Research Agenda

If one were to ask a number of economists whether they believed in a universal determinism, the majority would perhaps take up an agnostic position. In any case, whatever their opinions, they are likely to feel that they can carry on their work as economists quite well without deciding the issue. One should not, however, underestimate the surreptitious and pervading influence on academic work of subconsciously-held philosophical presuppositions.

Determinism consists not merely of the notion that we may find regularities by empirical means – ex ante facts in my terminology – but rather of the future notion that these facts, which we gather piecemeal, may be built up according to Laplace’s vision into a vast model that could explain and predict the entire course of events, given only the state of things at any instant of time. Within the confines of what was probably its original context, viz., classical mechanics, this notion seemed quite well-founded. Problems arise, however, when the mechanical analogy is taken into other fields. In economics it has to be admitted that even so basic a question as how a man will act in a given environment, or react to given stimuli, cannot be answered with anything like the exactness of mechanics, if indeed it can be answered at all. Explanations of the failure of the mechanical analogy in economics have usually followed either one of two themes, viz., a.) that the human will is undetermined or b.) that the great complexity of social phenomena makes a strictly deterministic scientific program unworkable

In closed models with comprehensive governing equations, all processes are fully determined, i.e. calculable, once the state of the system at any instant of time is known. It then does not really matter whether a description of a process refers to something which has already taken place or has yet to take place. However, common sense tells us that in the world at large this is not necessarily so, at least not for us, however it may seem to the vast intelligence Laplace spoke of. Let me take an example. Suppose a stranger to the country asks me to explain to him the geographical distribution of productive activity in the South African economy. Suppose further that I try to do this by telling him a long story which starts with the spice trade between Europe and the East, and features such events as the Great Trek, the discoveries of diamonds and gold, World War II, etc. The enquirer may then be well satisfied that he has understood the matter and that there is nothing miraculous in the account. Yet the mere fact that he can look back over a sequence of events and satisfy himself that in retrospect the whole thing seems quite credible, does not show that he could have predicted that sequence of events, nor that he can predict the situation four hundred years hence any more than someone four hundred years ago could have predicted the present situation. All he knows is a story built up on countless millions of small events that he feels could have been otherwise - events that were purely fortuitous and coincidental.