Knowledge and Persuasion in Economics.

Yoon, Yong J.

Since his 1983 article in the Journal of Economic Literature, McCloskey has lead for more than a decade the discussion of "the rhetoric of economics, "the question of how better to argue in economics. Rhetoric is not, as should be clear to all, merely appealing talk separate from the substance. Rhetoric matters because it is concerned with what should pass as knowledge and truth in science. Persuasive discussion uses fact, logic, metaphor, storytelling, and authority.

McCloskey's book is well written and covers a remarkable breadth of methodology in economic science, which will not fail to stir the economist's interest and protest, though most economists are not familiar with them. It is also provocative, evocative, and most of all entertaining.

The book begins with McCloskey's literary critique, an intellectual autobiography, of methodology and philosophy of economic science. He elaborates on his original motivation for the rhetoric in economics, i.e., criticism of modernism (extreme rationalism) and logical positivism. Alexander Rosenberg, a philosopher of economic science, is discussed extensively. Rosenberg charges that economic theory is nothing but applied mathematics. McCloskey argues that this charge applies only to general equilibrium theory and mathematical economics and armchair discussions of philosophers who fail to see the economic science. The book has extensive replies to his critics, mostly from philosophers of economics and the Austrian school. Along with the two earlier books, this book helps our understanding of his ideas from philosophical perspectives. The book ends by emphasizing the omnipresence of the rhetoric, language and conversation.

Inevitably McCloskey's enterprise on meta-economics (about-economics) touches on the whole aspect of doing economics (and reasoning). Mainstream economists preach and pretend to practice the research in economics by developing falsifiable hypothesis and confronting the data. Such methodology (modernism, logical positivism, rationalism, all from Cartesian methodology), as advocated by Milton Friedman, Becker and Stigler, and Lucas (my addition), McCloskey criticizes as being too narrow and misleading the science. It simply is not consistent with the way scientists (economists) actually work and communicate.

His basic insight is that the science involves more than this tight jacket of falsification; more fundamentally, it involves rhetoric, the argument or discourse using facts, logic, metaphor (model), storytelling. The dramatic departure is the insight that it is man who works out the knowledge, thus actually relies on his introspection.

McCloskey proposes that economists should be self-conscious of rhetoric and open up dialogues between economists, which can be facilitated by developing standards for discourse and literary critique for economics. Indeed economists seldom write on, or analyze, other economist's work. In this respect they are more like mathematicians or other scientists than professors in literature and humanities. Economists, of course, write book reviews, for instance, but few write with the seriousness and to the extent that Frank Knight wrote. This argument supports the relatively-absolute absolutes, the approach proposed by Frank Knight and James Buchanan.

McCloskey is rather polite regarding the good of rhetoric. Rhetoric will be useful in reducing bad arguments while conversing about economics; George Orwell also emphasized the importance of rhetoric in political writings. Development in science and rhetoric work together. Egypt, the Mideast, and China all had important mathematical discoveries early in history; only the Greeks developed the rhetoric, a logical proof by axiomatic method as we see in Euclidean geometry. The benefit will come from enlarging the nexus of dialogue which will benefit all participants by exploiting each other's insight and focus.

The book already covers a broad portion of intellectual history of philosophy and economics, but there are two issues with McCloskey's discussion. McCloskey does not discuss the rhetorical debate between Milton Friedman and Herbert Simon. This surprises me because he alludes to the works by financial economists Roll, Ross, and Sharp, who repeat Milton Friedman regarding the rhetoric of unimportance of the assumptions.

Godel's results in logic are briefly discussed along with the rhetoric of mathematics, but McCloskey failed to expose the potential import of Godel for rhetoric. Theorems in an empirical science are to be accepted because they are in agreement with observation. For a deductive discipline such as mathematics, the notion, discovered by the ancient Greeks, of axiomatic method made a strong impression upon thinkers and mathematicians throughout the age. A proposition may be established as the conclusion of an explicit logical proof based on accepted postulates and a formal (explicit) system of sound mathematical rules of proof.

Godel (1931) proved the pessimistic result that the axiomatic method has inherent limitations; there are innumerable problems in elementary number theory that cannot be reached by a fixed axiomatic method. It follows that what we understand by the process of mathematical reasoning and proof does not coincide with the exploitation of a formalized (explicit) axiomatic method. The human brain, human understanding and insight, may have built-in limitations of its own; there may be mathematical problems it is not capable of solving, but it is far more powerful than computers and is open to invention and discovery.

Roger Penrose believes that Godel's result, widely recognized as the most fundamental contribution in the foundations of mathematics, also initiates a major advance in the philosophy of the mind.

I have one objection to the book. McCloskey collects evidences for the relevance of rhetoric. As a result he loses his original focus. He cites Adam Smith: dogs do not talk and do not trade; men talk and exchange, and continues with Hayek and current financial economics, herd behavior and cheap talk. But I believe use of language in exchange and the Hayekian knowledge and information in the market is quite different from the rhetoric as argument for conveying knowledge and insight. Both erase your ignorance, but of a quite different kind. I do not mean that McCloskey should not discuss this topic. In fact, it adds the richness of the book. But it is important to distinguish the difference and not to forget the original insight.

Yong J. Yoon Public Service Commission Washington, D.C.