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American Economic Association is collaborating with JSTOR to digitize, preserve and extend access to journal of Economic Literature. Like oratory, rh etoric of economics depends for its virtues on th e virtues of its audience. American economic association: 'the Rhetoric of econometrics is not a relic of the past. It is a product of the present.'
American Economic Association is collaborating with JSTOR to digitize, preserve and extend access to journal of Economic Literature. Like oratory, rh etoric of economics depends for its virtues on th e virtues of its audience. American economic association: 'the Rhetoric of econometrics is not a relic of the past. It is a product of the present.'
American Economic Association is collaborating with JSTOR to digitize, preserve and extend access to journal of Economic Literature. Like oratory, rh etoric of economics depends for its virtues on th e virtues of its audience. American economic association: 'the Rhetoric of econometrics is not a relic of the past. It is a product of the present.'
Author(s): Donald N. McCloskey Source: Journal of Economic Literature, Vol. 21, No. 2 (Jun., 1983), pp. 481-517 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/2724987 Accessed: 24/10/2009 16:06 Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=aea. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. American Economic Association is collaborating with JSTOR to digitize, preserve and extend access to Journal of Economic Literature. http://www.jstor.org Journal of Economic Literature Vol. XXI (June 1983), pp. 481-517 T h e Rh etoric of Economics By DONALD N. MCCLOSKEY T h e University of Iowa T h e length of th e acknowledgments h ere testifies to an unexplored feature of th e rh etoric of economics, th e role of th e audience: like oratory, sch olarsh ip depends for its virtues on th e virtues of its audience. I h ave been fortunate in mine. I must apologize for my amateurish understanding of wh at is h appening in ph ilosoph y, math ematics, literary criticism, rh etorical studies, and oth er places beyond my competence, and ask th at practitioners in th ese fields assist in my furth er education. For th eir early attempts I th ank Evan Fales, Paul Hernadi, Joh n Lyne, Mich ael McGee, Allan Megill, Joh n Nelson, and Jay Semel of th e Colloquium on Applied Rh etoric at T h e University of Iowa; Wayne Booth , Ira Katznelson, and oth ers at th e University of Ch icago in th e program in Politics, Rh etoric and Law, before wh ich th e earliest version was delivered; Robert Boynton, Bernard Coh n, Joh n Comaroff; Otis Dudley Duncan, James 0. Freedman, Clifford Geertz, William Kruskal, Donald Levine, Laura McCloskey, Rich ard Rorty, Renato Rosaldo; and th e Humani- ties Society at th e University of Iowa. T h at th e economists on wh om I h ave inflicted th e argument h ave reacted with such intelligent skepticism and generous encouragement suggests, as th e paper does, th at we are better sch olars th an our meth odology would allow. I th ank my colleagues in economics at Iowa, especially th e Sanctuary Seminar in Economic Argument; Seminars at th e World Bank and th e National Science Foundation; my colleagues at th e Institute of Advanced Studies and th e Faculty of Economics at th e Australian National University; seminars at th e universities of Adelaide, Auck- land, Melbourne, New South Wales, T asmania and Western Austra- lia; at Monash , and Iowa State universities; Victoria University of Wellington; and an assemblage of economists elsewh ere: William Breit, Ronald Coase, Arth ur Diamond, Stanley Engerman, J. M. Fin- ger, Milton Friedman, Allan Gibbard, Robert Goodin, Gary Hawke, Robert Higgs, Albert Hirsch man, Eric Jones, Arjo Klamer, Harvey Leibenstein, David Levy, Peter Lindert, Neil de March i, Mich ael McPh erson, Amartya Sen, Robert Solow, Larry Westph al, Gordon Winston, and Gavin Wrigh t. T h omas Mayer's encouragement at an early stage and h is detailed comments as referee for th is Journal at a later stage were exceptionally h eartening and useful. 481 482 Journal of Economic Literature, Vol. XXI (June 1983) ECONOMIST S DO NOT FOLLOW th e laws of enquiry th eir meth odologies lay down. A good th ing, too. If th ey did th ey would stand silent on h uman capital, th e law of demand, random walks down Wall Street, th e elasticity of demand for gaso- line, and most oth er matters about wh ich th ey commonly speak. In view of th e volu- bility of economists th e many official meth odologies are apparently not th e grounds for th eir scientific conviction. Economists in fact argue on wider grounds, and sh ould. T h eir genuine, workaday rh etoric, th e way th ey argue in- side th eir h eads or th eir seminar rooms, diverges from th e official rh etoric. Econo- mists sh ould become more self-conscious about th eir rh etoric, because th ey will th en better know wh y th ey agree or dis- agree, and will find it less easy to dismiss contrary arguments on merely meth odo- logical grounds. Ph ilosoph y as a set of nar- rowing rules of evidence sh ould be set aside in scientific argument, as even many ph ilosoph ers h ave been saying now for fifty years. Economics will not ch ange much in sub- stance, of course, wh en economists recog- nize th at th e economic emperor h as posi- tively no cloth es. He is th e same fellow wh eth er ph ilosoph ically naked or cloth ed, in reasonably good h ealth aside from h is sartorial delusion. But th e temper of argu- ment among economists would improve if th ey recognized on wh at grounds th ey were arguing. T h ey claim to be arguing on grounds of certain limited matters of statistical inference, on grounds of posi- tive economics, operationalism, beh avior- ism, and oth er positivistic enth usiasms of th e 1930s and 1940s. T h ey believe th at th ese are th e only grounds for science. But in th eir actual scientific work th ey argue about th e aptness of economic metaph ors, th e relevance of h istorical precedents, th e persuasiveness of introspections, th e power of auth ority, th e ch arm of symme- try, th e claims of morality. Crude positiv- ism labels such issues "meaningless" or "nonscientific" or "just matters of opin- ion." Yet even positivists actually beh ave as th ough th e matters are discussable. In fact, most discussion in most sciences, and especially in economics, arises from th em. Noth ing is gained from clinging to th e Sci- entific Meth od, or to any meth odology ex- cept h onesty, clarity, and tolerance. Noth - ing is gained because th e meth odology does not describe th e sciences it was once th ough t to describe, such as ph ysics or math ematics; and because ph ysics and math ematics are not good models for eco- nomics anyway; and because th e meth od- ology is now seen by many ph ilosoph ers th emselves to be uncompelling; and be- cause economic science would stop pro- gressing if th e meth odology were in fact used; and, most important, because eco- nomics, like any field, sh ould get its stan- dards of argument from itself, not from th e legislation of ph ilosoph er kings. T h e real arguments would th en be joined. I. Rh etoric Is Disciplined Conversation T h ese points, elaborated below, amount to an appeal to examine th e rh etoric of economics. By "rh etoric" is not meant a verbal sh ell game, as in "empty rh etoric" or "mere rh etoric" (alth ough form is not trivial, eith er: disdain for th e form of words is evidence of a mind closed to th e varieties of argument). In Modern Dogma and th e Rh etoric of Assent Wayne Booth gives many useful definitions. Rh etoric is "th e art of probing wh at men believe th ey ough t to believe, rath er th an proving wh at is true according to abstract meth - ods"; it is "th e art of discovering good rea- sons, finding wh at really warrants assent, because any reasonable person ough t to be persuaded"; it is "careful weigh ing of more-or-less good reasons to arrive at more-or-less probable or plausible conclu- sions-none too secure but better th an would be arrived at by ch ance or unth ink- McCloskey: T h e Rh etoric of Economics 483 ing impulse"; it is th e "art of discovering warrantable beliefs and improving th ose beliefs in sh ared discourse"; its purpose must not be "to talk someone else into a preconceived view; rath er, it must be to engage in mutual inquiry" (Booth , 1974, pp. xiii, xiv, 59, 137). It is wh at economists, like oth er dealers in ideas, do anyway: as Booth says elsewh ere, "We believe in mu- tual persuasion as a way of life; we live from conference to conference" (Booth , 1967, p. 13). Rh etoric is exploring th ough t by conversation. T h e word "rh etoric" is doubtless an ob- stacle to understanding th e point, so de- based h as it become in common parlance. If "pragmatism" and "anarch ism" h ad not already suffered as much , unable to keep clear of irrelevant associations with th e bottom line or th e bomb, th e title migh t better h ave been "Pragmatism's Concep- tion of T ruth in Economics" or "Outline of an Anarch istic T h eory of Knowledge in Economics" (William James, 1907; Paul Feyerabend, 1975). But th e enemies of so- ph isticated pragmatism and gentle anar- ch ism, as of h onest rh etoric, h ave used th e weapons at h and. T h e results discourage onlookers from satisfying th e curiosity th ey migh t h ave h ad about alternatives to coercion in ph ilosoph y, politics, or meth od. A title such as "How Economists Explain" (Mark Blaug, 1980; but see be- low) or "Wh y Meth odology Is a Bad" would perh aps h ave been meeker and more persuasive.1 Still, "rh etoric" like th e oth ers is a fine and ancient word, wh ose proper use ough t to be more widely known among economists and calculators. T h e rh etoric h ere is th at of Aristotle, Cicero, and Quintilian among th e an- cients, reincarnated in th e Renaissance, crucified by th e Cartesian dogma th at only th e indubitable is true; wh ich in th e th ird century after Descartes rose from th e dead. T h e faith built on th ese miracles is known in literary studies as th e New Rh et- oric, new in th e 1930s and 1940s from th e h ands of I. A. Rich ards in Britain and Kenneth Burke in America (Rich ards, 1936; Burke, 1950). In ph ilosoph y Joh n Dewey and Ludwig Wittgenstein h ad al- ready begun to criticize Descartes' pro- gram of erecting belief on a foundation of skepticism. More recently Karl Popper, T h omas Kuh n, and Imre Lakatos among oth ers h ave undermined th e positivist supposition th at scientific progress does in fact follow Descartes' doubting rules of meth od. T h e literary, epistemological, and meth odological strands h ave not yet wound into one cord, but th ey belong to- geth er. On th e eve of th e Cartesian revo- lution th e French ph ilosoph er and educa- tional reformer, Peter Ramus (fi. 1550), brough t to completion a medieval ten- dency to relegate rh etoric to mere elo- quence, leaving logic in ch arge of reason. In th e textbooks th at Descartes h imself read as a boy probable argument was made th us for th e first time wh olly subser- vient to indubitable argument. Hostile to classical rh etoric, such a reorganization of th e liberal arts was well suited for th e Cartesian program extending over th e next th ree centuries to put knowledge on foundations built by ph ilosoph y and math - ematics. T h e program failed, and in th e meantime probable argument languish ed. In Rich ard Rorty's words, following Dewey, th e search for th e foundations of knowledge by Descartes, Locke, Hume, Kant, Russell, and Carnap was "th e tri- umph of th e quest for certainty over th e quest for wisdom" (Rorty, 1979, p. 61; cf. Joh n Dewey, 1929, pp. 33, 227). T o rein- state rh etoric properly understood is to reinstate wider and wiser reasoning. T h e reaction to th e narrowing of argu- ment by th e Cartesian program is by now broad. Its leading figures range from pro- fessional ph ilosoph ers (Steph en T oulmin, IAfter recognizing th e intent, Colin Forster of Australian National University suggested th e title "T h e Last Paper on Meth odology." But ambition must h ave limits. 484 Journal of Economic Literature, Vol. XXI (June 1983) Paul Feyerabend, Rich ard Rorty) to a miscellany of practitioners-turned-ph ilos- oph ers in ch emistry (Mich ael Polanyi), law (Ch aim Perelman), and literary criticism (Wayne Booth ). T h e reach of th e idea now- adays th at argument is more th an syllo- gism is illustrated well by th e lucid treat- ment of it in wh at would seem an unlikely place, by Glenn Webster, Ada Jacox, and Beverly Baldwin in "Nursing T h eory and th e Gh ost of th e Received View" (1981, pp. 25-35). T h e reach , h owever, h as not extended to economics. Austrian, institu- tionalist, and Marxist economists, to be sure, h ave for a century been attacking certain parts of positivism as th e basis for economic knowledge. But th ey h ave seized on oth er parts with redoubled fer- vor, and h ave so expressed th eir remain- ing doubts as to make th em unintelligible to anyone but th emselves. In th eir own way th ey h ave been as narrowing as th or- ough going positivists-th e rejection of econometrics, for instance, would be rea- sonable only if its more naive claims were taken seriously. For th e rest, economists h ave let ph ilosoph ical scribblers of a few years back supply th eir official th inking about wh at a good argument is. II. T h e Official Meth odology of Economics Is Modernist Economists h ave two attitudes towards discourse, th e official and unofficial, th e explicit and th e implicit. T h e official rh eto- ric, to wh ich th ey subscribe in th e abstract and in meth odological ruminations, de- clares th em to be scientists in th e modern mode. T h e credo of Scientific Meth od, known mockingly among its many critics as th e Received View, is an amalgam of logical positivism, beh aviorism, operation- alism, and th e h ypoth etico-deductive model of science. Its leading idea is th at all sure knowledge is modeled on th e early 20th century's understanding of certain pieces of 19th century ph ysics. T o emph a- size its pervasiveness in modern th inking well beyond sch olarsh ip it is best labeled simply "modernism," th at is, th e notion (as Booth puts it) th at we know only wh at we cannot doubt and cannot really know wh at we can merely assent to. Among th e precepts of modernism are: (1) Prediction (and control) is th e- goal of science. (2) Only th e observable implications (or predictions) of a th eory matter to its truth . (3) Observability entails objective, re- producible experiments. (4) If (and only if) an experimental impli- cation of a th eory proves false is th e th eory proved false. (5) Objectivity is to be treasured; subjec- tive "observation" (introspection) is not scientific knowledge. (6) Kelvin's Dictum: "Wh en you cannot express it in numbers, your knowl- edge is of a meagre and unsatisfac- tory kind."2 (7) Introspection, metaph ysical belief, aesth etics, and th e like may well fig- ure in th e discovery of an h ypoth esis but cannot figure in its justification. (8) It is th e business of meth odology to demarcate scientific reasoning from non-scientific, positive from norma- tive. (9) A scientific explanation of an event brings th e event under a covering law. (10) Scientists, for instance economic sci- entists, h ave noth ing to say as scien- tists about values, wh eth er of moral- ity or art. 2From Sir William T h omson (Lord Kelvin), Popu- larAddresses, edition of 1888-1889, quoted in Kuh n, 1977, p. 178n. An approximation to th is version is inscribed on th e front of th e Social Science Research Building at th e University of Ch icago. Frank Knigh t, th e famous University of Iowa economist, is said to h ave remarked on it one day: "Yes, and wh en you can express it in numbers your knowledge is of a meagre and unsatisfactory kind." McCloskey: T h e Rh etoric of Economics 485 (11) Hume's Fork: "Wh en we run over li- braries, persuaded of th ese princi- ples, wh at h avoc must we make? If we take in our h and any volume- of divinity or sch ool metaph ysics, for instance-let us ask, Does it contain any abstract reasoning concerning quantity or number? No. Does it con- tain any experimental reasoning con- cerning matter offact and existence? No. Commit it th en to th e flames, for it can contain noth ing but soph istry and illusion" (italics h is [1748], 1955, p. 173). Few in ph ilosoph y now believe as many as h alf of th ese propositions. A substantial, respectable, and growing minority be- lieves none of th em. But a large majority in economics believes th em all. For instance, th e leading meth odolo- gists in economics do. It is odd but true th at modernism in economic meth odol- ogy is associated with th e Ch icago Sch ool.3 T h e main texts of economic modernism, such as Milton Friedman's "T h e Meth od- ology of Positive Economics" (1953) or Gary Becker and George Stigler's "De Gustibus Non Est Disputandum" (1977), bear a Ch icago postmark; and th e more extreme interpretations of th e texts flour- ish among economists bearing a Ch icago degree. Wh at is odd about it is th at a group so annoying to oth er economists in most of its activities sh ould h ave th eir assent in th e matter of official meth od: Oddly, a watered down version of Friedman's es- say is part of th e intellectual equipment of most economists, and its arguments come readily to th eir lips. Premeditated writings on meth od, not excluding Ch icago's own, are more careful th an th e remark in th e course of oth er business th at reveals modernism in its rawer form. In precept one can be vague enough to earn th e assent of everyone; in practice one must make enemies. Kal- man Coh en and Rich ard Cyert, to take one among many examples of first-ch apter meth odology in economics texts, present in th eir book an outline of modernism, wh ich th ey assert is th e meth od "used in all scientific analyses" (1975, p. 17). T h e "meth od" th ey th en outline, with a bibli- ograph y h eavily weigh ted towards logical positivism and its allies, reduces to an ap- peal to be h onest and th ough tful. Only wh en such a ph rase as "at least in princi- ple testable by experiment and observa- tion" (p. 23) is given content by practice do we know wh at is at stake. T o be sure, vague precepts are not with out th eir uses. Wh en Friedman wrote, for instance, th e practice of economics was split into th eory with out fact and fact with out th eory. His modernist incantations, supported by ch oruses of ph ilosoph ers, were at th e time probably good for th e souls of all con- cerned. Friedman's essay was even th en more post-modernist th an one migh t suppose from sligh t acquaintance with its ideas. He did, for example, mention with approval th e aesth etic criteria of simplicity and fruitfulness th at an economist migh t use to select among a multiplicity of th eories with th e same predictions, th ough in th e next sentence h e attempted to reduce th em to objective matters of prediction (p. 10). He accepted th at questionnaires, forbidden to th e modernist in economics, are useful for suggesting h ypoth eses, th ough in th e next sentence h e asserted th at th ey are "almost entirely useless as a means of testing th e validity of eco- 3Noth ing in th is essay is meant to give comfort to th e enemies of Ch icago. Having long been a vic- tim of th eir anti-Ch icago dogmatism, I am not im- pressed by th e assertion th at Ch icago economics is peculiarly dogmatic. Ch icago is merely a particularly clear and candid version of a dogmatic impulse com- mon to all economics, expressing itself in meth odo- logical imperatives. Economists appear to believe th at economics is too important to be left to th e open-minded, and especially must never be left to anyone lacking faith in some approved formula for ach ieving knowledge. Ch icago is no worse th an th e rest. Immo, civis Ch icagonus sum, subspecies T P (cf Melvin Reder, 1982). 486 Journal of Economic Literature, Vol. XXI (June 1983) nomic h ypoth eses" (p. 31n). He emph a- sized th e role of th e rh etorical community to wh ich th e scientist speaks in producing conviction-wh eth er made up of sociolo- gists, say, or of economists-th ough in th e next sentence h e returned to an "objec- tive" th eory of testing. Like Karl Popper, Friedman appeared to be struggling to es- cape th e grip of positivism and its intellec- tual traditions, th ough with only sporadic success. Perh aps th at th e locus classicus of economic modernism contains so much th at is anti-modernist indicates th at mod- ernism cannot survive intelligent discus- sion even by its best advocates. T h e unpremeditated remark in th e h eat of economic argument, h owever, usually h as a crudely modernist content, often in Friedman's very words. An article by Rich ard Roll and Steph en Ross on finance, for instance, asserts th at "th e th eory sh ould be tested by its conclusions, not by its assumptions" and th at "similarly, one sh ould not reject th e conclusions de- rived from firm profit maximization on th e basis of sample surveys in wh ich managers claim th at th ey trade off profit for social good" (1980, p. 1093 and footnote). T h e same can be found elsewh ere, in nearly identical terms, all dating back to Fried- man's essay: William Sh arpe (1970, p. 77), for instance, writing on th e same matter as Roll and Ross, takes it as a rule of polite scientific beh avior th at "th e realism of th e assumptions matters little. If th e implica- tions are reasonably consistent with ob- served ph enomena, th e th eory can be said to 'explain' reality" (1970, p. 77). Repeated often, and exh ibiting modernism as well in th eir devotion to objective evidence, quantifiable tests, positive analysis, and oth er articles of th e faith , such ph rases h ave th e ring of incantation. Modernism is influential in economics, but not be- cause its premises h ave been examined carefully and found good. It is a revealed, not a reasoned, religion. III. Modernism Is a Poor Meth od Modernism Is Obsolete in Ph ilosoph y T h ere are a great many th ings wrong with modernism as a meth odology for sci- ence or for economic science.4 Even wh en ph ilosoph ically 'inclined, economists ap- pear to read about as much in professional ph ilosoph y as ph ilosoph ers do in profes- sional economics. It is unsurprising, th en, th at th e news of th e decline of modernism h as not reach ed all ears. From a ph iloso- ph er's point of view th e worst flaw in th e h ostility to th e "metaph ysics" th at mod- ernism sees everywh ere is th at th e h ostil- ity is itself metaph ysical. If metaph ysics is to be cast into th e flames, th en th e meth - odological declarations of th e modernist family from Descartes th rough Hume and Comte to Russell and Hempel and Popper will be th e first to go. For th is and oth er good reasons ph ilosoph ers agree th at strict logical positivism is dead, raising th e ques- tion wh eth er economists are wise to carry on with th eir necroph ilia.5 In th e economic case th e metaph ysical position akin to logical positivism is not well argued, probably because its roots lie more in th e ph ilosoph izing of ph ysicists from Mach to Bridgeman th an in th e par- allel th inking of professional ph ilosoph ers. It is at least obscure wh at migh t be th e appeal of "operationally meaningful state- ments" (Paul Samuelson, 1947, p. 3 and 4 T h e overdiscussed question of wh eth er th ere can be a value-free social science will not be much dis- cussed h ere, but it must be accounted one of th e ch ief failings of modernism th at it places moral argu- ment outside th e pale of rational discussion. In th is connection it sh ould be more widely known th at Morris Sch lick, th e founder of th e Vienna Circle of logical positivism and a vigorous lecturer on th e th eme th at moral knowledge is no knowledge at all, was murdered in 1936 by one of h is students. 6See Joh n Passmore, 1967. Karl Popper quotes Passmore with approval for th e motto of a ch apter of h is own entitled "Wh o Killed Logical Positivism?" (Popper, 1976, pp. 87-90), in wh ich h e confesses to th e murder. McCloskey: T h e Rh etoric of Economics 487 th rough out) or "valid and meaningful pre- dictions about ph enomena not yet ob- served" (Friedman, p. 7) as standards against wh ich all but math ematical asser- tions are to be judged. Samuelson, Fried- man, or th eir followers do not present rea- sons for adopting such metaph ysical positions, except for confident assertions, at th e time correct, th at th ey were th e received views of ph ilosoph ers on th e meth od of science. T h e trust in ph ilosoph y was a tactical error, for th e ph ilosoph y it- self h as since ch anged. Some ph ilosoph ers now doubt th e entire enterprise of epis- temology and its claim to provide founda- tions for knowledge (Rich ard Rorty, 1982b). A great many doubt th e prescrip- tions of modernist meth odology. Falsification Is Not Cogent A prescription th at economic meth odol- ogists h ave in common, for instance, is an emph asis on th e crucial falsifying test, sup- posedly th e h allmark of scientific reason- ing. But ph ilosoph ers h ave recognized for many decades th at falsification runs afoul of a criticism made by th e ph ysicist and ph ilosoph er Pierre Duh em in 1906, evi- dent at once with out ph ilosoph ical read- ing to an economist wh o h as tried to use falsification for science. Suppose th at th e h ypoth esis H ("British businessmen per- formed very poorly relative to Americans and Germans in th e late 19th century") implies a testing observation 0 ("Mea- sures of total factor productivity in iron and steel sh ow a large difference between British and foreign steelmaking"); it im- plies it, th at is, not by itself, but only with th e addition of ancillary h ypoth eses H1, H2, and so forth th at make th e measure- ment possible ("Marginal productivity th eory applies to Britain 1870-1913"; "British steel h ad no h idden inputs offset- ting poor business leadersh ips"; and so forth ). T h en of course not-0 implies not- H-or not-H1 or not-H2 or any number of failures of premises irrelevant to th e main h ypoth esis in question. T h e h ypoth e- sis in question is insulated from crucial test by th e ancillary h ypoth eses necessary to bring it to a test. T h is is no mere possibility but th e substance of most scientific dis- agreement: "Your experiment was not properly controlled"; "You h ave not solved th e identification problem"; "You h ave used an equilibrium (competitive, single-equation) model wh en a disequi- librium (monopolistic, 500-equation) model is relevant." And even if th e one h ypoth esis in question could be isolated, th e probabilistic nature of h ypoth eses, most especially in economics, makes cru- cial experiments non-crucial: ch ance is th e ever present alternative, th e Hn th at spoils falsificationism. Prediction Is Impossible in Economics T h e common claim th at prediction is th e defining feature of a real science, and th at economics possesses th e feature, is equally open to doubt. It is a clich e among ph ilosoph ers and h istorians of science, for instance, th at one of th e most successful of all scientific th eories, th e th eory of evo- lution, h as no predictions in th e normal sense, and is th erefore unfalsifiable by pre- diction. It is at least suggestive of some- th ing odd in prediction as a criterion for useful economics th at Darwin's th eory was inspired by classical economics, a sys- tem as it h appens erroneous in most of th e predictions it made. With no apparent awareness of th e incongruity, Friedman quoted Alch ian's revival of th e connection (Armen Alch ian, 1950) in th e midst of h is most famous piece of predictionist meta- ph ysics ("th e leaves are positioned as if each leaf deliberately sough t to maximize th e amount of sunligh t it receives"). In any event, predicting th e economic future is, as Ludwig von Mises put it, "be- yond th e power of any mortal man" (1949, p. 867). Wh at puts it beyond h is power 488 Journal of Economic Literature, Vol. XXI (June 1983) is th e very economics h e uses to make th e prediction. Wh en th e economist for a big bank predicts lower interest rates after Ch ristmas, and h as not before th e predic- tion placed h is net worth in margin loans on bonds, properly h edged and insured against variance, h e is beh aving eith er ir- rationally or self-deceivingly. If h e knows th e expected value of th e future, h e for some reason ch ooses not to take th e unlim- ited wealth th at such Faustian knowledge can surely bring, and is willing for some reason instead to dissipate th e opportunity by th e act of telling oth ers about it. If h e does not really know, th en h e faces no such unexploited opportunity. But th en h e h as perh aps no business talking as th ough h e does. Predictionism cannot be rescued by remarking th at th e big bank economist makes only conditional predic- tions. Conditional predictions sell for th eir value in a soft market: if th e sea were to disappear, a rock would accelerate in fall- ing from sea level to th e sea floor at about 32.17 feet per second per second. But a serious prediction h as serious boundary conditions. If it does it must answer again th e American Question: If you're so smart wh y aren't you rich ? At th e margin (be- cause th at is wh ere economics works) and on average (because some people are lucky) th e industry of making economic predictions, wh ich includes universities, earns only normal returns. Modernism Itself Is Impossible, and Is Not Followed T h e most damaging, h owever, of th ese lesser criticisms of th e modernist meth od- ology is th at if taken at its word it is narrow to absurdity. Consider again th e steps to modernist knowledge, from predictionism th rough Kelvin's Dictum to Hume's Fork. If economists (or ph ysicists) confined th emselves to economic (or ph ysical) propositions th at literally conformed to such steps th ey would h ave noth ing to say. Cartesian or Humean skepticism is too corrosive a standard of belief for a real h uman. As th e ch emist and ph ilosoph er Mich ael Polanyi put it, th e meth odology of modernism sets up "quixotic standards of valid meaning wh ich , if rigorously prac- ticed, would reduce us all to voluntary imbecility" (1962, p. 88). Modernism promises knowledge free from doubt, metaph ysics, morals, and personal convic- tion; wh at it delivers merely renames as Scientific Meth od th e scientist's and espe- cially th e economic scientist's metaph ys- ics, morals, and personal convictions. It cannot, and sh ould not, deliver wh at it promises. Scientific knowledge is no dif- ferent from oth er personal knowledge (Polanyi, 1962). T rying to make it differ- ent, instead of simply better, is th e death of science. In oth er words, th e literal application of modernist meth odology cannot give a useful economics. T h e best proofs are h is- torical. In h is Against Meth od (1975) Paul Feyerabend uses an interpretation of Gal- ileo's career to attack th e claims of pre- scriptive meth odology in ph ysics; th e same point can be made about economics. Had th e modernist criterion of persuasion been adopted by Galileo's contemporar- ies, h e argues, th e Galilean case would h ave failed. A grant proposal to use th e strange premise th at terrestrial optics ap- plied also to th e celestial sph ere, to assert th at th e tides were th e slosh ing of water on a mobile earth , and to suppose th at th e fuzzy views of Jupiter's alleged moons would prove, by a wild analogy, th at th e planets, too, went around th e sun as did th e moons around Jupiter would not h ave survived th e first round of peer review in a National Science Foundation of 1632, at any rate if th at one (unlike ours) were wedded to modernist ideology. T h e argu- ment applies widely to th e h istory of ph ys- ics: observational anomalies in th e experi- ments testing Einstein's th eories were ignored for many years, to be revealed as errors of measurement long after th e McCloskey: T h e Rh etoric of Economics 489 th eories h ad been embraced, embraced on grounds of "th e reason of th e matter," as Einstein was fond of saying (Feyera- bend, 1975, pp. 56-57). Historians of biology h ave uncovered one after anoth er case of cooking th e sta- tistical results to fit modernist precepts of wh at counts as evidence, from Pasteur and Mendel down to th e present. T h e mea- surement of IQ h as been a scandal of self- deception and bold fraud in th e name of scientific meth od from its beginning (Ste- ph en Jay Gould, 1981). Perh aps modern- ism fits poorly th e complexities of biology and psych ology: straining after evidence of a sort typically available only in th e sim- plest experiments in ph ysics may not suit th eir frontiers. It suits th e frontiers of eco- nomics poorly enough . For better or worse th e Keynesian revolution in eco- nomics would not h ave h appened under th e modernist legislation recommended for th e meth od of science. T h e Keynesian insigh ts were not formulated as statistical propositions until th e early 1950s, well af- ter th e bulk of younger economists h ad become persuaded th ey were true. By th e early 1960s liquidity traps and accelerator models of investment, despite failures in th eir statistical implementations, were taugh t to first-year students of economics as matters of scientific routine. Modernist meth odology would h ave stopped all th is in 1936: wh ere was th e evidence of an objective, statistical, controlled kind? Nor was th e monetarist counterrevolu- tion a success for modernist meth odology, th ough so powerful h ad th e meth odology become by th e 1960s in th e minds of econ- omists and especially of monetarist econo- mists th at most of th e explicit debate took place in its terms. Yet in truth crude ex- periments and big books won th e day, by th eir very crudeness and bigness. T h e Kennedy tax cut boosted th e Keynesians to th eir peak of prestige; th e inflation of th e 1970s brough t th em down again, leav- ing th e monetarists as temporary kings of th e castle. An important blow for mone- tarism was Friedman and Sch wartz' big book, A Monetary History of th e United States, 1867-1960. It establish ed a correla- tion, wh ich Keynesians would not deny, between money and money income. T h e significance of th e correlation, h owever, depended on th e assumption th at money caused prices and th at money was deter- minable by th e monetary auth ority (in 1929-1933, for example) despite th e open- ness of th e American economy to trade in both goods and money itself. Noneth e- less, wh at was telling in th e debate was th e sh eer bulk of th e book-th e rich ness and intelligence of its arguments, h ow- ever irrelevant most of th e arguments were to th e main point. A modernist meth od th orough ly ap- plied, in oth er words, would probably stop advances in economics. Wh at empirical anomaly in th e traditional tale inspired th e new labor economics or th e new eco- nomic h istory? None: th ey were merely realizations th at th e logic of economics h ad not exh austed its applicability at con- ventional borders. Wh at observable impli- cations justify th e investment of intellect since 1950 in general equilibrium th eory? For all th e modernist talk common among its th eorists, none; but so wh at? Could ap- plications of economics to legal questions rely entirely on objective evidence? No; but wh y would one wish to limit th e play of understanding? And so forth . T h ere is noth ing to be gained and a great deal to be lost by adopting modernism in eco- nomic meth odology. T h e very point is economic. In order for an economic th eory to be tested, Ron- ald Coase points out, some economists must care enough about it to both er. T h ey care only wh en it is believed by some in- vestigators-th ey and th eir allies or some significant group of opponents. Only wh en many believe is th ere a demand for tests. Fortunately, "economists, or at any rate enough of th em, do not wait to discover 490 Journal of Economic Literature, Vol. XXI (June 1983) wh eth er a th eory's predictions are accu- rate before making up th eir minds"; to wait in proper modernist style "would re- sult in th e paralysis of scientific activity" (Coase, 1982, p. 14) because no one would h ave an incentive to ch oose one out of th e infinite number of h ypoth eses for test. Even quantitative studies, h e argues, rely h eavily on pre-quantitative arguments founding belief, and h e quotes with ap- proval T . S. Kuh n's remark th at "th e road from scientific law to scientific measure- ment can rarely be traveled in th e reverse direction" (Coase, p. 18, quoting Kuh n, 1977, p. 219). T h e laws come from a rh eto- ric of tradition or introspection, and in ph ysics as in economics "quantitative studies . . . are explorations with th e aid of a th eory" (Coase, p. 17), search es for numbers with wh ich to make specific a th eory already believed on oth er grounds (see Edward Leamer, 1978, and th e discussion below). Modernism is imprac- tical. Any Meth od Is Arrogant and Pretentious T h e objections to modernist meth od so far, h owever, are lesser ones. T h e greater objection is simply th at modernism is a meth od. It sets up laws of argument drawn from an ideal science or th e underlying h istory of science or th e essence of knowl- edge. T h e claim is th at th e ph ilosoph er of science can tell wh at makes for good, useful, fruitful, progressive science. He knows th is so confidently th at h e can limit arguments th at worth y scientists make spontaneously, casting out some as un- scientific, or at best placing th em firmly in th e "context of discovery." T h e ph iloso- ph er undertakes to second-guess th e sci- entific community. In economics th e claim of meth odological legislation is th at th e legislator is not merely expert in all branch es of economic knowledge with in sound of h is proclamations but expert in all possible future economics, limiting th e growth of economics now in order to make it fit a ph ilosoph er's idea of th e ulti- mate good. It is h ard to take such claims seriously. Einstein remarked th at "Wh oever under- takes to set h imself up as a judge in th e field of T ruth and Knowledge is sh ip- wrecked by th e laugh ter of th e gods" (Ein- stein, 1953, p. 38). Modernism sets up a court of th e Red Queen ("Normative argu- ment," sh e says, "off with h is h ead"), and th e gods laugh merrily. Any meth odology th at is law-making and limiting will do so. It will do so with th e noblest intentions, but economists are fond of pointing out in like cases th at noble intentions can h ave bad consequences. T h e meth odologist fancies h imself th e judge of th e practi- tioner. His proper business, th ough , is an anarch istic one, resisting th e rigidity and pretension of rules. I. A. Rich ards applied th e point to th e th eory of metaph or: "Its business is not to replace practice, or to tell us h ow to do wh at we cannot do al- ready; but to protect our natural skill from th e interference of unnecessarily crude views about it" (1936, p. 116). T h e crudeness of modernist meth odol- ogy, or of any meth odology reducible to rigid precept, is bad; but th at it is allowed to interfere with practice is worse. T h e custom of meth odological papers in eco- nomics is to scold economists for not allow- ing it to interfere more. Mark Blaug's use- ful book summarizing th e state of play of economic meth odology in 1980, T h e Meth odology of Economics: Or How Econ- omists Explain, is a recent case in point. It would be better subtitled "How th e Young Karl Popper Explained," since it repeatedly attacks extant arguments in economics for failing to comply with th e rules Popper laid down in Logik der For- sch ung in 1934. Blaug's exordium is typi- cal of th e best of th e meth odologists in economics: "Economists h ave long been aware of th e need to defend 'correct' prin- ciples of reasoning in th eir subject; al- th ough actual practice may bear little McCloskey: T h e Rh etoric of Economics 491 relationsh ip to wh at is preach ed, th e preach ing is worth considering on its own ground" (Blaug, p. xii). Words like th ese flow easily from a modernist's pen. But wh y would preach ing unrelated to actual practice be worth considering at all? Wh y do economists h ave to defend in th e ab- stract th eir principles of reasoning, and before wh at tribunal? A case for h aving a meth odology-wh eth er logical positivist or Popperian or Austrian or Marxist- would be expected to give answers to th e questions of wh y, but commonly does not. Recent ph ilosoph y of science and ordinary good sense suggest th at it cannot. Blaug's peroration is frankly prescriptive, taking economic rh etoric directly from ph iloso- ph y: Wh at meth odology can do is to provide criteria for th e acceptance and rejection of research programs, setting standards th at will h elp us to discriminate between wh eat and ch aff. T h e ultimate question we can and indeed must pose about any research program is th e one made familiar by Popper: wh at events, if th ey materi- alize, would lead us to reject th at program? A program th at cannot meet th at question h as fallen sh ort of th e h igh est standards th at scien- tific knowledge can attain [1980, p. 264]. It sounds grand, but Einstein's gods are rolling in th e aisles. Wh y sh ould a dubious epistemological principle be any test of practice, much less th e ultimate test? And doesn't science take place most of th e time well sh ort of th e ultimate? Anyone would commend th e vision of science th at Popper and h is followers h ave-of science as a self-correcting ex- ploration verging on th e dialectic oth er- wise so foreign to th e analytic tradition in ph ilosoph y. For an economic scientist to adopt an obdurate refusal to consider objections and to resist offering h ostages to evidence, th ough as common in mod- ernist as in nonmodernist circles, is not merely unscientific; it is cowardly. So much one can take from th e idea of falsifi- cation by evidence. T h e problem comes, and th e modernist preach ing begins, with th e word "evidence." Sh ould it all be "ob- jective," "experimental," "positive," "ob- servable"? Can it be? In T h e Open Society and Its Enemies (1945) Popper closes th e borders of h is society to psych oanalysts and Marxists on th e grounds th at th ey do not conform to th e modernist notion of evidence prevalent th ere. He would also h ave to close it to ph ysicists from Galileo Galilei to particle ch armers. An economist bracero, surely, would be deported on th e next truck from such an open intellectual society. Oth er Sciences Do Not Follow Modernist Meth ods For all its claims to th e scientific priest- h ood, th en, economics is different from th e man-in-th e-street's image of Science. Economists sh ould be glad th at th eir sub- ject fits poorly with th is image and well with th e New Rh etoric, as do studies long foreign to economics such as th e study of literature or law or politics. Economics, in oth er words, is not a Science in th e way we came to understand th at word in h igh sch ool. But neith er, really, are oth er sciences. Oth er sciences, even th e oth er math emat- ical sciences, even th e Queen h erself, are rh etorical. Math ematics appears to an in- cognoscento to be th e limiting example of objectivity, explicitness, and demon- strability. Surely h ere is bedrock for belief. Yet standards of math ematical demon- stration ch ange. T h e last fifty years h ave been a disappointment to followers of Da- vid Hilbert and h is program to put math e- matics on indubitable foundations. T h e h istorian of math ematics, Morris Kline, wrote recently th at "it is now apparent th at th e concept of a universally accepted, infallible body of reasoning-th e majestic math ematics of 1800 and th e pride of man-is a grand illusion." Or again: T h ere is no rigorous definition of rigor. A proof is accepted if it obtains th e endorsement of th e leading specialists of th e time and employs 492 Journal of Economic Literature, Vol. XXI (June 1983) th e principles th at are fash ionable at th e mo- ment. But no standard is universally acceptable today [1980, pp. 6, 315]. T h e recent flap over a computerized proof of th e four-color proposition is one exam- ple. T h e more fundamental example is said to be Kurt G6del's proof fifty years ago th at some true and statable proposi- tions in math ematics are unprovable. T h e point is controversial. Joh n van Heijenoort writes th at "th e bearing of G6del's results on epistemological problems remains un- certain. . . . [T ]h ey sh ould not be rash ly called upon to establish th e primacy of some act of intuition th at would dispense with formalization" (1967, p. 357). T o be sure. But one need not dispense with for- malization and flee to an unexamined act of intuition to th ink th at formalization h as limits. Kline's opinions are somewh at loosely expressed, and unpopular among math e- maticians. Apparently less so are th ose of Ph ilip J. Davis and Reuben Hersh , wh ose recent book T h e Math ematical Experi- ence (1981) was described in th e American Math ematical Month ly as "one of th e masterpieces of our age." Davis and Hersh speak of th e crisis of confidence in modern math ematical ph ilosoph y, h owever, in terms nearly identical with Kline's. In th e work of T h e Ideal Math ematician "th e line between complete and incomplete proof is always somewh at fuzzy, and often controversial" (p. 34; cf. p. 40). T h ey quote a living Ideal Math ematician, Solomon Feferman, wh o writes "it is also clear th at th e search for ultimate foundations via for- mal systems h as failed to arrive at any con- vincing conclusion" (p. 357). With out us- ing th e word, Davis and Hersh argue th at wh at is required is a rh etoric of math emat- ics: T h e dominant style of Anglo-American ph iloso- ph y ... tends to perpetuate identification' of th e ph ilosoph y of math ematics with logic and th e study of formal systems. From th is stand- point, a problem of principal concern to th e math ematician becomes totally invisible. T h is is th e problem of giving a ph ilosoph ical account ... of preformal math ematics.. . , including an examination of h ow [it] relates to and is af- fected by formalization [1981, p. 344]. T h ey assert th at "informal math ematics is math ematics. Formalization is only an abstract possibility wh ich no one would want or be able actually to carry out" (p. 349). Real proofs "are establish ed by 'con- sensus of th e qualified"' and are "not ch eckable . . . by any math ematician not privy to th e gestalt, th e mode of th ough t in th e particular field. . . . It may take generations to detect an error" (p. 354). T h ey conclude: T h e actual experience of all sch ools-and th e actual daily experience of math ematicians- sh ows th at math ematical truth , like oth er kinds of truth , is fallible and corrigible.... It is rea- sonable to propose a different task for math e- matical ph ilosoph y, not to seek indubitable truth , but to give an account of math ematical knowledge as it really is-fallible, corrigible, tentative, and evolving, as is every oth er kind of h uman knowledge [p. 406]. Not much in th is line h as been done, th ough one astounding piece h as sh own wh at can be: Imre Lakatos' Proofs and Refutations: T h e Logic of Math ematical Discovery gives an account for a th eorem in topology of th e rh etoric of math emat- ics. It appears, th en, th at some deep prob- lems facing math ematics are problems of rh etoric, problems in "th e art of probing wh at men believe th ey ough t to believe." Similar points can be made about oth er sciences, such as paleontology. T h e sud- den proliferation of species at th e begin- ning of th e Cambrian period, one of th e great puzzles in evolution, was explained by Steven Stanley in 1973 by supposing th e sudden arrival of forms of life th at fed on oth er forms of life, single-celled h er- bivores, as it were, in a grassy sea. T h eir grazing on th e dominant forms allowed new forms to survive th e competition from th e previously dominant ones, wh ich McCloskey: T h e Rh etoric of Economics 493 in turn resulted in new grazers. Steph en Jay Gould remarks of th e arguments of- fered in support of th is brilliant and per- suasive th eory th at: . . .th ey do not correspond to th e simplistic notions about scientific progress th at are taugh t in most h igh sch ools and advanced by most me- dia. Stanley does not invoke proof by new infor- mation obtained from rigorous experiment. His second criterion is a meth odological presump- tion, th e th ird a ph ilosoph ical preference, th e fourth an application of prior th eory. . . . Sci- ence, at its best, interposes h uman judgment and ingenuity upon all its proceedings. It is, after all (alth ough we sometimes forget it), practiced by h uman beings [Gould, 1977, p. 125]. One can even say th e same of ph ysics, th at favorite of outsiders seeking a pre- scription for real, objective, positive, predictive science. T h e sequence Carnap- Popper-Lakatos-Kuh n-Feyerabend repre- sents in th e h istory and ph ilosoph y of ph ysics a descent, accelerating recently, from th e frigid peaks of scientific absolut- ism to th e sweet valleys of anarch ic rh eto- ric (see Popper, 1934, 1976; Lakatos, 1970; Kuh n, 1970; Feyerabend, 1975, 1978). If economics sh ould imitate oth er sciences, imitate even th e majesty of ph ysics and math ematics (th ere is, to be sure, consid- erable doubt th at it sh ould), th en it sh ould officially open itself to a wider range of discourse. IV. T h e Unofficial Rh etoric Is Honorable But Unexamined Econometric Rh etoric Is T oo Narrow But unofficially it does. T h e second atti- tude towards discourse is th at adopted in actual scientific work in economics. It is different from th e official, modernist rh et- oric. Wh at is alarming about th e workaday rh etoric is not its content but th at it is unexamined, and th at in consequence th e official rh etoric pops up in misch ievous ways. Economists agree or disagree-th eir disagreements are exaggerated-but th ey do not know wh y. Any economist believes more th an h is evidence of a suitably mod- ernist and objective sort implies. A recent poll of economists, for example, found th at only th ree percent of th ose surveyed flatly disagreed with th e assertion th at "tariffs and import quotas reduce general eco- nomic welfare." Only two percent dis- agreed with th e assertion th at "a ceiling on rents reduces th e quantity and quality of h ousing available." Only eigh t percent disagreed with th e assertion th at "th e tax- ing and spending of government h as a sig- nificant impact on th e income of a partly idle economy" (J. R. Kearl, Clayne Pope, Gordon Wh iting, and Larry Wimmer, 1979). You probably fall into th e 97, 98, and 92 percent majorities. T h e evidence for th e assertions, h owever, is obscure. How do economists know th ese state- ments are true? Wh ere did th ey acquire such confidence? T h e usual answer is th at "th eory tells us." But great social ques- tions are not answered by looking at a dia- gram on a blackboard, because it is trivi- ally easy to draw a diagram th at yields th e opposite answer. T h e factual experi- ence of th e economy, certainly, h as little to do with th eir confidence. No study h as sh own in ways th at would satisfy a consis- tent modernist, for example, th at h igh tar- iffs in America during th e 19th century, on balance, h urt Americans. Yet it is be- lieved th at tariffs h urt th en and now.6 No study h as sh own th at an inadvertent pol- icy of fiscal ease brough t unemployment down during th e War. Yet it is believed on all sides. Economists h ave not consid- ered th eir rh etoric. Everywh ere in th e literature of eco- nomics one is met with premises th at are unargued, tricks of style masquerading as reason ("it is evident th at"), forms of evi- dence th at ignore th e concerns of th e au- 6Ch arles Peirce, th e founder of pragmatism, re- lated in 1877 h ow h e h ad been "entreated not to read a certain newspaper lest it migh t ch ange my opinion upon free-trade" (p. 101). 494 Journal of Economic Literature, Vol. XXI (June 1983) dience, and oth er symptoms of a lack of self-consciousness in rh etoric. T h e lack is most evident in quarrels across research paradigms. Some economists, (I am one) believe th at peasants are rational. T h e mass of modernist proofs, originating largely from Ch icago, th at resistance to th e "Green Revolution" or persistence in scattering plots of land are rational leave many oth er economists cold. Some econo- mists (I am one) believe th at competition is a robust ch aracterization of th e modern American economy. T h e mass of mod- ernist proofs, originating largely from Ch i- cago, th at, for instance, advertising h as small effects on profits leaves th e oth ers cold. Wh y? Wh y do Ch icago proofs leave T exas institutionalists or NYU Austrians or Massach usetts Marxists or even Berkeley neoclassicists cold? T h e non-Ch icago economists, of course, believe th ey h ave modernist evidence of th eir own. But part of th e problem is th at th ey also believe, with out th inking about it much , th at th ey h ave evidence of a non-modernist sort: stories of peasants and th eir lumpish ch ar- acter in th e flesh ; self-awareness of th e force of advertising. A good part of th e disagreement is over evidence th at is not brough t openly into th e discussion, th ough it is used. Even in th e most narrowly tech nical matters of scientific discussion economists h ave a sh ared set of convictions about wh at makes an argument strong, but a set wh ich th ey h ave not examined, wh ich th ey can communicate to graduate stu- dents only tacitly, and wh ich contains many elements embarrassing to th e offi- cial rh etoric. A good example is th e typical procedure in econometrics. From eco- nomic th eory, politics, and th e workings of th e economist's psych e, all of wh ich are in th e rh etorical sense unexamined, come h ypoth eses about some bit of th e econ- omy. T h e h ypoth eses are th en specified as straigh t lines, linear models being th ose most easily manipulated. T h e straigh t lines are fitted to someone else's collection of facts. So far th e official and workaday rh etoric correspond, and th e one migh t with justice be called a guide to th e oth er. Presently, h owever, th ey diverge. If th e results of th e fitting to th e data are reason- able, on grounds th at are not th emselves subject to examination, th e article is sent off to a journal. If th e results are unreason- able, th e h ypoth esis is consigned to a do loop: th e economic scientist returns to th e h ypoth eses or th e specifications, altering th em until a publish able article emerges. T h e product may or may not h ave value, but it does not acquire its value from its adh erence to th e official rh etoric. It vio- lates th e official rh etoric blatantly. But wh y sh ouldn't it? Even at th e level of tests of statistical significance th e workaday rh etoric violates th e ph iloso- ph er's law. But so wh at? It is a clich e of cynicism in economics and related statisti- cal fields to point out th at a result signifi- cantly different from one th at may h ave been gotten by ch ance does not h ave th e significance it claims if th e h ypoth esis h as been manipulated to fit th e data. T h at only significant results get publish ed h as long been a scandal among statistical pur- ists: th ey fear with some reason th at at th e five percent level of significance some- th ing like five percent of th e computer runs will be successful. T h e scandal is not, h owever, th e failure to ach ieve modernist standards of scientific purity. T h e scandal is th e failure to articulate reasons wh y one migh t want to ignore th em. It would be arrogant to suppose th at one knew better th an th ousands of intelli- gent and h onest economic sch olars wh at th e proper form of argument was. T h e Received View is arrogant in th is way, lay- ing down legislation for science on th e ba- sis of epistemological convictions h eld with veh emence inversely proportional to th e amount of evidence th at th ey work. Better to look h ard at wh at is in fact done. In an important book th at is an exception McCloskey: T h e Rh etoric of Economics 495 to th e general neglect of rh etorical consid- erations in economics Edward Leamer asks wh at purpose th e workaday proce- dures in econometrics may be serving (Leamer, 1978, esp. p. 17). Instead of com- paring th em with a doctrine in th e ph ilos- oph y of science h e compares th em with reasons th at ough t to persuade a reasona- ble person, with wh at really warrants as- sent, with , in sh ort, economic rh etoric. As Ch ristoph er Sims points out in a review, "th ere is a myth th at th ere are only two categories of knowledge about th e world-'th e' model, given to us by 'eco- nomic th eory,' with out uncertainty, and th e parameters, about wh ich we know noth ing except wh at th e data, via objec- tively specified econometric meth ods, tells us. . . . T h e sooner Leamer's cogent writings can lead us to abandon th is myth , to recognize th at nearly all applied work is sh ot th rough with applications of uncer- tain, subjective knowledge, and to make th e role of such knowledge more explicit and more effective, th e better" (Sims, 1979, p. 567). Yes. T h e very title of Lea- mer's book is an outline of rh etoric in econometrics: Specification Search es: Ad Hoc Inference with Nonexperimental Data. Examples of th e search abound. It is common in a seminar in economics for th e speaker to present a statistical result, apparently irrefutable by th e rules of posi- tive economics, and to be met by a ch orus of "I can't believe it" or "It doesn't make sense." Milton Friedman's own Money Worksh op at Ch icago in th e late 1960s and th e early 1970s was a case in point. Put in statistical language, th e rh etorical con- text th at creates such skepticism can be called a priori beliefs and can be analyzed in Bayesian terms. It seldom is, but such a step would not be enough even if it were taken. T h at th e rh etorical community in economics migh t reject "solid" results, for instance th at oil prices appear in a regres- sion explaining inflation, and accept "flimsy" ones, for instance th at money causes inflation, sh ows th e strength of prior beliefs. (T h e beliefs can be reversed with out ch anging th e example.) T o leave th e discussion at prior beliefs, h owever, perh aps formalizing th em as prior proba- bility distributions, is to perpetuate th e fact-value split of modernism, leaving most of wh at matters in science to squeals of pleasure or pain. Wh at is required is an examination of th e workaday rh etoric th at leads to th e prior beliefs. It is not enough , as T h omas F. Cooley and Steph en F. LeRoy do in th eir recent, penetrating paper on "Identification and Estimation of Money Demand" (1981) to merely stand appalled at th e infection of econo- metric conclusions by prior beliefs. If econometric argument does not persuade it is because th e field of argument is too narrow, not because th e impulse towards th ough tfulness and explicitness wh ich it embodies is wrong. T h e arguments need to be broadened, not merely dismissed. T h e Controversy Over Purch asing Power Parity Is an Example of Unexamined Rh etoric A good example of h ow th e official rh et- oric-in th e absence of an examination of th e workaday rh etoric-can lead a litera- ture in economics astray, especially in econometric matters, is th e debate about purch asing power parity. It is worth exam- ining in detail as a case study in unex- amined rh etoric and th e need to broaden it (Donald McCloskey and J. Rich ard Zech er, 1982). T h e question is: is th e inter- national economy more like th e economy of th e Midwest, in wh ich Iowa City and Madison and Ch ampaign all face given prices for goods; or is it more like th e solar system, in wh ich each planet's economy is properly th ough t of in isolation? If th e Iowa City view is correct, th en th e prices of all goods will move togeth er every- wh ere, allowing for exch ange rates. If th e Martian view is correct th ey will move 496 Journal of Economic Literature, Vol. XXI (June 1983) differently. If th e Iowa City view is cor- rect, th en all closed models of economies, wh eth er Keynesian or monetarist or ra- tionally expecting, are wrong; if th e Mar- tian view is correct, th en economists can (as th ey do) go on testing macroeconomic faith s against American experience since th e War. T h e question of wh eth er prices are closely connected internationally, th en, is important. T h e official rh etoric does not leave much doubt as to wh at is required to answer it: collect facts on prices in, say, th e United States and Canada and . . . well . . . test th e h ypoth esis (derived in orth odox fash ion from a h igh er order h y- poth esis, using objective data, looking only at observable facts, controlling th e experiment as much as possible, and so forth , according to th e received view). A large number of economists h ave done th is. Half of th em conclude th at purch as- ing power parity works; th e oth er h alf con- clude th at it fails. A misleading but none- th eless superb paper by Irving Kravis and Robert Lipsey on th e subject concludes th at it fails, in terms th at are worth repeat- ing: We th ink it unlikely th at th e h igh degree of national and international commodity arbi- trage th at many versions of th e monetarist [sic] th eory of th e balance of payments contemplate is typical of th e real world. T h is is not to deny th at th e price structures of th e advanced indus- trial countries are linked togeth er, but it is to suggest th at th e links are loose rath er th an rigid [1978, p. 243, italics added]. Every italicized word involves a com- parison against some standard of wh at constitutes unlikelih ood or h igh ness or typicality or being linked or looseness or rigidity. Yet h ere and elsewh ere in th e tortured literature of purch asing power parity no standard is proposed. T h e narrowest test of purch asing power parity, and th e one th at springs most read- ily to a mind trained in th e official rh eto- ric, is to regress th e price in th e United States (of steel or of goods-in-general, in levels or in differences) against th e corre- sponding price abroad, allowing for th e exch ange rate. If th e slope coefficient is 1.00 th e h ypoth esis of purch asing power parity is said to be confirmed; if not, not. Kravis and Lipsey perform such a test. Be- ing good economists th ey are evidently made a little uncomfortable by th e rh eto- ric involved. T h ey admit th at "Each ana- lyst will h ave to decide in th e ligh t of h is purposes wh eth er th e purch asing power parity relationsh ips fall close enough to 1.00 to satisfy th e th eories" (p. 214). Pre- cisely. In th e next sentence, h owever, th ey lose sigh t of th e need for an explicit stan- dard if th eir argument is to be cogent: "As a matter of general judgment we ex- press our opinion th at th e results do not support th e notion of a tigh tly integrated international price structure." T h ey do not say wh at a "general judgment" is or h ow one migh t recognize it. T h e purpose of an explicit economic rh etoric would be to provide guidance. T h e guidance Kravis and Lipsey provide for evaluating th eir general judgment is a footnote (p. 214) reporting th e general judgments of Hou- th akker, Haberler, and Joh nson th at devi- ations from parity of anyth ing under 10 to 20 percent are acceptable to th e h y- poth esis. It h appens, incidentally, th at th e bulk of th e evidence offered by Kravis and Lipsey passes rath er th an fails such a test, belying th eir conclusions. But accepting or rejecting one unargued standard by comparing it with anoth er unargued stan- dard does not much advance th e art of argument in economics. Kravis and Lipsey, to be fair, are unusu- ally sensitive to th e case for h aving some standard, more sensitive th an are most economists working th e field. T h ey return repeatedly to th e question of a standard, th ough with out resolving it. On page 204 th ey reject in one irrelevant sentence th e only standard proposed in th e literature so far, th e Genberg-Zech er criterion, de- McCloskey: T h e Rh etoric of Economics 497 scribed below. On pages 204-05 and on 235 and again on 242 th ey draw a distinc- tion between th e statistical and th e eco- nomic significance of th eir results. So fre- quently do th ey make th e point th at it must be counted one of th e major ones in th e paper. On page 205 th ey remark, for example, th at even small differences between domestic and export prices can make a big difference to th e incentive to export: "th is is a case in wh ich statistical significance [th at is, a correlation of th e two prices near 1.0, wh ich one migh t mis- takenly suppose to imply th at th ey were insignificantly different] does not neces- sarily connote economic significance." Yet th ey do not turn th e sword on th emselves. No wonder: with out a rh etoric of eco- nomic significance, and in th e face of a modernist rh etoric of statistical signifi- cance with th e prestige of alleged science beh ind it, th ey are unaware th ey are wielding it. T h e abuse of th e word "significant" in connection with statistical arguments in economics is universal. Statistical signifi- cance seems to give a standard by wh ich to judge wh eth er a h ypoth esis is true or false th at is independent of any tiresome consideration of h ow true a h ypoth esis must be to be true enough . T h e point in th e present case is th at th e "failure" of purch asing power parity in a regression of th e usual type is not measured against a standard. How close does th e slope h ave to be to th e ideal of 1.00 to say th at pur- ch asing power parity succeeds? T h e litera- ture is silent. T h e standard used is th e ir- relevant one of statistical significance. A sample size of a million yielding a tigh t estimate th at th e slope was .9999, "signifi- cantly" different from 1.00000, could be produced as evidence th at purch asing power parity h ad "failed," at least if th e logic of th e usual meth od were to be fol- lowed consistently. Common sense, pre- sumably, would rescue th e sch olar from asserting th at an estimate of .9999 with a standard error of .0000001 was signifi- cantly different from unity in a significant meaning of significance. Such common sense sh ould be applied to findings of slopes of .90 or 1.20. It is not.7 T h e irrelevance of th e merely statistical standard of fit does not undermine only th at h alf of th e empirical literature th at finds purch asing power parity to be wrong. T owards th e end of a fine article favorable to purch asing power parity, Paul Krugman writes: T h ere are several ways in wh ich we migh t try to evaluate purch asing power parity as a th e- ory. We can ask h ow much it explains [th at is, R-square]; we can ask h ow large th e devia- tions from purch asing power parity are in some absolute sense; and we can ask wh eth er th e deviations from purch asing power parity are in some sense systematic [1978, p. 405]. T h e defensive usage "in some absolute sense" and "in some sense" betrays h is unease, wh ich is in th e event justified. T h ere is no "absolute sense" in wh ich a description is good or bad. T h e sense must be comparative to a standard, and th e standard must be argued. Similarly, Jacob Frenkel, an enth usiast for purch asing power parity as such th ings go among economists but momentarily bewitch ed by th e ceremony of regression, says th at "if th e market is efficient and if th e forward exch ange rate is an unbiased forecast of th e future spot exch ange rate, th e constant [in a regression of th e spot rate today on th e future rate for today quoted yesterday] . . . sh ould not differ significantly from unity." In a footnote on th e next page, speaking of th e standard 7An example is J. D. Rich ardson's paper, "Some Empirical Evidence on Commodity Arbitrage and th e Law of One Price" (1978). He regresses Canadian on American prices multiplied by th e exch ange rate for a number of industries and concludes: "It is nota- ble th at th e 'law of one price' fails uniformly. T h e h ypoth esis of perfect commodity arbitrage is re- jected with 95 percent confidence for every com- modity group" (p. 347, italics added). T h e question is, wh y in an imperfect world would it matter th at perfect arbitrage is rejected? 498 Journal of Economic Literature, Vol. XXI (June 1983) errors of th e estimates for such an equa- tiori in th e 1920s, h e argues th at "wh ile th ese results indicate th at markets were efficient and th at on average forward rates were unbiased forecasts of future spot rates, th e 2-8 percent errors were signifi- cant"(1978, pp. 175-76, italics added). He evidently h as forgotten h is usage of "sig- nificant" in anoth er signification. Wh at h e appears to mean is th at h e judges a 2-8 percent error to be large in some unspeci- fied economic sense, perh aps as offering significant profits for lucky guessers of th e correct spot rate. In any event, it is un- clear wh at h is results imply about th eir subject, purch asing power parity, because significance in statistics, h owever useful it is as an input into economic significance, is not th e same th ing as economic signifi- cance. T h e point is not th at levels of signifi- cance are arbitrary. Of course th ey are. T h e point is th at it is not known wh eth er th e range picked out by th e level of signifi- cance affirms or denies th e h ypoth esis. Nor is th e point th at econometric tests are to be disdained. Quite th e contrary. T h e point is th at th e econometric tests h ave not followed th eir own rh etoric of h ypoth - esis testing. Nowh ere in th e literature of tests of purch asing power parity does th ere appear a loss function. We do not know h ow much it will cost in policy wrecked or analysis misapplied or reputa- tion ruined if purch asing power parity is said to be true wh en by th e measure of th e slope coefficient it is only, say, 85 per- cent true. T h at is, th e argument due to Neyman and Pearson th at undergirds modern econometrics h as been set aside h ere as elsewh ere in favor of a merely statistical standard, and an irrelevant one related to sampling error at th at. We are told h ow improbable it is th at a slope coef- ficient of .90 came from a distribution cen- tered on 1.00 in view of th e one kind of error we claim we know about (unbiased sampling error with finite variance), but we are not told wh eth er it matters to th e truth of purch asing power parity wh ere such limits of confidence are placed. Silence on th e matter is not confined to th e literature of purch asing power par- ity. Most texts on econometrics do not mention th at th e goodness or badness of a h ypoth esis is not ascertainable on merely statistical grounds. Statisticians th em- selves are more self-conscious, alth ough th e transition from principle to practice is sometimes awkward. A practical diffi- culty in th e way of using th e Neyman and Pearson th eory in pure form, A. F. Mood and F. A. Graybill say, is th at th e loss function is not known at all or else it is not known accurately enough to warrant its use. If th e loss function is not known, it seems th at a decision function th at in some sense min- imizes th e error probabilities will be a reason- able procedure [1963, p. 278]. T h e ph rase "in some sense" appears to be a marker of unexplored rh etoric in th e works of intellectually h onest sch olars. In any event, th e procedure th ey suggest migh t be reasonable for a general statisti- cian, wh o makes no claim to know wh at is a good or bad approximation to truth in fields outside statistics. It is not reason- able for a specialist in international trade or macroeconomics. If th e loss function is not known it sh ould be discovered. And th at will entail a study of th e question's rh etoric. One standard of economic significance in questions of parity, for example, migh t be th e degree to wh ich th e customary re- gressions between countries resembled similar regressions with in a single country. We agree, for purposes of argument, th at th e United States is to be treated as a sin- gle point in space, as one economy across wh ich distances are said not to matter for th e purposes of th inking about inflation or th e balance of payments. Having done so we h ave a standard: is Canada economi- cally speaking just as closely integrated with th e United States as is California with McCloskey: T h e Rh etoric of Economics 499 Massach usetts? Is th e Atlantic Economy as closely integrated as th e American Economy? T h e standard is called th e Gen- berg-Zech er criterion, after its inventors (Hans Genberg, 1976; McCloskey and Zech er, 1976). It is not th e only conceiv- able one. T h e degree of market integra- tion in some golden age (1880-1913 per- h aps; or 1950-1970) migh t be a standard; th e profits from arbitrage above normal profits migh t be anoth er standard; th e de- gree to wh ich an X percentage deviation from purch asing power parity does or does not disturb some assertion about th e causes of inflation migh t be still anoth er. T h e point is to h ave standards of argu- ment, to go beyond th e inconclusive rh et- oric provided by th e pseudo-scientific ceremony of h ypoth esis-regression-test- publish in most of modern economics. V. T h e Rh etoric of Economics Is a Literary Matter Even a Modernist Uses, and Must Use, Literary Devices T h e mere recognition th at th e official rh etoric migh t be dubious, th en, frees th e reason to examine h ow economists really argue. Obscured by th e official rh etoric th e workaday rh etoric h as not received th e attention it deserves, and th e knowl- edge of it is th erefore contained only in seminar traditions, advice to assistant pro- fessors, referee reports (a promising pri- mary source for its study), and jokes. It is significant th at George Stigler, a leader of modernism in economics, ch ose to ex- press h is observations about th e rh etoric of economics in a brilliantly funny "T h e Conference Handbook" ("Introductory Remark number E: 'I can be very sympa- th etic with th e auth or; until 2 years ago I was th inking along similar lines' ") rath er th an as a serious study in one of th e several fields h e h as mastered, th e h istory of eco- nomic th ough t (1977). T h e attitude of th e Handbook is th at rh etoric is mere rh eto- ric, mere game playing in aid of ego grati- fication; th e serious business of Science will come on th at h appy day wh en th e information th eory of oligopoly or th e vul- gar Marxist th eory of th e state is brough t to a critical test under th e auspices of naive falsificationism. Economists can do better if th ey will look soberly at th e varieties of th eir argu- ments. T h e varieties examined h ere can only be crude preliminaries to a fuller study, a study th at migh t dissect samples of economic argument, noting in th e man- ner of a literary or ph ilosoph ical exegesis exactly h ow th e arguments sough t to con- vince th e reader. It is not obvious a priori wh at th e categories migh t be; in view of th e meth odological range of modern eco- nomics th ey doubtless would vary much from auth or to auth or. A good place to start migh t be th e categories of classical rh etoric, Aristotle's divisions into inven- tion, arrangement, delivery, and style, for instance, with h is paired sub-h eadings of artificial (i.e., argumentative) and inartifi- cial (i.e., factual) proofs, syllogism and ex- ample, and th e like. A good place to con- tinue would be th e procedures of modern literary critics, brigh t people wh o make th eir living th inking about th e rh etoric of texts. T h e purpose would not be to make th e auth or look foolish or to uncover fallacies for punish ment by ridicule-fallacymon- gering is evidence of a legislative attitude towards meth od, and it is no surprise th at Jeremy Benth am, confident of h is ability to legislate for oth ers in matters of meth od as in education, prisons, and government, h ad compiled from h is notes T h e Book of Fallacies (1824). David Hackett Fisch er's book, Historians'Fallacies (1970), h as th is flaw: th at it takes as fallacious wh at may be merely probable and supporting argu- ment. T h e purpose of literary scrutiny of eco- nomic argument would be to see beyond th e received view on its content. T wo 500 Journal of Economic Literature, Vol. XXI (June 1983) pages (pp. 122-23) ch osen literally at random from th at premier text of th e re- ceived view, and a local maximum in eco- nomic sch olarsh ip, Samuelson's Founda- tions, will suffice for illustration: (1) T o begin with h e gives a general math ematical form from wh ich detailed results in comparative statics can be ob- tained by reading across a line. T h e impli- cation of th e lack of elaboration of th e math ematics is th at th e details are trivial (leading one to wonder wh y th ey are men- tioned at all). An "interesting" special case is left "as an exercise to th e interested reader," drawing on th e rh etorical tradi- tions of applied math ematics to direct th e reader's mind in th e righ t directions. T h e math ematics is presented in an offh and way, with an assumption th at we all can read off partitioned matrices at a glance, inconsistent with th e level of math ematics in oth er passages. T h e air of easy math e- matical mastery was important to th e in- fluence of th e book, by contrast with th e embarrassed modesty with wh ich British writers at th e time (Hicks most notably) push ed math ematics off into appendices. Samuelson's skill at math ematics in th e eyes of h is readers, an impression nur- tured at every turn, is itself an important and persuasive argument. He presents h imself as an auth ority, with good reason. T h at th e math ematics is so often pointless, as h ere, is beside th e point. Being able to do such a difficult th ing (so it would h ave seemed to th e typical economist reading in 1947) is warrant of expertise. T h e argument is similar in force to th at of a classical education conspicuously dis- played. T o read Latin like one's moth er tongue and Greek like one's aunt's tongue is extremely difficult, requiring applica- tion well beyond th e ordinary; th erefore- or so it seemed to English men around 1900-men wh o h ave acquired such a skill sh ould h ave ch arge of a great empire. Likewise-or so it seemed to economists around 1983-th ose wh o h ave acquired a skill at partitioned matrices and eigen- values sh ould h ave ch arge of a great econ- omy. T h e argument is not absurd or a "fal- lacy" or "mere rh etoric." Virtuosity is some evidence of virtue.8 (2) T h ere are six instances of appeal to auth ority (C. E. V. Leser, Keynes, Hicks, Aristotle, Knigh t, and Samuelson; appeal to auth orities is someth ing of a Samuel- sonian specialty). Appeal to auth ority is often reckoned as th e worst kind of "mere" rh etoric. Yet it is a common and often legitimate argument, as h ere. No sci- ence would advance with out it, because no scientist can redo every previous argu- ment. We stand on th e sh oulders of giants, and it is a perfectly legitimate and persua- sive argument to point th is out from time to time. (3) T h ere are several appeals to relax- ation of assumptions. T h e demand for money is "really interesting . . . wh en un- certainty . . . is admitted." Again, th e im- plicit assumption in Hicks th at money bears no interest is relaxed, unh itch ing th e interest rate from th e zero return on money. Relaxation of assumptions is th e literature generating function of modern economics. In th e absence of quantitative evidence on th e importance of th e as- sumption relaxed it is no modernist evi- dence at all. Samuelson is careful to stick to th e subjunctive mood of th eory (money "would pass out of use"), but no doubt wants h is strictures on a th eory of th e in- terest rate based merely on liquidity pref- erence (th at is, on risk) to be taken seri- ously as comments on th e actual world. T h ey are, surely, but not on th e operation- alist grounds h e articulates wh en preach - ing meth odology. (4) T h ere are several appeals to h ypo- 8 T h e limiting case is spelling. Most college teach - ers will agree th at th ose wh o do not know h ow to spell "consensus" lose some of th eir auth ority to speak on it. McCloskey: T h e Rh etoric of Economics 501 th etical toy economies, constrained to one or two sectors, from wh ich practical re- sults are derived. T h is h as since Ricardo been among th e commonest forms of eco- nomic argument, th e Ricardian vice. It is no vice if done reasonably. "It would be quite possible to h ave an economy in wh ich money did not exist, and in wh ich th ere was still a substantial rate of inter- est." Yes, of course. (5) T h ere is, finally, one explicit appeal to analogy, wh ich is said to be "not ... superficial." Analogy, as will be sh own in detail in a moment, pervades economic th inking, even wh en it is not openly analogical: transaction "friction," yield "spread," securities "circulating," money "with ering away" are inexplicit examples h ere from one paragraph of live or only h alf-dead metaph ors. Yet analogy and metaph or, like most of th e oth er pieces of Samuelson's rh etoric, h ave no standing in th e official canon. Most of th e Devices Are Only Dimly Recognized T h e range of persuasive discourse in economics is wide, ignored in precept wh ile potent in practice. At th e broadest level it is worth noting th at th e practice of economic debate often takes th e form of legal reasoning, for, as Booth put it, "th e processes developed in th e law are codifications of reasonable processes th at we follow in every part of our lives, even th e scientific" (1974, p. 157). Econ- omists would do well to study jurispru- dence, th en, with some oth er aim th an subordinating it to economic th eory. For instance, economists, like jurists, argue by example, by wh at Edward Levi calls "th e controlling similarity between th e pres- ent and prior case" (1967, p. 7). T h e details of th e pleading of cases at economic law h ave little to do with th e official scientific meth od. With out self- consciousness about workaday rh etoric th ey are easily misclassified. A common argument in economics, for example, is one from verbal suggestiveness. T h e prop- osition th at "th e economy is basically com- petitive" may well be simply an invitation to look at it th is way, on th e assurance th at to do so will be illuminating. In th e same way a psych ologist migh t say "we are all neurotic"-it does not mean th at 95 percent of a randomly selected sample of us will exh ibit compulsive h andwash - ing; rath er, it is merely a recommendation th at we focus attention on th e neurotic ingredient "in us all" (Passmore, 1966, p. 438). T o misunderstand th e expression as a properly modernist h ypoth esis would be to invite much useless testing. T h e case is similar to MV=PT understood as an identity. T h e equation is th e same term- for-term as th e equation of state of an ideal gas, and h as th e same status as an irrefuta- ble but useful notion in ch emistry as it h as in economics. T h e identity can be ar- gued against, but not on grounds of "fail- ing a test." T h e arguments against it will deny its capacity to illuminate, not its modernist truth . Anoth er common argument in econom- ics with no status in th e official rh etoric is ph ilosoph ical consistency: "If you as- sume th e firm knows its own cost curve you migh t as well assume it knows its pro- duction function, too: it is no more dubi- ous th at it knows one th an th e oth er." T h e argument, usually inexplicit th ough sig- nalled by such a ph rase as "it is natural to assume," is in fact ch aracteristic of ph ilosoph ical discourse (Passmore, 1970). It is analogous to symmetry as a criterion of plausibility, wh ich appears in many forms and forums. A labor economist tells a seminar about compensating differen- tials for th e risk of unemployment, refer- ring only to th e utility functions of th e workers. An auditor remarks th at th e value of unemployment on th e demand side (th at is, to th e firm) is not included. 502 Journal of Economic Literature, Vol. XXI (June 1983) T h e remark is felt to be powerful, and a long discussion ensues of h ow th e demand side migh t alter th e conclusions. T h e argu- ment from th e-oth er-side-is-empty is per- suasive in economics, but economists are unaware of h ow persuasive it is. Likewise (and h ere we reach th e border of self-consciousness in rh etoric), "ad h oc- cery" is universally condemned by semi- nar audiences. An economist will ch eer- fully accept a poor R2 and terrible and understated standard errors if only sh e "h as a th eory" for th e inclusion of such - and-such a variable in th e regressions. "Having a th eory" is not so open and sh ut as it migh t seem, depending for instance on wh at reasoning is prestigious at th e mo- ment. Anyone wh o th rew accumulated past output into an equation explaining productivity ch ange before 1962 would h ave been accused of ad h occery. But after Arrow's essay on "T h e Economics of Learning By Doing" (wh ich as it h ap- pened h ad little connection with max- imizing beh avior or oth er h igh er order h ypoth eses in economics), th ere was sud- denly a warrant for doing it. An example of th e rh etoric of econom- ics wh ich falls well with in th e border of self-consciousness is simulation. Econo- mists will commonly make an argument for th e importance of th is or th at variable by sh owing its potency in a model with back-of-th e-envelope estimates of th e pa- rameters. Common th ough it is, few books or articles are devoted to its explication (but, see Rich ard Zeckh auser and Edith Stokey, 1978). It would be as th ough stu- dents learned econometrics entirely by studying examples of it-no bad way to learn, but not self-conscious in grounding th e arguments. Wh at is legitimate simula- tion? Between A. C. Harberger's modest little triangles of distortion and Jeffrey Williamson's immense multiequation models of th e American or Japanese econ- omies since 1870 is a broad range. Econo- mists h ave no vocabulary for criticizing any part of th e range. T h ey can deliver summary grunts of belief or disbelief but find it difficult to articulate th eir reasons in a disciplined way. VI. Economics Is Heavily Metaph orical Models Are Metaph ors T h e most important example of eco- nomic rh etoric, h owever, falls well outside th e border of self-consciousness. It is th e language economists use, and in particular its metaph ors. T o say th at markets can be represented by supply and demand "curves" is no less a metaph or th an to say th at th e west wind is "th e breath of au- tumn's being." A more obvious example is "game th eory," th e very name being a metaph or. It is obviously useful to h ave in one's h ead th e notion th at th e arms race is a two-person, negative-sum cooperative "game." Its persuasiveness is instantly ob- vious, as are some of its limitations. Each step in economic reasoning, even th e rea- soning of th e official rh etoric, is metaph or. T h e world is said to be "like" a complex model, and its measurements are said to be like th e easily measured proxy variable to h and. T h e complex model is said to be like a simpler model for actual th inking, wh ich is in turn like an even simpler model for calculation. For purposes of per- suading doubters th e model is said to be like a toy model th at can be manipulated quickly inside th e doubter's h ead wh ile listening to th e seminar. Joh n Gardner wrote: T h ere is a game-in th e 1950s it used to be played by th e members of th e Iowa Writers' Worksh op-called 'Smoke.' T h e player wh o is 'it' [th inks of] some famous person .. . and th en each of th e oth er players in turn asks one question. .. such as 'Wh at kind of weath er are you?'. . . Marlon Brando, if weath er, would be sultry and uncertain.... T o understand th at Marlon Brando is a certain kind of weath er is to discover someth ing (th ough someth ing neith er useful nor demonstrable) and in McCloskey: T h e Rh etoric of Economics 503 th e same instant to communicate someth ing [Gardner, 1978, pp. 118-19]. On th e contrary, in economics th e com- parable discovery is useful and by re- course to rh etorical standards demonstr- able. Metaph ors in Economics Are Not Ornamental Metaph or, th ough , is commonly viewed as mere ornament. From Aristotle until th e 1930s even literary critics viewed it th is way, as an amusing comparison able to affect th e emotions but inessential for th ough t. "Men are beasts": if we cared to be flat-footed about it, th e notion was, we could say in wh at literal way we th ough t th em beastly, removing th e orna- ment to reveal th e core of plain meaning underneath . T h e notion was in 1958 com- mon in ph ilosoph y, too: With th e decline of metaph ysics, ph ilosoph ers h ave grown less and less concerned about God- liness and more and more obsessed with clean- liness, aspiring to ever h igh er levels of linguistic h ygiene. In consequence, th ere h as been a ten- dency for metaph ors to fall into disfavour, th e common opinion being th at th ey are a frequent source of infection [H. J. N. Horsburgh , 1958, p. 231]. Such suspicion toward metaph or is widely recognized by now to be unnecessary, even h armful. T h at th e very idea of "re- moving" an "ornament" to "reveal" a "plain" meaning is itself a metaph or sug- gests wh y. Perh aps th inking is metaph ori- cal. Perh aps to remove metaph or is to re- move th ough t. T h e operation on th e metaph oric growth would in th is case be worse th an th e disease. T h e question is wh eth er economic th ough t is metaph orical in some nonorna- mental sense. T h e more obvious meta- ph ors in economics are th ose used to con- vey novel th ough ts, one sort of novelty being to compare economic with noneco- nomic matters. "Elasticity" was once a mind-stretch ing fancy; "depression" was depressing; "equilibrium" compared an economy to an apple in a bowl, a set- tling idea; "competition" once induced th ough ts of h orseraces; money's "veloc- ity" th ough ts of swirling bits of paper. Much of th e vocabulary of economics con- sists of dead metaph ors taken from non- economic sph eres. Comparing noneconomic with eco- nomic matters is anoth er sort of novelty, apparent in th e imperialism of th e new economics of law, h istory, politics, crime, and th e rest, and most apparent in th e work of th at Kipling of th e economic em- pire, Gary Becker. Among th e least bi- zarre of h is many metaph ors, for instance, is th at ch ildren are durable goods. T h e ph ilosoph er Max Black pointed out th at "a memorable metaph or h as th e power to bring two separate domains into cogni- tive and emotional relation by using lan- guage directly appropriate to th e one as a lens for seeing th e oth er" (1962, p. 236). So h ere: th e subject (a ch ild) is viewed th rough th e lens of th e modifier (a durable good). A beginning at literal translation would say, "A ch ild is costly to acquire initially, lasts for a long time, gives flows of pleasure during th at time, is expensive to maintain and repair, h as an imperfect second-h and market.... Likewise, a du- rable good, such as a refrigerator.. T h at th e list of similarities could be ex- tended furth er and furth er, gradually re- vealing th e differences as well-"ch ildren, like durable goods, are not objects of affec- tion and concern"; "ch ildren, like durable goods, do not h ave th eir own opinions"- is one reason th at, as Black says, "meta- ph orical th ough t is a distinctive mode of ach ieving insigh t, not to be construed as an ornamental substitute for plain th ough t" (p. 237). T h e literal translation of an important metaph or is never fin- ish ed. In th is respect and in oth ers an im- portant metaph or in economics h as th e quality admired in a successful scientific 504 Journal of Economic Literature, Vol. XXI (June 1983) th eory, a capacity to astonish us with im- plications yet unseen.9 But it is not merely th e pregnant quality of economic metaph ors th at makes th em important for economic th inking. T h e lit- erary critic I. A. Rich ards was among th e first to make th e point, in 1936, th at meta- ph or is "two th ough ts of different th ings active togeth er, . . . wh ose meaning is a resultant of th eir interaction" (Rich ards, 1936, p. 93, my italics; Black, 1962, p. 46; Owen Barfield, 1947, p. 54). A metaph or is not merely a verbal trick, Rich ards con- tinues, but "a borrowing between and intercourse of th ough ts, a transaction be- tween contexts" (p. 94, h is italics). Econo- mists will h ave no trouble seeing th e point of h is economic metaph or, one of mutu- ally advantageous exch ange. T h e opposite notion, th at ideas and th eir words are in- variant lumps unaltered by combination, like bricks (Rich ards, p. 97), is analogous to believing th at an economy is a mere aggregation of Robinson Crusoes. But th e point of economics since Smith h as been th at an island-full of Crusoes trading is dif- ferent from and often better off th an th e mere aggregation. Anoth er of Becker's favorite metaph ors, "h uman capital," illustrates h ow two sets of ideas, in th is case both drawn from in- side economics, can th us mutually illumi- nate each oth er by exch anging connota- tions. In th e ph rase "h uman capital" th e field in economics treating h uman skills was at a stroke unified with th e field treat- ing investment in mach ines. T h ough t in both fields was improved, labor economics by recognizing th at skills, for all th eir in- tangibility, arise from abstention from consumption; capital th eory by recogniz- ing th at skills, for all th eir lack of capitali- zation, compete with oth er investments for a claim to abstention. Notice by con- trast th at because economists are experts only in durable goods and h ave few (or at any rate conventional) th ough ts about ch ildren, th e metaph or th at ch ildren are durable goods h as so to speak only one direction of flow. T h e gains from th e trade were earned mostly by th e th eory of ch il- dren (fertility, nuptiality, inh eritance), gaining from th e th eory of durable goods, not th e oth er way around. Economic Metaph ors Constitute a Poetics of Economics Wh at is successful in economic meta- ph or is wh at is successful in poetry, and is analyzable in similar terms. Concerning th e best metaph ors in th e best poetry,- comparing th ee to a summer's day or com- paring A to B, argued Owen Barfield, We feel th at B, wh ich is actually said, ough t to be necessary, even inevitable in some way. It ough t to be in some sense th e best, if not th e only way, of expressing A satisfactorily. T h e mind sh ould dwell on it as well as on A and th us th e two sh ould be someh ow inevitably fused togeth er into one simple meaning [Bar- field, 1947, p. 54]. If th e modifier B (a summer's day, a refrig- erator, a piece of capital) were trite-in th ese cases it is not, alth ough in th e poem Sh akespeare was more self-critical of h is simile th an economists usually are of th eirs-it would become as it were de- tach ed from A, a mech anical and unillu- minating correspondence. If essential, it fuses with A, to become a master meta- ph or of th e science, th e idea of "h uman capital," th e idea of "equilibrium," th e idea of "entry and exit," th e idea of "com- petition." T h e metaph or, quoth th e poet, is th e "consummation of identity." 9 A good metaph or depends on th e ability of its audience to suppress incongruities, or to wish to. Booth gives th e example of: 'All th e world's a stage' . . . [T h e reader must make a ch oice only if th e incongruities-failures of fit-come too soon]. Usually th ey arrive late and with out much strength .... [W]e h ave no difficulty ruling from our attention, in th e life-stage metaph or, th e selling of tick- ets, fire insurance laws, th e necessity for footligh ts [1961, p. 22f]. T h e appreciation of "h uman capital" requires th e same suspension of disbelief. McCloskey: T h e Rh etoric of Economics 505 Extent Explicit- ness Sh ort Long Explicit simile tiresome caution (T h e firm beh aves (repeat th e simile) as if it were one mind maximiz- ing its dis- counted value.) Middling metaph or allegory (h uman capital) (economics of edu- cation using h u- man capital) Implicit symbol a symbol system: a (income) math ematics; a (demand curve) th eory (Keynes- ian th eory of in- come determi- nation) (supply and demand analysis) Figure 1. Analogical T h inking Has T wo Dimensions (And Economic Cases in Point) Few would deny, th en, th at economists frequently use figurative language. Much of th e pitiful h umor available in a science devoted to calculations of profit and loss comes from talking about "islands" in th e labor market or "putty-clay" in th e capital market or "lemons" in th e commodity market. T h e more austere th e subject th e more fanciful th e language. We h ave "turnpikes" and "golden rules" in growth th eory, for instance, and long disquisitions on wh at to do with th e "auctioneer" in general equilibrium th eory. A literary man with advanced training in math emat- ics and statistics stumbling into Econome- trica would be astonish ed at th e meta- ph ors surrounding h im, lost in a land of allegory. Allegory is merely long-winded meta- ph or, and all such figures are analogies. Analogies can be arrayed in terms of ex- plicitness, with simile ("as if") th e most explicit and symbol ("th e demand curve") th e least explicit; and th ey can be arrayed by extent. Economists, especially th eorists, are for- ever spinning "parables" or telling "sto- ries." T h e word "story" h as in fact come to h ave a tech nical meaning in math emat- ical economics, th ough usually spoken in seminars rath er th an written in papers. It means an extended example of th e eco- nomic reasoning underlying th e math e- matics, often a simplified version of th e situation in th e real world th at th e math e- matics is meant to ch aracterize. It is an allegory, sh ading into extended symbol- ism. T h e literary th eories of narrative could make economists self-conscious about wh at use th e story serves. Here th e story is th e modifier, th e math ematics th e subject. A tale of market days, traders with bins of sh moos, and customers with costs of travel between bins illuminates a fixed point th eorem. Even Math ematical Reasoning Is Metaph orical T h e critical question is wh eth er th e op- posite trick, modifying h uman beh avior with math ematics, is also metaph orical. If it were not, one migh t acknowledge th e metaph orical element in verbal econom- ics about th e "entrepreneur," for instance, or more plainly of th e "invisible h and," yet argue th at th e linguistic h ygiene of math ematics leaves beh ind such fancies. T h is indeed was th e belief of th e advanced th inkers of th e 1920s and 1930s wh o in- spired th e now-received view in economic meth od. Most economists subscribe to th e belief with out doubt or comment or th ough t. Wh en engaging in verbal eco- nomics we are more or less loose, it is said, taking literary license with our "story"; but wh en we do math ematics we put away ch ildish th ings. But math ematical th eorizing in eco- nomics is metaph orical, and literary. Con- sider, for example, a relatively simple case, th e th eory of production functions. Its vocabulary is intrinsically metaph ori- cal. "Aggregate capital" involves an anal- ogy of "capital" (itself analogical) with 506 Journal of Economic Literature, Vol. XXI (June 1983) someth ing-sand, bricks, sh moos-th at can be "added" in a meaningful way; so does "aggregate labor," with th e addi- tional peculiarity th at th e th ing added is no th ing, but h ours of conscientious atten- tiveness; th e very idea of a "production function" involves th e astonish ing analogy of th e subject, th e fabrication of th ings, about wh ich it is appropriate to th ink in terms of ingenuity, discipline, and plan- ning, with th e modifier, a math ematical function, about wh ich it is appropriate to th ink in terms of h eigh t, sh ape, and single valuedness. T h e metaph orical content of th ese ideas was alive to its inventors in th e 19th cen- tury. It is largely dead to 20th -century economists, but deadness does not elimi- nate th e metaph orical element. T h e meta- ph or got out of its coffin in an alarming fash ion in th e Debate of th e T wo Cam- bridges in th e 1960s. T h e debate is testa- ment, wh ich could be 'multiplied, to th e importance of metaph orical questions to economics. T h e very violence of th e com- bat suggests th at it was about someth ing beyond math ematics or fact. T h e com- batants h urled math ematical reasoning and institutional facts at each oth er, but th e important questions were th ose one would ask of a metaph or-is it illuminat- ing, is it satisfying, is it apt? How do you know? How does it compare with oth er economic poetry? After some tactical re- treats by Cambridge, Massach usetts on points of ultimate metaph ysics irrelevant to th ese important questions, mutual ex- h austion set in, with out decision. T h e rea- son th ere was no decision was th at th e important questions were literary, not math ematical or statistical. T h e continued vitality of th e idea of an aggregate produc- tion function in th e face of math ematical proofs of its impossibility and th e equal vitality of th e idea of aggregate economics as practiced in parts of Cambridge, En- gland in th e face of statistical proofs of its impracticality would oth erwise be a great mystery. Even wh en th e metaph ors of one's eco- nomics appear to stay well and truly dead th ere is no escape from literary questions. T h e literary man C. S. Lewis pointed out in 1939 th at any talk beyond th e level of th e-cow-standing-h ere-is-in-fact-purple, any talk of "causes, relations, of mental states or acts . . . [is] incurably metaph ori- cal" (1962, p. 47). For such talk h e enunci- ated wh at may be called Screwtape's T h eorem on Metaph or, th e first corollary of wh ich is th at th e escape from verbal into math ematical metaph or is not an es- cape: wh en a man claims to th ink independently of th e buried metaph or in one of h is words, h is claim may .. . [be] allowed only in so far as h e could really supply th e place of th at buried metaph or.... [T Mh is new appreh ension will usually turn out to be itself metaph orical [p. 46]. If economists forget and th en stoutly deny th at th e production function is a meta- ph or, yet continue talking about it, th e result is mere verbiage. T h e word "pro- duction function" will be used in ways satisfying grammatical rules, but will not signify anyth ing. T h e ch arge of meaning- lessness applied so freely by modernists to forms of argument th ey do not under- stand or like sticks in th is way to th em- selves. Lewis' second corollary is th at "th e meaning in any given composition is in inverse ratio to th e auth or's belief in h is own literalness" (p. 27). An economist speaking "literally" about th e demand curve, th e national income, or th e stability of th e economy is engaging in mere syn- tax. Lewis cuts close to th e bone h ere, th ough sparing h imself from th e car- nage: T h e percentage of mere syntax masquerading as meaning may vary from someth ing like 100 percent in political writers, journalists, psych ol- ogists, and economists, to someth ing like forty percent in th e writers of ch ildren's stories.. T h e math ematician, wh o seldom forgets th at h is symbols are symbolic, may often rise for sh ort stretch es to ninety percent of meaning and ten of verbiage [p. 49]. McCloskey: T h e Rh etoric of Economics 507 If economists are not comparing a social fact to a one-to-one mapping, th us bring- ing two separate domains into cognitive and emotional relation, th ey are not th ink- ing: I've never slapped a curved demand; I never h ope to slap one. But th is th ing I can tell you now: I'd rath er slap th an map one. Literary T h inking Reunifies th e T wo Cultures Metaph or, th en, is essential to economic th inking, even to economic th inking of th e most formal kind. One may still doubt, th ough , wh eth er th e fact matters. For it is possible for rh etoricians as well as unre- constructed modernists to commit th e Ph ilosoph izing Sin, to bring h igh -brow considerations of th e ultimate into discus- sions about h ow to fix a flat tire. Push kin's poetry may be ultimately untranslatable, in view of th e difference in language, to be sure, but also th e difference in situation between a Push kin in Russia in th e early 19th century and a bilingual translator in New York in th e late 20th century. Be- cause h e was a different man speaking to a different audience even Nabokov's bril- liant translation, in th e words of th e econ- omist and litterateur, Alexander Ger- sch enkron, "can and indeed sh ould be studied but . . . cannot be read" (in Steiner, 1975, p. 315). Our intrinsic loneli- ness will make some nuance dark. Yet crude translation, even by mach ine, is use- ful for th e workaday purposes of inform- ing th e Central Intelligence Agency (for instance, "out of sigh t, out of mind" = "blind madman"). Likewise, th e intrinsic metaph ors of language may make it ulti- mately impossible to communicate plain meaning with out flourish es-th e flour- ish es are th e meaning. But th e economist may be able to get along with out full awareness of h is meaning for th e worka- day purposes of advising th e Central Intel- ligence Agency. So it migh t be argued. But it sh ould be argued cautiously. Self-consciousness about metaph or in economics would be an improvement on many counts. Most obviously, unexamined metaph or is a sub- stitute for th inking-wh ich is a recom- mendation to examine th e metaph ors, not to attempt th e impossible by banish ing th em.10 Rich ard Wh ately, D.D., Arch - bish op of Dublin, publicist for free trade as for oth er pieces of classical political economy, and auth or of th e standard work in th e 19th century on T h e Elements of Rh etoric, drew attention to th e metaph or of a state being like an individual, and th erefore benefiting like an individual from free trade. But h e devoted some at- tention, not all of it ironic, to th e question of th e aptness of th e figure: T o th is is it replied, th at th ere is a great differ- ence between a Nation and an Individual. And so th ere is, in many circumstances . . . [h e enu- merates th em, mentioning for instance th e un- limited duration of a Nation] and, moreover, th e transactions of each man, as far as h e is left free, are regulated by th e very person wh o is to be a gainer or loser by each ,-th e individ- ual h imself; wh o, th ough h is vigilance is sh arp- ened by interest, and h is judgment by exercise in h is own department, may ch ance to be a man of confined education, possessed of no gen- eral principles, and not pretending to be versed in ph ilosoph ical th eories; wh ereas th e affairs of a State are regulated by a Congress, Ch am- ber of Deputies, etc., consisting perh aps of men of extensive reading and speculative minds [1894, p. 63]. T h e case for intervention cannot be put better. And th e metaph or is h ere an occa- sion for and instrument of th ough t, not a substitute. Metaph ors, furth er, evoke attitudes th at are better kept in th e open and under th e control of reasoning. T h is is plain in th e ideological metaph ors popular with parties: th e invisible h and is so very dis- crete, so sooth ing, th at we migh t be in- clined to accept its touch with out protest; 10 An example of a naive attack on economic meta- ph ors, and of a failure to realize th at economic th e- ory is itself armed with metaph or, is th e first page of McCloskey (1981). 508 Journal of Economic Literature, Vol. XXI (June 1983) th e contradictions of capitalism are so very portentous, so scientifically precise, th at we migh t be inclined to accept th eir existence with out inquiry. But it is true even of metaph ors of th e middling sort. T h e metaph ors of economics convey th e auth ority of Science, and often convey, too, its claims to eth ical neutrality. It is no use complaining th at we didn't mean to introduce moral premises. We do. "Marginal productivity" is a fine, round ph rase, a precise math ematical metaph or th at encapsulates a most powerful piece of social description. Yet it brings with it an air of h aving solved th e moral problem of distribution facing a society in wh ich people cooperate to produce th ings to- geth er instead of producing th ings alone. It is irritating th at it carries th is message, because it may be far from th e purpose of th e economist wh o uses it to sh ow ap- proval for th e distribution arising from competition. It is better, th ough , to admit th at metaph ors in economics can contain such a political message th an to use th e jargon innocent of its potential. A metaph or, finally, selects certain re- spects in wh ich th e subject is to be com- pared with th e modifier; in particular, it leaves out th e oth er respects. Max Black, speaking of th e metaph or "men are wolves," notes th at "any h uman traits th at can with out undue strain be talked about in 'wolf-language' will be rendered promi- nent, and any th at cannot will be push ed into th e background" (1962, p. 41). Econo- mists will recognize th is as th e source of th e annoying complaints from non-math e- matical economists th at math ematics "leaves out" some feature of th e truth or from non-economists th at economics "leaves out" some feature of th e truth . Such complaints are often trite and ill- formed. T h e usual responses to th em, h owever, are h ardly less so. T h e response th at th e metaph or leaves out th ings in or- der to simplify th e story temporarily is disingenuous, occurring as it often does in contexts wh ere th e economist is simul- taneously fitting 50 oth er equations. T h e response th at th e metaph or will be tested eventually by th e facts is a stirring prom- ise, but seldom fulfilled (see again Leamer, th rough out). A better response would be th at we like th e metaph or of, say, th e self- ish ly economic person as calculating ma- ch ine on grounds of its prominence in ear- lier economic poetry plainly successful or on grounds of its greater congruence with introspection th an alternative metaph ors (of people as religious dervish es, say, or as sober citizens). In T h e New Rh etoric: A T reatise on Argumentation (1967), Ch aim Perelman and L. Olbrech ts-T yteca note th at "acceptance of an analogy . . . is often equivalent to a judgment as to th e importance of th e ch aracteristics th at th e analogy brings to th e fore" (p. 390). Wh at is remarkable about th is unremark- able assertion is th at it occurs in a discus- sion of purely literary matters, yet fits so easily th e matters of economic science. T h is is in th e end th e significance of metaph ors and of th e oth er rh etorical ma- ch inery of argument in economics: econo- mists and oth er scientists are less separate from th e concerns of civilization th an many th ink. T h eir modes of argument and th e sources of th eir conviction-for in- stance, th eir uses of metaph or-are not very different from Cicero's speech es or Hardy's novels. T h is is a good th ing. As Black wrote, discussing "arch etypes" as extended metaph ors in science: "Wh en th e understanding of scientific models and arch etypes comes to be regarded as a rep- utable part of scientific culture, th e gap between th e sciences and th e h umanities will h ave been partly filled" (p. 243). VII. Be Not Afraid T h e Alternative to Modernism Is Not Irrationalism It will be apparent by now th at th e ob- jectivity of economics is overstated and, McCloskey: T h e Rh etoric of Economics 509 wh at is more important, overrated. Preg- nant economic knowledge depends little on, as Mich ael Polanyi put it, "a scientific rationalism th at would permit us to be- lieve only explicit statements based on tangible data and derived from th ese by a formal inference, open to repeated test- ing" (1966, p. 62). A rh etoric of economics makes plain wh at most economists know anyway about th e rich ness and complexity of economic argument but will not state openly and will not examine explicitly. T h e invitation to rh etoric, h owever, is not an invitation to irrationality in argu- ment. Quite th e contrary. It is an invita- tion to leave th e irrationality of an artifi- cially narrowed range of arguments and to move to th e rationality of arguing like h uman beings. It brings out into th e open th e arguing th at economists do anyway- in th e dark, for th ey must do it somewh ere and th e various official rh etorics leave th em benigh ted. T h e ch arge of irrationalism comes easily to th e lips of meth odological auth oritari- ans. T h e notion is th at reasoning outside th e constricted epistemology of modern- ism is no reasoning at all. Mark Blaug, for instance, ch arges th at Paul Feyerabend's book Against Meth od "amounts to replac- ing th e ph ilosoph y of science by th e ph i- losoph y of flower power" (1980, p. 44). Feyerabend commonly attracts such dis- missive remarks by h is flamboyance. But Steph en T oulmin and Mich ael Polanyi are noth ing if not sweetly reasonable; Blaug lumps th em with Feyerabend and attacks th e Feyerabend-flavored wh ole. On a h igh er level of ph ilosoph ical soph istica- tion Imre Lakatos' Meth odology of Scien- tific Research Programmes (1978, from ar- ticles publish ed from 1963 to 1976) repeatedly tars Polanyi, Kuh n, and Feyer- abend with "irrationalism" (e.g., Vol. 1, pp. 9nl, 76n6, 91nl, 130 and 130n3), em- ph asizing th eir sometimes aggressively ex- pressed case against rigid rationalism and ignoring th eir moderately expressed case for wider rationality. T h e tactic is an old one. Rich ard Rorty notes th at "th e ch arges of 'relativism' and 'irrationalism' once lev- eled against Dewey [were] merely th e mindless defensive reflexes of th e ph ilo- soph ical tradition wh ich h e attacked" (1979, p. 13; Rorty, 1982a, Ch . 9). T h e posi- tion taken by th e opponents of Dewey, Polanyi, Kuh n, and th e rest is "if th e ch oice is between Science and irrational- ity, I'm for Science." But th at's not th e ch oice. T h e Barbarians Are Not at th e Gates Yet still th e doubt remains. If we aban- don th e notion th at econometrics is by it- self a meth od of science in economics, if we admit th at our arguments require comparative standards, if we agree th at personal knowledge of various sorts plays a part in economic knowledge, if we look at economic argument with a literary eye, will we not be abandoning science to its enemies? Will not scientific questions come to be decided by politics or wh im? Is th e routine of Scientific Meth od not a wall against irrational and auth oritarian th reats to inquiry? Are not th e barbarians at th e gates? T h e fear is a surprisingly old and persis- tent one. In classical times it was part of th e debate between ph ilosoph y and rh eto- ric, evident in th e unsympath etic way in wh ich th e soph ists are portrayed in Plato's dialogues. Cicero viewed h imself as bring- ing th e two togeth er, disciplining rh eto- ric's tendency to become empty advocacy and trope on th e one h and and disciplin- ing ph ilosoph y's tendency to become use- less and inh uman speculation on th e oth er. T h e classical problem was th at rh et- oric was a powerful device easily misused for evil ends, th e atomic power of th e clas- sical world, and like it th e subject of wor- rying about its proliferation. T h e solution was to insist th at th e orator be good as well as clever: Cato defined h im as "vir bonus dicendi peritus," th e good man 510 Journal of Economic Literature, Vol. XXI (June 1983) skilled at speaking, a Ciceronian ideal as well. Quintilian, a century and a h alf after Cicero, said th at "h e wh o would be an orator must not only appear to be a good man, but cannot be an orator unless h e is a good man" (Institutio XII, 1, 3). T h e classical problem looks quaint to moderns, wh o know well th at regressions, radios, computers, experiments, or any of th e now canonized meth ods of persuasion can be and h ave been used as meth ods of de- ceit. T h ere is noth ing about anaph ora, ch iasmus, metonymy, or oth er pieces of classical rh etoric th at make th em more subject to evil misuse th an th e modern meth ods. One can only note with regret th at th e Greeks and Romans were more sensitive to th e possibility, and less h ypno- tized by th e claims of meth od to moral neutrality. T h e 20th century's attach ment to limit- ing rules of inquiry solves a German prob- lem. In th e German Empire and Reich it was of course necessary to propound a split of fact from values in th e social sci- ences if anyth ing was to be accomplish ed free of political interference. And German speculative ph ilosoph y, one h ears it said, warranted a logical positivist cure. T h e German h abits, h owever, h ave spilled over into a quite different world. It is said th at if we are to avoid dread anarch y we cannot trust each scientist to be h is own meth odologist. We must legislate a uni- form th ough narrowing meth od to keep sch olars from resorting to figurative and literal murder in aid of th eir ideas. We ourselves could be trusted with meth od- ological freedom, of course, but th e oth ers cannot. T h e argument is a strange and au- th oritarian one, uncomfortably similar to th e argument of, say, th e Polish auth ori- ties against Solidarity or of th e Ch ilean auth orities against free politics. It is odd to h ear intellectuals making it. Perh aps th eir low opinion of th e free play of ideas comes from experiences in th e faculty sen- ate: th e results of academic democracy, it must be admitted, are not so bad an argument for auth oritarianism, at least un- til one looks more closely at th e results of auth oritarianism. Surely, th ough , th e al- ternative to blindered rules of modernism is not an irrational mob but a body of en- ligh tened sch olars,, perh aps more enligh t- ened wh en freed to make arguments th at actually bear on th e questions at issue. T h ere Is No Good Reason to Wish to Make "Scientific" As Against Plausible Statements T h e oth er main objection to an openly rh etorical economics is not so pessimistic. It is th e sunny view th at scientific knowl- edge of a modernist sort may be h ard to ach ieve, even impossible, but all will be well on earth and in h eaven if we strive in our poor way to reach it. We sh ould h ave a standard of T ruth beyond persua- sive rh etoric to wh ich to aspire. In Figure 2 all possible propositions about th e world are divided into objective and subjective, positive and normative, scientific and h u- manistic, h ard and soft. T h e modernist supposes th at th e world comes divided nicely along such lines. scientific h umanistic fact opinion objective subjective positive normative vigorous sloppy precise vague th ings words cognition intuition h ard soft Figure 2. T h e T ask of Science Is to Move th e Line According to th e modernist meth odolo- gist th e scientist's job is not to decide wh eth er propositions are useful for under- standing and ch anging th e world but to classify th em into one or th e oth er h alf, scientific or nonscientific, and to bring as many as possible into th e scientific por- McCloskey: T h e Rh etoric of Economics 511 tion. But wh y? Wh ole teams of ph ilosoph - ical surveyors h ave sweated long over th e placing of th e demarcation line between scientific and oth er propositions, worrying for instance about wh eth er astrology can be demarcated from astronomy; it was th e ch ief activity of th e positivist movement for a century. It is not clear wh y anyone troubled to do so. People are persuaded of th ings in many ways, as h as been sh own for economic persuasion. It is not clear wh y th ey sh ould labor at drawing lines on mental maps between one way and an- oth er. T h e modernists h ave long dealt with th e embarrassment th at metaph or, case study, upbringing, auth ority, introspection, sim- plicity, symmetry, fash ion, th eology, and politics serve to convince scientists as th ey do oth er folk by labeling th ese th e "con- text of discovery." T h e way scientists dis- cover h ypoth eses h as been h eld to be dis- tinct from th e "context of justification," namely, proofs of a modernist sort. T h o- mas Kuh n's autobiograph ical reflections on th e matter can stand for puzzlement in recent years about th is ploy: Having been weaned intellectually on th ese distinctions and oth ers like th em, I could scarcely be more aware of th eir import and force. For many years I took th em to be about th e nature of knowledge, and . .. yet my at- tempts to apply th em, even grosso modo, to th e actual situations in wh ich knowledge is gained, accepted, and assimilated h ave made th em seem extraordinarily problematic [Kuh n, 1970, p. 9]. T h e meth odologist's claim is th at "ulti- mately" all knowledge in science can be brough t into th e h ard and objective side of Figure 2. Consequently, in certifying propositions as really scientific th ere is great emph asis placed on "conceivable falsification" and "some future test." T h e apparent standard is th e Cartesian one th at we can find plausible only th e th ings we cannot possibly doubt. But even th is curious standard is not in fact applied: a conceivable but practically impossible test takes over th e prestige of th e real test, but free of its labor. Such a step needs to be ch allenged. It is identical to th e one involved in equating as morally similar th e actual compensation of th ose h urt during a Pareto optimal move with a h ypoth etical compensation not actually paid, as in th e Hicks-Kaldor test; and it is identically du- bious. A properly identified econometric measurement of th e out-of-sample prop- erties of macroeconomic policy is "opera- tional," th at is, conceivable, but for all th e scientific prestige th e conceivability lends to talk about it, th ere are grave doubts wh eth er it is practically possible. Wh ile economists are waiting for th e ultimate th ey migh t better seek wisdom in th e h u- manism of h istorical evidence on regime ch anges or of introspection about h ow in- vestors migh t react to announcements of new monetary policies. And of course th ey do. T h e point is th at one cannot tell wh eth er an assertion is persuasive by knowing at wh ich portion of th e scientific/ h umanistic circle it came from. One can tell wh eth er it is persuasive only by th ink- ing about it. Not all regression analyses are more persuasive th an all moral argu- ments; not all controlled experiments are more persuasive th an all introspections. Economic intellectuals sh ould not dis- criminate against propositions on th e basis of race, creed, or epistemological origin. T h ere are some subjective, soft, vague propositions th at are more persuasive th an some objective, h ard, precise propo- sitions. T ake, for instance, th e law of demand. T h e economist is persuaded th at h e will buy less oil wh en its price doubles better th an h e or anyone else is persuaded of th e age of th e universe. He may reason- ably be persuaded of it better th an h e is th at th e earth goes around th e sun, be- cause not being an astronomer with direct knowledge of th e experiments involved 512 Journal of Economic Literature, Vol. XXI (June 1983) h e h as th e astronomical facts only from th e testimony of people h e trusts, a reli- able th ough not of course infallible source of knowledge.1" T h e economic fact h e h as mostly from looking into h imself and see- ing it sitting th ere. T h e ceremony of th e official rh etoric to th e contrary, it is not because th e law of demand h as predicted well or h as passed some statistical test th at it is believed-alth ough such furth er tests are not to be scorned. T h e "scientific" ch aracter of th e tests is irrelevant. It may be claimed in reply th at people can agree on precisely wh at a regression coefficient means but cannot agree precisely on th e ch aracter of th eir introspection. Even if true (it is not) th is is a poor argument for ignoring introspection if th e introspection is persuasive and th e regression coeffi- cient, infected with identification prob- lems and errors in variables, is not. Preci- sion means low variance of estimation; but if th e estimate is greatly biased it will tell precisely noth ing. An extreme case unnecessary for th e ar- gument h ere will make th e point clear. You are persuaded th at it is wrong to mur- der better th an you are persuaded th at inflation is always and everywh ere a mon- etary ph enomenon. T h is is not to say th at similar tech niques of persuasion will be applicable to both propositions. It says merely th at each with in its field, and each th erefore subject to th e meth ods of h onest persuasion appropriate to th e field, th e one ach ieves a greater certainty th an th e oth er. T o deny th e comparison is to deny th at reason and th e partial certitude it can bring applies to nonscientific subjects, a common but unreasonable position. T h ere is no reason wh y specifically scientific per- suasiveness ("at th e .05 level th e coeffi- cient on M in a regression of prices in 30 countries over 30 years is insignificantly different from 1.0") sh ould take over th e wh ole of persuasiveness, leaving moral persuasiveness incomparably inferior to it. Arguments such as th at "murder violates th e reasonable moral premise th at we sh ould not force oth er people to be means to our ends" or th at "from beh ind a prena- tal veil of ignorance of wh ich side of th e murderer's revolver we would be after birth we would enact laws against mur- der" are persuasive in comparable units. Not always, but sometimes, th ey are, in- deed, more persuasive, better, more prob- able (T oulmin, 1958, p. 34). We believe and act on wh at persuades us-not wh at persuades a majority of a badly ch osen jury, but wh at persnades well educated participants in our civilization and justly influential people in our field. T o attempt to go beyond persuasive reasoning is to let epistemology limit reasonable persua- sion. VIII. T h e Good of Rh etoric Better Writing Well, wh at of it? Wh at is to be gained by taking th e rh etoric of economics seri- ously? T h e question can be answered by noting th e burdens imposed by an unex- amined rh etoric. First of all, economics is badly written, written by a formula for scientific prose. T h e situation is not so bad as it is in, say, psych ology, wh ere papers th at do not con- form to th e formula (introduction, survey of literature, experiment, discussion, and so forth ) are in some journals not accepted. But economists are stumbling towards conventions of prose th at are bad for clar- ity and h onesty. T h e study of rh etoric, it must be said, does not guarantee th e stu- dent a good English style. But at least it makes h im blush at th e disdain for th e reader th at some economics exh ibits (Wal- ter Salant, 1969). "T h e astronomical "fact" th at th e earth goes around th e sun, of course, is not even a properly modernist fact, th ough it is commonly treated as one in such discussions. Wh ich goes around wh ich is a matter of th e point of view one ch ooses. It is th e aesth etics of th e simpler th eory, not th e "facts," th at leads to h eliocentrism. McCloskey: T h e Rh etoric of Economics 513 T h e economist's English contains a mes- sage, usually th at "I am a Scientist: give way." Occasionally th e message is more genial: Zvi Grilich es' irony says "Do not make a fetish out of th ese meth ods I am expounding: th ey are mere h uman arti- fices." Milton Friedman's style, so careful and clear, h as to an exceptional degree th e ch aracter of th e Inquirer. We will not raise up a race of Dennis Robertsons, Rob- ert Solows, George Stiglers, or Robert Lu- cases by becoming more sensitive to th e real messages in scientific procedure and prose, but maybe we will stunt th e growth of th e oth er kind. Better T each ing A second burden is th at economics is badly taugh t, not because its teach ers are boring or stupid, but because th ey often do not recognize th e tacitness of economic knowledge, and th erefore teach by axiom and proof instead of by problem-solv- ing and practice. T o quote Polanyi yet again: . . .th e transmission of knowledge from one generation to th e oth er must be predominately tacit.... T h e pupil must assume th at a teach - ing wh ich appears meaningless to start with h as in fact a meaning th at can be discovered by h itting on th e same kind of indwelling [a favorite Polanyi expression] as th e teach er is practicing [1966, p. 61]. It is frustrating for students to be told th at economics is not primarily a matter of memorizing formulas, but a matter of feel- ing th e applicability of arguments, of see- ing analogies between one application and a superficially different one, of knowing wh en to reason verbally and wh en math e- matically, and of wh at implicit ch aracter- ization of th e world is most useful for cor- rect economics. Life is h ard. As a blind man uses h is stick as an extension of h is body, so wh enever we use a th eory "we incorporate it in our body-or extend our body to include it-so th at we come to dwell in it." Problem-solving in economics is th e tacit knowledge of th e sort Polanyi- describes.12 We know th e economics, but cannot say it, in th e same way a musician knows th e note h e plays with out con- sciously recalling th e tech nique for exe- cuting it. A singer is a prime example, for th ere is no set of mech anical instructions one can give to a singer on h ow to h it a h igh C. Al Harberger often speaks of so- and-so being able to make an economic argument "sing." Like th e directions to Carnegie Hall, th e answer to th e question "h ow do you get to th e Council of Eco- nomic Advisors?" is "practice, practice." Better Foreign Relations A th ird burden placed on economics by its modernist meth odology is th at eco- nomics is misunderstood and, wh en re- garded at all, disliked by both h umanists and scientists. T h e h umanists dislike it for its baggage of antih umanist meth odology. T h e scientists dislike it because it does not in reality attain th e rigor th at its meth od- ology claims to ach ieve. T h e bad foreign relations h ave many costs. For instance, as was noted above, economics h as re- cently become imperialistic. T h ere is now an economics of h istory, of sociology, of law, of anth ropology, of politics, of politi- cal ph ilosoph y, of eth ics. T h e flabby meth - odology of modernist economics simply makes th is colonization more difficult, raising irrelevant meth odological doubts in th e minds of th e colonized folk. Better Science A fourth burden is th at economists pointlessly limit th emselves to "objective" facts, admitting th e capabilities of one's own or oth ers' minds as merely sources of h ypoth eses to be tested, not as th em- selves arguments for assenting to h ypoth e- ses. T h e modernist notion is th at common sense is nonsense, th at knowledge must someh ow be objective, not versteh en or 120n th is score, and some oth ers, I can h eartily recommend McCloskey, 1982. 514 Journal of Economic Literature, Vol. XXI (June 1983) introspection. But, to repeat, we h ave much information immediately at our dis- posal about our own beh avior as economic molecules, if we would only examine th e grounds of our beliefs. T h e idea th at obser- vational proofs of th e law of demand, such as th e Rotterdam Sch ool's multi-equation approach , are more compelling th an in- trospection is especially odd. Even th e econometrics itself would be better, as Ch ristoph er Sims h as recently argued: If we th ink carefully about wh at we are doing, we will emerge, I th ink, both more confident th at much of applied econometrics is useful, despite its differences from ph ysical science, and more ready to adapt our language and meth ods to reflect wh at we are actually doing. T h e result will be econometrics wh ich is more scientific [by wh ich h e means "good"] if less superficially similar to statistical meth ods used in experimental sciences [Sims, 1982, p. 25]. T h e curious status of survey research in modern economics is a case in point. Unlike oth er social scientists, economists are extremely h ostile towards question- naires and oth er self-descriptions. Second- h and knowledge of a famous debate among economists in th e late 1930s is part of an economist's formal education. T h e debate concerned th e case of asking busi- nessmen if th ey equalized marginal cost to marginal revenue. It is revealing th at th e failure of such a study-never mind wh eth er th at was indeed th e study-is supposed to convince economists to aban- don all self-testimony. One can literally get an audience of economists to laugh out loud by proposing ironically to send out a questionnaire on some disputed eco- nomic point. Economists are so impressed by th e confusions th at migh t possibly re- sult from questionnaires th at th ey aban- don th em entirely, in favor of th e confu- sions resulting from external observation. T h ey are unth inkingly committed to th e notion th at only th e externally observable beh avior of economic actors is admissable evidence in arguments concerning eco- nomics. But self-testimony is not useless, even for th e purpose of resolving th e mar- ginal cost-average cost debate of th e 1930s. One could h ave asked "Has your profit margin' always been th e same?" "Wh at do you th ink wh en you find sales lagging?" (Lower profit margin? Wait it out?) Foolish inquiries into motives and foolish use of h uman informants will pro- duce nonsense. But th is is also true of fool- ish use of th e evidence more commonly admitted into th e economist's study. Better Dispositions A fifth and final burden is th at scientific debates in economics are long-lasting and ill-tempered. Journals in geology are not filled with articles impugning th e ch arac- ter of oth er geologists. T h ey are not filled with bitter controversies th at drone on from one century to th e next. No wonder. Economists do not h ave an official rh etoric th at persuasively describes wh at econo- mists find persuasive. T h e math ematical and statistical tools th at gave promise in th e brigh t dawn of th e 1930s and 1940s of ending economic dispute h ave not suc- ceeded, because too much h as been asked of th em. Believing mistakenly th at opera- tionalism is enough to end all dispute, th e economist assumes h is opponent is dish on- est wh en h e does not concede th e point, th at h e is motivated by some ideological passion or by self-interest, or th at h e is simply stupid. It fits th e naive fact-value split of modernism to attribute all dis- agreements to political differences, since facts are alleged to be, unlike values, im- possible to dispute. T h e extent of disagree- ment among economists, as was men- tioned, is in fact exaggerated. T h e amount of th eir agreement, h owever, makes all th e more puzzling th e venom th ey bring to relatively minor disputes. T h e assaults on Milton Friedman or on Joh n Kenneth Galbraith , for example, h ave a bitterness th at is quite unreasonable. If one cannot reason about values, and if most of wh at McCloskey: T h e Rh etoric of Economics 515 matters is placed in th e value h alf of th e fact-value split, th en it follows th at one will embrace unreason wh en talking about th ings th at matter. T h e claims of an overblown meth odology of Science merely end conversation.13 A rh etorical cure for such disabilities would reject ph ilosoph y as a guide to sci- ence, or would reject at least a ph ilosoph y th at pretended to legislate th e knowable. T h e cure would not th row away th e illu- minating regression, th e crucial experi- ment, th e unexpected implication unex- pectedly falsified. T h ese too persuade reasonable sch olars. Non-argument is th e necessary alternative to narrow argument only if one accepts th e dich otomies of modernism. 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