall Bausor (1986) has demonstrated how complicated it is to model the passage of time from the transactor’s point of view. David Levine (1986) has suggested that the problem of firms’ interpretations of one another’s activities has a direct bearing upon the rate of growth of the macroeconomy. Philip Mirowski (1981) has argued that institutions cannot be explained within the ambit of neoclassical models, because the only legitimate explanation in that sphere is one which reduces the institution to antecedent natural givens, which renders their function incoherent and superfluous. Furthermore, Mirowski (1986b, 1990) attempts to outline the mathematical foundations of institutionalist economics, arguing that the quantitative character of prices and commodities is socially constructed, and suggesting that the institution of money imposes an algebraic group structure which permits the mathematical manipulation of economic categories, and hence reifies the notion of value.

ACKNOWLEDGEMENTS

I would like to thank Anne Mayhew, Marc Tool, Ken Dennis and especially Paul Dale Bush for their comments on an earlier draft of this essay. I am sure that none of them agree with my overall thesis, so they should not be held accountable for the foregoing.

NOTES

1Evidence for this assertion is presented in detail in Mirowski 1989, Chapters 4–6.

2See, however, Mirowski (1987a and 1988); Mini (1974).

3I must stress that what follows is specifically my own reading of Peirce, although it shares many points with Apel (1981). We shall ignore in this essay questions of the wellsprings of Peirce’s influences, or the tangled question of his metaphysics. We should caution, however, that some authors in the institutionalist literature (such as

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Liebhafsky 1986, p. 13) have tried to absolve Peirce of any Hegelian or Continental influence, a thesis I obviously find unpersuasive. On this issue, see Peirce (1958b, p. 283); Thayer (1981) and Apel (1981, p. 201 fn.).

4This assertion of the self-correcting nature of specifically quantitative induction is perhaps one of the weakest parts of the Peircian corpus, because it does not give any cogent reasons for the privileged character of quantitative evidence. On this issue, see Kuhn (1977). Further, it is easy to devise numerous situations where repeated measurement does not converge upon any particular value. This would especially be true of non-ergodic situations, such as those envisioned in Peirce’s own ‘evolutionary’ laws.

5Peirce made a number of observations on the role of conservation principles in the construction of the static mechanical world picture, such as Peirce (1935, pp. 15, 20, and 100). It is interesting to compare these statements with the definition (given on p. 108 of this present chapter) of an institution as ‘a socially constructed invariant’. See also (Mirowski 1984b).

6As Peirce saw it:

But the higher places in science in the coming years are for those who succeed in adapting the methods of one science to the investigation of another. That is where the greatest progress of the passing generation has consisted in. Darwin adapted biology to the methods of Malthus and the economists. Maxwell adapted to the theory of gases the methods of the doctrine of chances, and to electricity the methods of thermodynamics…. Cournot adapted to political economy the calculus of variations.

(Peirce 1985a, p. 46)

On this issue, see also Mirowski (1987a and 1989).

7The reasons for the decline of pragmatism in the 1940s is beyond our mandate in this paper, but see Thayer (1981, pp. 560–3), where it is suggested that pragmatism’s alliance with liberal social engineering, its misconstrual as a methodological semantic principle, and Dewey’s alliance with the logical positivists (particularly in Dewey 1939b) all served to cripple the programme.

8Veblen wrote:

addiction to magical superstition or religious conceptions will necessarily have its effect on the conceptions and logic employed in technological theory and practice, and will impair its efficiency by that much.

(Veblen 1914, p. 41)

Here Veblen clearly understands that science may be influenced by culture as well as vice versa, but notice the derogatory language in reference to non-science, as well as the unfounded assertion that cultural or teleological influences impair the efficiency of scientific logic. Where the DMD thesis posits a vortex, Veblen has two poles of a dichotomy, where one can only pollute the other.

9 See note 7 above.