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Towards the native’s point of view

The difficulty of changing the conversation

Arjo Klamer

PRELUDE

Three economists are talking about economic development during lunch. The conversation is smooth until one of them tries to call attention to the ‘native’s point of view’.

Economist 1:	We have been discussing economic development for a
	while, and all we have been talking about are resources and
	incentives. Shouldn’t we also think of the influences of the
	cultural factor of economic development? The beliefs
	people hold, their perceptions and their aspirations could
	very well constrain their actions.
Economist 2:	[?]
Economist 3:	You mean that we should discuss people’s preferences? I
	doubt if that will get us anywhere. The neoclassical model
	appears to be doing pretty well. At any rate, if we were to
	follow your suggestion we would do sociology.
Economist 2:	Yeah. [He mumbles something about ‘vagueness’, ‘science’
	and ‘the road to madness’.]
Economist 1:	But Amartya Sen points us in that direction.
Economist 2:	[?]
Economist 3:	Didn’t he go to Harvard recently?
Economist 1:	Clifford Geertz, an anthropologist, has done work on
	economic development in which he pays attention to the
	native’s point of view. He…
Economist 3:	Never heard of him.
Economist 1:	Some economists are advocating a hermeneutic position. To

them Geertz could…

Economists 2 and 3: [?]

Economist 2: Listen, I am having this problem with solving an iterative process that I get in my growth model. The computer

18 WHAT IS HERMENEUTICS?

program that I am using works all right for the first steps but then something goes wrong. Could it be that…?

Like any conversation, a conversation among economists is constrained. ‘Anything’ does not ‘go’ in economics; in this case talk about the native’s point of view (i.e., the meaning of economic phenomena to the agents whose actions constitute those phenomena) goes nowhere. The question that I want to press here is, simply, why that is. More specifically, what is the nature of the difficulty that the three economists have?

The temptation here is great to declare those who do not understand or do not make sense, ‘obtuse’, ‘dogmatic’, ‘stupid’, or, worse, ‘unscientific’ and ‘not serious’. But such judgements will generally misrepresent the nature of the difficulty. To answer the question why the difficulty occurs, we need to go back to the source of the problem. Before I do so, we should be convinced that there is a problem.

IS THERE A PROBLEM?

I am willing to accept a lot that a physicist tells me. Quarks and strings do not play a critical role in my intellectual and emotional lives, and a discussion about them will meet little resistance from me unless it is for lack of interest or incomprehension. This is true for discussions in physics, chemistry, music theory, cricket, molecular biology and other disciplines of which I have acquired little knowledge. I have little to say and fail to see their problems as interesting.

This is not always true: some ideas that emanate from these disciplines intrigue me and can even bother me. When a physicist poses the possibility of time going backwards I am confused. I want to know more; I want to know what this means. What makes a difference here is that whereas I know little about quarks and strings, I have clear conceptions of time, and its going backwards is not one of them. I do not only not comprehend—how could I?—but I also resist. The possibility of time going backwards does not occur in the world as I understand it. I might be merely curious or intrigued if Carlos de Castaneda were the inventor of this idea, but since these are respectable physicists at well-known universities who utter the theory, I have a problem.

I have a similar problem when I listen to neoclassical economists discussing human behaviour. The talk about optimizing strategies and individual choice does not mesh with human behaviour as I understand it.1 This is a problem. Because I am not a physicist I can ignore the talk about quarks and time going backwards. That I cannot do when neoclassicals present their models. Being an economist myself I am interested, and I have to deal with the discrepancy between those models and my partly tacit and partly articulated understanding of human processes.

TOWARDS THE NATIVE’S POINT OF VIEW 19

AMPLIFICATION: RUMBLINGS IN THE MARGIN

AND OUTSIDE OF ECONOMICS

The problem, which might be labelled a problem of cognitive dissonance, has hardly been noticed within the world of economics itself. Whether the issue is the buying of laundry detergent or economic development, a constrained maximization model is the way to go. Any other sound is doomed to be drowned out in conversations among economists.

There is, however, some rumbling in the margins. Amartya Sen (1977) perceives in the neoclassical characterization of individuals a ‘rational fool’; Albert O.Hirschman (1985) adopts Sen’s notion of metapreferences to express the possibility that people evaluate and change their preferences; George Akerlof (1984) introduces sociological variables into the model; Herbert Simon (1985) makes connections with cognitive psychology. Nothing too revolutionary here, but such rumbling heightens and amplifies the of a problem.

The problem becomes loud and clear when one looks at economics from the outside, and begins reading the works of Clifford Geertz, Michael Foucault, Marshall Sahlins, Mary Douglas, Alasdair MacIntyre and their like. Take, for example, Geertz’s Peddlers and Princes (1963): it deals with a subject that belongs to the economic domain—namely, economic development in Indonesia. But one seeks in vain for rational choice or formulations of optimizing strategies in Geertz’s account. Instead there is much about symbolic actions of Javanese and Balinese villagers, the subjects in the book. The account is interesting. Even Harry Johnson, a neoclassical economist who reviewed the book for the Journal of Political Economy (1964) thought so.2 Geertz’s account seduces and persuades yet it does not ‘go’ in economic discourse. That makes for a problem.

The writings of MacIntyre and Foucault do not transgress directly into the domain of economists, but the effects on the economist reader are similar. Their historical and rhetorical ways of writing about ethics and knowledge add to the sense of a problem in the neoclassical accounts. They generate a discursive situation in which the concept of a rational individual solving constrainedoptimization puzzles seems absurdly limited. We experience a problem. Can we go beyond its mere observation?

A ROUNDABOUT WAY OF GETTING TO THE

PROBLEM

Practising economists hint at the problem when they complain about the unrealism of assumptions. Yet their criticisms do not seem to hold much water. Alternative assumptions, such as cost-mark-up pricing, seem ad hoc. Without being able to say precisely why, I suspected that the critics were caught up in the same language game as the neoclassicists. They did not help towards an understanding of the problem.

20 WHAT IS HERMENEUTICS?

I began to reflect upon what economists do. Popper and Lakatos were the philosophers to which one turned at the time, but they did not help much either. Were they, too, speaking the same language as neoclassicals? Michael Polanyi showed new possibilities and the realm of argumentation and rhetorics opened up. That is where Foucault, MacIntyre, and also Aristotle came in.

Seeing economics as a discourse and exploring its rhetorical dimensions, to which their works inspire, seems to bring new life to the conversation about economics. It breaks the grip that a narrow logic had on methodological thinking and stimulates one to see beyond epistemology (the points of departure in conventional methodology), and to watch the behaviour of economists more directly.

But many economists, and especially the economic methodologists among them, hear in this conversation different sounds from those intended. They hear the denial of standards that can discriminate between strong and weak arguments, and advocacy of an ‘anything goes’ position. ‘Rhetorics debunks science’, they say. Extensive communication does not appear to get us much closer.3 These reactions, which are quite common, were irritating at first. And then they began to intrigue me, because they seemed symptomatic of a problem. This problem is, namely, the Cartesian tendency to divide the world in twos. If a statement is not objective, many will almost automatically relegate it to the realm of the subjective; if someone denies the existence of fixed standards, they will see in this the denial of all standards and the embracement of relativism.

I now think that this problem in discussions on methodology is related to the problem that I am having with neoclassical economics. Thinking about the behaviour of economists, therefore, might offer insights into the behaviour of economic subjects. This is a roundabout way of getting to the problem, but it is one that I have found useful and pursue here.

A note of clarification

It is easy to confuse the discourse about economics and economists with the discourse about the economy and economic subjects. The discourse about economics and economists is a metadiscourse; it takes us on to a metalevel from which we reflect on our activities as economists. The relationships are as follows: