Ebook: Prolegomena 4 : An Open Dialogue With Nobel Laureates In Economics - The Road To A Third Revolution In The Economic Science

Prolegomena 4, in its own way, is a continuation of the previous trilogy withthe same title (1998, 2000 and 2001) but on a different platform and with itsparticular perspective. The previous trilogy attempted to present the essence ofa new, more complete system of economic, monetary, financial, social andpolitical order based on general stable equilibrium conditions.In Prolegomena 4 we enter a new territory of research, called “The History ofContemporary Economic Thought”, in the form of an open dialogue with NobelLaureates in Economics starting with 1969, specifically in their MemorialLecture delivered when they received the Prize in Economic Science, dedicatedto the memory of Alfred Nobel. During the Great Depression of the 1930s, we struggled through a globaleconomic crisis, characterized by an open conflict between the economic andfinancial realities of that time and the dominant classical economic science,which was not wrong per se but rather imperfect, unfinished business.Two generations later, in 2001, we are again faced with a global crisischaracterized by a similar conflict between the actual economic and financialrealities and the now dominant modern school of Keynesian macroeconomics,which per se is not wrong in the short run. However, when used in the long runbeyond its limit of normal efficiency, it may create, as it did, new, morecomplicated problems. Keynes called this “secular stagnation” and thoughtthat his theory and policies would solve it, but now we see that it did not! It isenough to mention that the monetary policy of the USA has been changed tentimes during ten months in 2001, yet the economy has not changed its course.Recently the National Bureau of Economic Research in the USA has announcedthat a recession had already begun in March, 2001 (see Boston Globe, 2001).In view of these conditions, it is legitimate to raise the question thatsomething is deficient, not in order, in the House of Economics. Indeed, almostthe whole of the twentieth century was dominated by a Great MethodologicalArgument similar to that in the physical sciences. It was, and still is, an openconflict in the sense that the results of modern macroeconomics are viewed asbeing contradictory to classical economics. In other words, the final results ofmacroeconomics are considered to be a better substitute for the results given byclassical economics. The position of modern, Keynesian economics appears tobe rather strong because of the fact that in the physical sciences – speakingmethodologically – there is a similar situation. Consequently, we are dealinghere with a crisis in methodology and in logic, “the queen of all sciences”, asJohn Stuart Mill called it. Kurt Go¨del (1931) gave a signal that something was not in order in the houseof modern, symbolic, mathematic logic as presented in Principia Mathematica(Whitehead and Russell, 1910). Go¨del, by formulating his now famous incompleteness-proof, actually did not solve anything from the substance of theargument. He only showed beyond doubt that modern formalist logic inapplication leads nowhere but to a dead end, to an impasse in which obviouslywe find ourselves today, not only in economics but in physical, natural sciencesas well. Go¨del did not have the concept of the orientation table as applied also tologic, and, therefore, he provided only the proof that we are unable to confirmor to negate propositions of the Principia Mathematica type. He lacked the toolsto see that his contribution actually was valid only for modern, formalist logicof truth-form but not classical logic of truth-content or any new logic of thefuture, which includes both truth-form and truth-content as a synthesis.When we finally developed and applied a new, more comprehensive type oflogic, actually a sui generis synthesis between classical and modern logic whichwe called “Integrated Logic”, then the picture of the argument changedradically. The results of modern economics as well as modern physics were notcontradictory but rather complementary to their classical sisters. By one strokein logic and methodology, the Great Methodological Argument of the twentiethcentury has been solved, and we hope forever. But a warning is necessary. Thewise Schumpeter used to say: “It is hard enough to discover a new concept ortheorem, but sometimes it is even more difficult to convince the peers in thefield that indeed you have discovered something new and valuable.” Moredetail about “Integrated Logic” can be found in: Rugina, (1998, 2000).Other problems in economics appear in a similar situation when the newconcept of “Integrated Logic” is applied. A logical place where we can find anoriginal source of new ideas and interpretations is in the lectures delivered byrecipients of the Nobel Prize. This is why we decided to write “Prolegomena 4:An Open Dialogue with Nobel Laureates in Economics”, with the scope: thequest for more logical and empirical precision (evidence) in the present andfuture development of the economic science. In point of evaluation during the dialogue, we chose a composite standardformed of 25 elements, i.e. concepts and theorems, where we thought there is aproblem to be solved, partially or totally. The full clarification of the compositestandard is provided in a rather long Introduction, entitled “New contributionsto the science of economics”. Indeed, the composite standard is long because ofthe complex nature of the subject matter involved.With regard to the Introduction, we may recall the wise advice of LordKeynes, which is as valid in 2002 as it was in 1936:The ideas which are here expressed so laboriously are extremely simple and should beobvious. The difficulty lies, not in the new ideas, but in escaping from the old ones, whichramify, for those brought up as most of us have been, into every corner of our mind (Keynes,1936). We cannot close this Preface without expressing our thanks to Professor Barrie0. Pettman, Baron of Bombie, Director of the International Institute of Social Economics, and Lady Maureen of Bombie, who understood and supported newideas and new methods of how to solve old and new problems.Not less significant are the thanks to my life partner, Irene Aurelia Rugina,for her continuous interests, observations and editorial help in the preparationof this Prolegomena 4. Anghel N. Rugina Previously published in: International Journal of Social Economics, Volume 30, Number 4, 2003