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T. W. HUTCHISON: THE POLITICS AND PHILOSOPHY OF ECONOMICS (Book Review)Klant, J JJournal of Economic Issues (pre-1986); Sep 1983; 17, 000003; ABI/INFORM Completepg. 850

R50 Book Reviews

the actions taken by the EPA. It is important to note that the criteria used for classifying the different species is open to interpretation.

Another factor that increases the flexibility of prohibitive policy is budget and staff Jinlitations. Sinc~ there arc insufficient resources to en­force all the rules completely, agencies must use judgment al1d discretion to select those portions of the policy deemed most "important." Other internal forces such as contlicting organizational goals force administra­tors within the agencies to compromise and negotiate various aspects of the policy. External forces, ranging from intermediaries that help resolve contlict between opposition and support groups to pressure groups serving their own self interest, also playa role of determining the ultimate results of the policies.

The judiciary is another important institution in determining the shape of prohibitive policy. Not only arc the formal proceedings crucial in inter­preting the legal liabilities, but the threat of litigation intluences the nature of the standards and their enforcement.

In a section slightly more than four pages long Yaffee discusses ethics as one of the foundations of prohibitive policy. The interaction of ethics and efficiency is a complex issue that shapes policies at many levels. not just as a rationalization for their existence, and is worth much more than four paS"s of discussion. Yaffee should have more closely integrated his ideas on ethics with the case studies.

The book contributes to understanding the forces that shape the regu­latory process. 1t doesn't rely on neoclassical economic models but rather on social, politicnl, and legal forces. In addition to the analysis it provides a wealth of information and data on the evolution and structure of the Endangered Species Act.

R. LARRY REYNOLDS

Boise Slate University

THE POLITICS AND PHILOSOPHY OF ECONOMICS. By T. W. Hlltchison. Oxford: Basil Blackwell. 1981. Pp. 310. $25.00.

Although "Economics" sounds more scientific. what economists ac­tually do remains Political Economy all the same. It cannot be helped; eco­nomics and politics are interconnected and interdependent in various ways. Political issue~. lire even involved in methodological debates.

In this book, T. W. Hutchison examines some of the political, philo-

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Book Reviews 851

sophical, and epistemological presuppositions of the Marxian, Keynesian, and Austrian schools of thought. He discusses methodological require­ments that theories must meet and criticizes the excessive claims to gen­erality of macroeconomic theories in particular. He also pays some attention to how political and historical changes shape demands on eco­nomic policy and how they place constraints on economists' theories.

This is not a general treatise. It deals with capita selecta. Earlier ver­sions of most of these theories have been published separately before. Their joint presentation under a common denomination, however, gives one a fairly good idea of Hutchison's generall metatheory, which has de­veloped body and flavor during the more than forty years since The Sig­nificance and Basic Postulates of Economic Theory (1938). That slim volume, in which all-cl!1bracing questions were answered in an abstract way, was written by "a 25-year-old intellectual ... a kind of 'falsification­is!' ... and probably ipso facto naive," as he now refers to his neopositiv­ist past in Lakatosian vein.

Hutchinson apparently lost his exigent faith in economics as a natural science, but in the last chapter of the present book, "On the Aim and Methods of Economic Theorizing," he repeats his demands for clarity, testability, and maintaining the important distinction between definitions and empirical statements. His pet aversions are "infallibilism," of which he accuses Marxians and Keynesians, and "apriorism," the capital sin of Fredrich von "'ieser and Ludwig von Mises.

Venturing a dive into what to a great extent is left implicit in his present writing, I guess that in Hutchinson's philosophy the empirical-scientific destination, where non refuted but falsifiable laws rule, will nevt:f be reached, but that it is a matter of democratic ethics to try and get as near as possible. This implies in my opinion that economics is a mixture of metaphysics (in the Popperian sense) and empirical science. Theories are not value-free. They are accepted, amended, or rejected in a rational dis­cussion on their plausibility. Empirical results are as a rule not decisive but may be strong supports. Hutchison's book itself is an excellent ex­ample of such a rational discussion in which the ideas of economists are carefully being weighed.

Hutchison is an English author for whom the world holds more than Cambridge; it is even wider than Britain and America. He reviews the suc­cess of the Social Market Economy in the German Federal Republic, of which Walter Eucken was the intellectual godfather. He discusses at great length Carl Menger's Aristotelian essentialism and his "exact laws" based on the assumption of "omniscience," which have only limited applicability.

Hutchison also discusses the ideas on philosophy and method of other

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852 Book Reviews

Austrians. He draws attention to Fredrich von Hayek's almost unnoticed methodological change-owr. He shows that neo Austrians, contrary to what some of them claim. have no common methodology: Menger was an Aristotelian, Mises an apodictic apriorist, and the later Hayek (after 1937) a Popperian who lcjects the idea of social and economic laws. Murray Rothbard keeps tf> the apriorist early Hayek (before 1937) but Jacob Kirzner starts from the later Hayek to arrive at the thesis that hu­man actions are not even imprecisely predictable. That conclusion cannot be shared by either of the two Hayeks.

The title of chapter 4. "Keynes ,'enlls the Keynesians." lost its ques­tion-mark since the text was published in 1977 as a Hobart Paperback for the first time. No wonder. for the conclusions were well founded and have been strengthened in subsequent literature such as Allan Meltzer's article in the JOIIl"lwl oj Economic Litera/lire of March 1981. Keynes favored policies to stabilize investment but launched early warnings against inflation and labelled what was later called "Keynesian policy" "modernist stuff. gone wrong and turned sour and silly." Hutchison pic­tures a decline of the Cambridge School. starting from a "difficult and delicate balance between moral and social enthusiasm and scientific mcthod which was on the whole scrupulously preserved by [Henry] Sidg­wick and [Albert] Marshall" and ending up in apostolic Keynesianism and '"Marxian hope."

There are quite a few points in this book that are disputable, as should be in a rational discussion. \Vhen reading the chapter on Friedrich Engels, for instance. I deplored that Hutchison has not written "Marx versus the Marxians." He makes Engels. who. like his contemporaries, believed in unshakable scientific truth. responsible for Marxian dogmatism and in­tolerance. Although I consider his Dialectics of Natllre in quite a few respects a ridiculous book, I do not think the accusation fair. The Marx­ians must be blamed. They are actually ignoring what Karl Marx and Engels saiel about methodology.

Marx's work shows how one's method can clash with one's methodol­ogy.He is not the only one. Isaac Newton, for instance, claimed to be an inductivist who "derived" hypotheses from facts. but he acted as a hypo­thetical-deductivist. l\1arx anel Engels were. on the other hand, hypothet­ical-deductivists in their methodology: (I) They were antHnductivists. (2) Engcls is in line with Emmanuel Kant, William Whewell, and Karl Popper when he proclaims the primacy of hypotheses. They have to be proven by facts. He and Marx are not apriorists. (3) Marx and Engels deny that hypotheses must be accepted because they are "dialectic." "Dia­lectics," whatever that way mean. must be proven by facts. (4) In ac-

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Book Reviews 853

cordance with German romantic philosophy of nature Engels thinks that science is "under the domination" of philosophy. He considers what Georgii Plekhanov later called "di.alectic materialism" the correct heuris­tic philosophy to invent hypotheses. rhis is a twist, in my opinion, but I must admit that all plausible economic theories rest upon ph:ilosophy.

As far as his method is concerned, Marx often refers to fa,tual evidence but he is also an all-devouring metaphysician whose labor theory of value can fortunately be easily cut off with Occam's razor. Marxians may be true believers in the "objective laws of motion of capitalism," but Marx and Engels have in their philosophy left quite a few doors open to get rid of the dogmatic stuff and to restore clarity, testability, and the distinction between definitions and empirical statements. Infallibilists are not, as Hutchison seems to assume, dogmatists per se. They do not expect refuta­tion, but they are prepared to abandon hypotheses when confronted with falsifying evidence.

J. J. KLANT

University of Amsterdam

MARX: ECONOMIST, PHILOSOPHER, JEW. By Murray Wolfson. New York: St. Martin's Press, 1982. Pp. 279. $25.00.

Murray Wolfson's new book is a significant contribution to the under­standing of Karl Marx's thought. What makes it different from mainstream studies is that Wolfson recognizes the importance of the Jewish culture and experience in Marx's intellectual development. Wolfson finds in the evolution of Marx's thought three distinct stages, each of which reflects in many important ways Marx's relationship, both intellectual and personal, to his Jewish heritage.

The first stage, between Marx's university days and 1843, is marked by his critical studies of Hegel. Marx reversed, as is well known, the direc­tion of causality in Hegel's philosophical system, making the empirical individual the active agent instead of the universal idea. To Marx, Hegel's system was conservative in that it legitimized the Prussian State's authority over individuals. After all, it was individuals who created the state, not the other way around. This transposition of Hegel's logic was attractive to the Young Hegelians because they saw in it a revolutionary potential: particular finite forms (for example, the Prussian State) are impermanent and subject to change by individuals.