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Monday
Jul252016

Selgin on kaleidics 

"According to Shackle, the future is unknowable and 'kaleidic' (that is, dominated by patternless changes)"

George Selgin

I travelled to Madrid recently and caught up on some reading about Austrian school methodology. One article that particularly stood out was George Selgin's "Praxeology and understanding: An analysis of the controversy in Austrian Economics" (published in 1988 in the Review of Austrian Economics, and subsequently turned into a short book). I absolutely loved Selgin's defense of praxeology: (p.42)

Indeed. The challenging part though was Selgin's warning to "kaleidic" economists:

it is utterly contradictory for upholders of the doctrine that the future is kaleidic to involve themselves in theoretical doscussions, especially when such discussion refer to institutions such as banks of money or to classes of events such as the trade cycle or inflation (p.48)

Selgin's basic point is that praxeology beats kaleidics, and if you have to "temper" kaleidics to retain praxeology, it's no better than mere historicism. Those of us who adhere to Mises' distinction between theory and history; who favour explanation over prediction; and look for pattern changes rather than single point estimates; are thus not truly "kaleidic" economists. OK, fair enough. But there may still be an advantage to getting as close to radical subjectivism as one can get without falling down the black hole of nihilism. The world probably isn't kaleidic, but it may well be more kaleidic than the vast majority of economists are wont to admit. And at important moments it can appear kaleidic. Shackle may be presenting a view - something we can incorporate, without having to fully adopt. After all a kaleidiscope isn't "patternless". It's just highly complex, prone to unanticipated readjustment, and this impossible to forecast. According to Richard Wagner a "kaleidic" view of economists is simply one that takes time seriously, and sees turbulence as the "unavoidable incompleteness of intertemporarl coordinaiton". Yes!

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