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Economics Is Structured Like a Language William Kaye-Blake (Lincoln
University, New Zealand) ©
Copyright: William Kaye-Blake 2006 Introduction The title of this paper is a
rip-off of Lacan’s pronouncement that ‘the
unconscious is structured like a language’ (Lacan,
1981). It is meant to carry two meaning. First, it is an ontological
statement. It asserts that a ‘study (or a theory) of being or existence, a
concern with the nature and structure of the “stuff” of reality’(Lawson,
2003) that employs insights from the study of language can provide insights
into those human activities labelled ‘economic’. This paper discusses the
implications of a linguistically-inspired conception of economic phenomena
and contrasts this ontology to those of Lawson (2003) and Ruccio
(2005). The title is also a nod to
McCloskey’s work on how economists do economics. She emphasised that, as much
as economists are interested in incontrovertible facts and solid logic, they
are also constantly using models/metaphors to tell compelling stories about
economic behaviour. Economists are story-telling creatures and they use all
the tools of language and rhetoric to tell their stories. This paper, for
example, relies on the metaphor that economic activity is in some way similar
to language. It also, for better or worse, appeals to the authority of dead
white men, such as Lacan, Saussure,
and Freud, another rhetorical device. Mostly, though, it attempts to tell a
compelling story in hopes of persuading the reader. Two
ontologies: Lawson and Ruccio Lawson’s Reorienting Economics (2003)is to be commended because of the
discussions it has stirred up regarding the philosophical underpinnings of
economic research. It has been extensively reviewed and discussed in this
journal, so the discussion here is brief. Lawson suggests that mainstream
economics is unhealthy because it relies on mathematical-deductive
explanations of economic phenomena. These are closed-system explanations, in
which the same initial conditions lead (with some probability, including 1.0)
to the same results. He conceives of social reality, including economic
phenomena, as an open system, as processual or emergent,
and as depending on ‘transformative human agency’ (p. 16). Thus, an economics
based on critical realism is more appropriate. Lawson is advocating that
economists be explicit about the ontologies
motivating their research. He is also advocating his preferred ontology,
critical realism, which appears to be as follows. Social reality is layered
and structured. Regularities that are observable at the surface of social
reality may be used to identify principles that are operative at some deeper
level. Social reality is also open, because ‘events are determined by a
multitude of shifting causes’ (p. 42). According to critical realism,
economists can observe surface human actions or human doings. Taking into
account the social rules and positions that structure society, it is then
possible to reveal or locate similarities or patterns or regularities. There are significant issues
with Lawson’s ideas that economists can (a) all agree on some set of specific
regularities as important and typical of economies, and (b) use
transcendental analysis to move from these observed phenomena to explanations
of their underlying causes. The discussions of Hodgson (2004), Caldwell
(2004), and Vromen (2004) are particularly
insightful about the weaknesses in Lawson’s ideas, and their arguments need
not be repeated here. What is at issue here is the
specific ontology that Lawson advocates. As Vromen
(2004) asks, ‘What grounds does Lawson have for believing that his ontology
provides some sort of impeccable neutral ground…?’ (p. 18). This point is
emphasised by the alternative ontologies that Ruccio (2005) discusses – Marxism, postmodernism, and
their synthesis – which provide well-developed and solidly grounded theories
of the nature of reality generally and economics specifically. It is the
postmodernist ontology that this paper would like to address, recognising
that Marx’s writings have a complex status for postmodern
theory. Marx’s analysis of alienation and exploitation are important to postmodern theory, which nevertheless tends to reject the
metanarrative of dialectical materialism (Tweeten & Zulauf, 1999). Ruccio (2005) explains that postmodern
theory views social reality as constructed through discourses. This means
first that economists from different schools rely on ‘different concepts and
conceptual strategies’ (p. 44). However, there is no external measure against
which to compare the different discursively produced conceptions of economic
reality, and thus no standard to use to validate (or, in a more Popperian vein, invalidate) any particular discourse.
This is the classic problem that Derrida pronounced: ‘il n’y a pas de hors-texte’,
everything is text (Tweeten & Zulauf, 1999). Even social interactions can be viewed and
read as texts (Hirschman & Holbrook, 1992). The second implication of the
discursive construction of social reality is that discourse is performative: ‘the economy … will be affected by which
discourses are present’ (Ruccio, 2005). What gets
to be discussed and how it is discussed affect the social ‘reality’ that is
being analysed, a sort of socio-economic Heisenberg uncertainty principle. As a result, postmodern ontology is very different from Lawson’s. Most
importantly, it asserts that there is no ‘depth’ to social reality, no
influence of lower-level metaprinciples on
higher-level actualities or surface. Instead, there is only surface: ‘Nothing
behind, nothing underneath; no levels of ontological priority or causation’ (Ruccio, 2005). This ontology is that of Foucault and Deleuze and Guattari. It is a
‘flat’ vision of ‘the nature and structure … of reality’. Each phenomenon is
the product of forces acting on each other, and each meaning is created by a
play amongst different discourses (Massumi, 1992).
These forces are constantly acting and interacting, so that social reality is
constantly making and remaking itself. Importantly, people are free to choose
their own identities, e.g., as consumers (Hirschman & Holbrook, 1992), by
combining the forces that act on them (and on which they act) in new ways (Massumi, 1992). Social reality is open, as Lawson
maintains, but for a different reason. It is not that multiple principles
operative at a deeper level than the surface of economic phenomena are at
work, making regularities sometimes difficult to perceive. Instead, the
interplay of forces is happening right at the surface, in the different
discourses that are constructing the social reality. These are the ontological
perspectives that Lawson and Ruccio have provided,
which have hopefully been faithfully re-presented. An ontology based on the
insights of linguistics is somewhat different. The next section describes a
linguistic economics, and explores the challenge that it makes to a key
concept from Lawson and Ruccio: openness. A
different ontology: linguistic economics The study of language,
linguistics, is in part concerned with semiology,
the study of signs and signification. In language, words are signs or signifiers that point to, represent,
or stand for signifieds.
The relationship is arbitrary, in that any signifier could be used for a
certain signified. In addition, the signifiers have no positive content, but
their meaning is based on the differences between signifiers (Saussure, 1916 [2004]). Meaning is therefore determined
by a chain of signifiers, because these relative differences between
signifiers can be altered by the presence of other signifiers (Copjec, 1994; de Saussure, 1916
[2004]). Saussurian linguistics underpin the postmodern ontology of Ruccio,
in which meaning is creating by the interplay of the differences of the
signifiers or the interplay of the discourses present in a specific moment.
However, Saussurian linguistics also inform Lacanian ideas, which have led to a certain strand of
cultural theory. It is this strand that this paper picks up. To understand
this different ontology, the notion of openness is examined below. Openness is a key concept for
Lawson. He perceives that social reality is open and proposes that critical
realism is faithful to this openness, while mainstream economics uses closed
mathematical-deductive techniques. Two things should be noted. First, it is
not at all clear that critical realism can be both analytical and open: all
analysis requires some closure conditions (Hodgson, 2004). Secondly, the extent
to which mainstream economists have a closed ontology (as opposed to closed
analyses) is debatable (Vromen, 2004). Those
caveats aside, openness is key for Lawson. He explains it as follows: We can make best sense of such
variability [such as differences in prices for different consumers] by
recognising that there is not a cessation of the underlying causal structures
and mechanisms where a pattern does not strictly hold, but that
countervailing mechanisms are also typically in play affecting the actual
outcomes. This is consistent … with the social world in general being open (events are determined by a
multitude of shifting causes). (p. 42) By contrast, he maintains
that, ‘[f]or the deductivist, analysis requires
that underlying powers, etc. are always reflected fully in predictable
behaviour, i.e. are actualised, and in ways where events could not have
turned out otherwise’ (p. 26). The postmodern
view of openness is slightly different. Postmodernists ‘emphasize the
randomness of causation and effectivity of chance,
the indeterminacy of events’ (Ruccio, 2005). For Deleuze and Guattari, this
openness is the result of the potential present in each present moment, in
which multiple forces come to bear but amongst which individual have some
choice: ‘Becoming must keep on becoming, in an indefinite movement of
invention opening wider and wider zomes of autonomy
populated by more and more singularities’ (Massumi,
1992). There is a problem with both
of these formulations of openness. They reflect complexity: multiple forces acting either on the surface of
society or surging up from its depths; they are still deterministic. These forces, many though they be, determine the
present phenomena. They are thus in fact closed,
although complex. The methodological solution for social scientist is to
develop better models that account for all the variables and forces, not to
respect some notion of openness. This was the problem that Heinlein grappled
with in The Moon is a Harsh Mistress:
if a computer could gather up more information and make more calculations of
potential futures than mere humans could, it could plot a lunar rebellion
much more effectively and be better prepared for contingencies. Predicting a
complex system of forces requires more information, but it is in theory no
different from predicting a simple system. Savoir pour prevoir, prevoir
pour pouvoir. The root of this problem is
that Lawson and the postmodernists are looking at the past: they theorise
that prior forces/operative principles cause the present and push it into the
future. The insight of linguistics is that the present is not determined
until the future has already happened. Meaning depends on a chain of
signifiers, each of which is capable of modifying the meaning of a previous signifier. The present is
open not because (or not only because) so many different pasts can lead to
it, but also because the unknown future can change the meaning of the
present. Saussure was aware of this problem, and
attempted to resolve it by fixing meaning at the moment of understanding,
when ‘the open-ended diachrony of the system was
bracketed and a synchronic closure was supposed to be operative’ (Copjec, 1994). The problem is two-fold: first, that
subsequent events can alter that synchronic closure, and second, we as users
of language are aware of this possibility. Two examples from economics
may clarify the issue. The first example is from Caldwell (2004), who
described the problem that econometrician have in extrapolating policy
recommendations from their empirical modelling results. ‘How is [an
economist] to make believable inferences from such a literature, when results
may have already been, or in the future be, challenged and even conceivably
overturned?’ (Goldfarb, quoted in Caldwell, 2004, p. 23). That is, current
understanding or meaning of economics is contingent on future results, just
as current meaning of signifiers is contingent on the future chain of
signifiers. The second example is from Robinson (1962), who explained that Pigou reconciled Marshall’s notions of capital with those
of Walras and Jevons by
modelling the end state when accumulation had ceased. At that time, capital
has a demand price and a supply price. But, Robinson notes, the point when
accumulation has ended does not help very much in understanding the present.
Thus, to make sense of capital, Pigou had to
imagine a time when the chain of signifiers had ended, when the last
signifier slid into place and fixed the meaning, the price, of all the
priors. Economics is structured like a
language. Every day, people use language to communicate even though the
meaning of their utterances cannot be fixed until the end of time. We manage
in spite of this linguistic indeterminacy. It is the same in economic
behaviour: the value of the products one buys or the goods one produces is
contingent. The product might not perform as advertised, it could break, it
could be superseded tomorrow by something that works better and costs less.
The goods produced might not command a high enough price to cover the cost of
production, or demand could exceed projections and profits would be less than
they could have been. Certainly, economic tools have been developed to deal
with these uncertainties, such as demand management (Galbraith, 1967) and
insurance. However, economics is fundamentally open because the future is
unknown; it could surprise us (Earl, 1983). The next section presents a
less theoretical and more ‘grounded’ discussion of linguistic economics. Its
motivation is Lawson’s comment that he is often asked to apply his theory,
that he is often asked to provide a critical realist account of some
phenomena (Lawson, 1999, cited in Davidsen, 2005).
The example is consumer reactions to genetically modified food, an analysis
of which could benefit from reference to a linguistic model of economic
activity. The
value of genetically modified food Genetically modified food is a
contentious topic on several levels. First, there is a scientific debate over
what the potential impacts of GM crops and GM food could be on the
environment (Benbrook, 2001; CEC, 2000; Firbank et al., 2003; Gianessi,
Silvers, Sankula, & Carpenter, 2002). GM food
is also politically contentious, raising issues such as control of the food
supply, consumers’ rights to be informed and to choose, and liability regimes
(Caswell, 1998; Thompson, 1997; Wright, 2000; Wynne, 2003). Finally, GM food is
contentious within the economics discipline: the push to describe consumer
reactions contends with the push to prescribe what those reactions ought to
be. The tension between is and ought is clear in the literature on
consumer willingness to pay for GM food. Throughout this literature, there
are respondents who refuse to accept GM food at the prices offered (e.g.,
Burton & Pearse, 2002; James & Burton,
2003; McCluskey, Ouchi, Grimsrud, & Wahl, 2001). Yet, because consumers ought to accept GM
food (because scientists say that it is safe and several governments say that
it is substantially equivalent to non-GM food (Huffman, 2003; Tegene, Huffman, Rousu, & Shogren, 2003)), the reactions of such consumers are set
aside. They are excluded as irrational, not for economic analysis, outside
the bounds of economics and under the purview of some other discipline (Earl,
1986). GM food is also problematic
from an economic perspective because reactions are unpredictable.
Socio-economics categories that economists use for describing people tend to
be ineffective for describing willingness to pay for GM food. Income,
education, age are all inconclusive. Gender has consistently been used, but
some suggest that it may not be important (Kaye-Blake, Bicknell, &
Saunders, 2005; Rigby & Burton, 2003). The result is that economics is
largely impotent at predicting the willingness to pay of different consumers,
and cannot claim much more than that consumers are different because they are
different. A linguistic economics is also
not baffled by the fact that people react differently. Meaning is contingent;
this is what linguistics demonstrates. What a person says now has meaning
based on what has been said in the past AND what will be said in the future.
But members of a linguistic (economic) community must communicate (exchange)
before the future fixes the meaning (value) of the utterances (transactions).
Two different reactions to GM food can be seen as two different ways to cope
with the contingent nature of the value of GM food. One way to cope with this
uncertainty is to act as though the important aspects of the commodity are
already known. This is the nature of the argument that GM food is
substantially equivalent to non-GM food. Consumers know what food is and what
it does because of their life-long association with food. Substantial
equivalence suggests that consumers can accept that GM food is just like
non-GM food in all the ways that matter. GM food is no differently contingent
than non-GM food and no special precautions or activities need to be
undertaken. It is thus not surprising that individuals with greater trust in
institutions have greater acceptance of GM food (Grice & Lawrence, 2003;
Shoemaker et al., 2001; Verdurme & Viaene, 2002). They believe that governments and
corporation ‘know’: savoir pour pouvoir, pouvoir pour prevoir. Because these institutions can know and
predict, the future is not uncertain and the present is therefore not
contingent. The second way to cope with
this uncertainty is to act as though meanings and values in the present are
radically contingent on an uncertain future. Thus, present actions should be
robustly appropriate under a range of different futures. This is the nature
of the arguments that GM technology requires a precautionary principle: future impacts will not be known until
the future arrives, so people should choose present actions with desirable
outcomes under a range of different possible futures. These consumers believe
that past events have been surprises – BSE was
caused by a mechanism that scientists said could not happen – and that
present decisions need to be made with an eye for the potential for surprises
(echoes of Shackle here). GM food thus provides an
example of how a linguistically-informed economics can better understand
economic behaviour. Faced with the uncertainty caused by the contingent
nature of present transactions, people may choose to discount the potential
uncertainties or to focus on the potential for unforeseen consequences.
Importantly, neither response is demonstrably ‘right’ or rational, in that
the value of GM food cannot be known until the future has already happened. Conclusion Lawson’s critique stresses
that the mathematical/deductive ontology that mainstream economists use is
incorrect for their subject matter, the economy. He suggests the ontology of
critical realism as a better approach. Ruccio, in
turn, provides a postmodern ontology as a different
alternative. A central idea for these ontologies is
that of openness. Both Lawson’s openness, based on underlying operative
principles, and postmodern openness, based on
multiple forces interplaying on the social surface, are argued here to be not
so much open but complex. The present is viewed as the culmination of
knowable principles or past forces. The present is therefore a product of the
past and thus closed. Making Lawson’s ontological
turn into a sort of philosophical roundabout, this paper offers another
ontological exit. It suggests that it may be useful to understand economics
linguistically. Linguistics demonstrates that meaning is produced by
differences between signifiers. Until the chain of signifiers ends, the
differences and therefore the meanings are not fixed. The present is thus
open not because of the past but because of the future. It is the same with
economics: the value of what consumers buy or producers create or traders
exchange is not fixed in the present. Certainly, the moment of exchange
establishes a price, but the value of goods and services in terms of utility
or satisfaction or future profit streams is unknown until the future happens. The discussion on the
‘appropriate’ ontology for economics, sparked in this forum by Lawson’s
writings, is welcome. This paper presents and, yes, advocates a specific
ontology, one informed by linguistic ideas of Saussure
by way of Lacan and Copjec.
It is not intended to be read as a rejection of others’ ontologies,
however; it is an offering of a different perspective in the hope of widening
the discussion. It is also meant to be contingent, a thinking that never
finishes realising itself. Only when someone has had the final word can the
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