INEM 2017 Conference, Day 3

INEM 2017 conference has just ended on a rainy afternoon. I am full of memories and happy to have some new friends. It was another long day actually, so I need to focus on my overall feelings and insights instead of providing a detailed summary of the day. However, there were some very impressive presentations. Just to mention one, Max Düsterhöft and Thomas Schädlich analyse central bank communication in a language philosophical framework. They have some tricky aspects: clarity, for instance, measured in terems of the length of the sentences or grammatical simplicity. The authors digged down even to Wittgenstein’s language philosophy. It was really a thought-provoking presentation and I was so happy to see how thorough these guys are. Or to mention another talk, Caterina Marchionni in her talk outlined a program along which the achievements in economics can be made horizontal instead of following the common vertical pattern. New models in economics and oftentimes in science as such do not overwrite each other making the former constructs inadequate, but address new questions the preceding models did not pose at all. In my context these thoughts are really relevant for they are in support of my ideas about the complementarity of ‘rival’ theories. In Hungary there are intense debates around the relationship between mainstream economics and institutionalism, regarding the former as irrelevant because of its highly abstract nature. In my view the relationship is of complementing nature (each theory explains something), and this is the reason why I was so happy to listen to Caterina’s presentation.

Today I could gather a lot of general insights why methodology of economics is so important. John Davis in his talk devoted to agent-based modelling called attention to a thought of Brian Epstein according to which how we know something determines what we can know and whether we know anything at all. At the bottom line every discipline is methodology. This is a clear message.

During lunch I found myself in the delightful position of having a chat whit Brian Epstein. I know some works of his, moreover, some panelists directly referred to his thoughts during the conference. He is a real gentleman. At lunch suddenly turned to me and triggered a conversation about his ideas and my ideas and took the trouble to clarify his suggestions about modern business cycle theories. His point is very provocative. For him, the problem is not whether some elements of real-world social systems can be ommitted or not. It is widely believed in the physicalist reconstruction of economics that we have some fundamental laws and there are factors, mechanisms and the like in addition that disturb the working of these laws. For clarity, we oftentimes leave these factors out of the picture in order to focus on the consequences of the fundamental laws. Brain takes a sceptical stance. In his opinion, the microfoundations project is erroneous for such factors are also ommitted that make essential or constituent part of the phenomenon under scrutiny. So in the microfoundations project not only some factors of marginal importance are left out but some essential features of the social universe. This is the reason why the knowledge provided by the microfounded cycle models seem to be so distorted and indadequate.

It is a shocking experience. I think this critique is very effective – it is as destructive as the DSM-theorem. Bearing in mind the social logic of mainstream economics, these thoughts will be ignored for mainstream authors cannot block them.

But the talk with Brian convinced me of a very serious thing. Economists are really naive as far as methodology is considered. Brian could set up an effective critique because he is a philosopher. So, all in all, economics is in need of far more methodological considerations to make its fundaments more consistent. All of us, fellow economists, need to become methodologists first and foremost since it is the methodological circles, debates and the resulting considerations that can really strengthen our science… It is my strong belief.

It is time to say goodby to San Sebastian. I had wonderful four days. I hope we can continue discussing…



INEM 2017 Conference, Day 2

I had a superb view of the ocean from my window at the conference. Is it really a wonder that from time to time I got disorganized and was not able to pay attention to the presentations…? It is a shame, I know…


It was day 2. It was the longest day of the conference with panel presentations from as early as 9:30 up to 19:30. I was listening to so much talks that I need to select somehow or rather focus on my overall feelings and insights instead of a detailed and thematic descriptions of the sessions.

The first block of the day was devoted to experimental economics. There were some interesting points. For instance, Sreeja Jaiswal from India gave a talk about a practical application in which fileld experimental methods were used to evaluate the environmental impacts of some large-scale railroad investment activities. But it was Don Ross who took the morning and made my day. It was an old desire of mine to meet him in person and to attend one of his lectures. Today he presented some brand new (meaning really new) results regarding bundle sequences of choices. This issue may seem complicated at first sight, but at the bottomline you can easily take it in. People have a tendency not to regard some choices invididually and in separated form but they treat them in bundles. Don took an illustrative example: if my problem on a rainy Monday morning regards to have a jog or not to have, I will address the issue in a different way. I will ask myself: am I a serious runner? – and if so, I will go out for a run. It is my attitude towards running that is tested and not my temporary mood. Don and his collaborators created a very effective framework for testing this hypothesis. We the audience were proud to attend the presentation of these results.

After listenig to the majority of today’s preesentations I got under the impression that contemporary philosophy of economics despite its young age reached a post-modern phase. What am I talking about…? Researchers are working on well-defined topics and problems, but these projects are so closed that this closeness somehow hinders the possibility of mutual understanding. A research topic turns some researchers on but the remaing part may be completely ignorant of even the basic terms and problems. This is not an objection rather a concern. Even Jonathan Perraton’s lecture on Piketty’s book calls attention to this surmise. Jonathan underlied that Piketty made some troublesome or arbitrary methodological decisions, but his book is a hit notwithstanding. How is it possible? We live in a day and age when science shows the symptoms of industrial production. This process has its own explanation… Processing or even finding the relevant literature becomes more and more difficult and demanding, so it is no wonder that researchers are prone to work in intellectual isolation. This is the reason why research communities such Rotterdam’s EIPE or Helsinki’s TINT are so precious.

Actually, I am disapponted somehow by the fact that the dissemination of new ideas is rather slow. It is weird that in 2017 mainstream economics is still blamed for its selectivity. It is a fact of life I think. All sciences need to make selections, but I cannot understand why we should squeeze everything into economics. Economics is not political science. Economics is not ethics. Economics is not sociology – so I am wondering at the idea of making economics as a totalist discipline. We have several complementing disciplines. We should let them do their job.

So it was day 2. The grand lunch is on the way, the company are meeting at 20:30 at Palacio Miramar to have the lunch together, to go on discussing and to say goodby to the conference. Tomorrow is the final day.


INEM 2017 Conference, Day 1

An evening of a long and busy day. Day 1 of INEM 2017 is over, and for it is raining cats and dogs at the moment, I can spend some time writing this post. After having a wonderful breakfast I was heading to the conference centre. San Sebastian is situated in the Western area of the time zone, so at 6 AM when I usully wake up it is pitch black, while at 8 PM you can go for a walk in broad daylight. Funny. But anyway, the Palace is within easy reach, it takes only 15 minutes to get there. A light walk on the shore… an ideal start for the day. I love to watch animals walking up and down next to me. I can still picture myself at Duke University watching the large squirrel population. I named one of the squirrels ‘Brian’… here I met some seagulls. They are the local Bryans.


I need to remind myself about not forgetting about the conference… The day started at 10:30 with Julian Reiss’ talk. First, he gave us some practical sugesstions… where to eat, what to see, where to stay.. and the like. Then he had his presidental address under the title ‘Against epistocracy’. In this talk, Julian responded to some recent books (one of them is Jason Brennan’s ‘Against democracy’) about the challenges modern democracies face. In particular, the social role of scientists and experts should be strengthened, say the books. Why…? Laymen’s decisions are troublesome. So, according to Brennan and others, it is time for us to switch to epistocracy as epistocracy is likely to result in better decisions. This is simple instrumentalism. Epistocracy is better for it leads to better decisions.

We have some implicit assumptions at this point. There exists higher-order political knowledge that entails higher-order knowledge of the society and, what is more, this higher-order social knowledge is objective. This is not a necessity, however. There are values in the game with complex trade-offs among them. It is, too, very dubious to apply values to some situations. But the most fundamental question regards the alleged irrationality of the voters. According to Brennan, voters are ignorant, arrogant, misinformed nationalists (don’t dell them, please… they may feel offended). However, this portray is dependent on the notion of rationality we apply. The point is science, social science, does not necessarily lead to a consensus – or if so, this is only ‘accidentally’, resulting from some common biases of the sciences. Seeking a consensus is not the best way of solving a social problem. Maybe it is a wrong theory or a wrong methodology or some selective biases or even wrong social values that underlie a consensus. However, this answer seems as problematic as the basic question itself. One can reach such a conclusion only by depriving science of the ability of self-reflection. I think science can correct its own mistakes. But for Julian, there is no need for us to prefer science to non-scientific decision-making processes. He takes a sceptical view.

Brian Albrecht and Brian Kogelmann regarded models as foils. It is an interesting new way of addressing an age-old problem. We have descriptive models for sure, but we have models the best use of which is making contrast. They serve as the basis for comparison, so it is a virtue of them if they are NOT like reality. Some examples from literature were listed: foils are often applied in novels in order to highlight some characteristics of a protagonist. But I think something is still missing from this account. Is this enough to set up a model that is different from reality on purpuse…? I don’t think so. Suppose, I have a model according to which it is the storks that bring the new-born babies. Is such a model different from reality? Naturally. How can it help us understand reality? By making a contrast, we can know for sure that it is NOT the storks that bring the babies: reality is necessarily different from our model as we failed to use reality as the matter for our bricks to build models. There is a difference between unrealisticness and unrealisticness. Cooked-up assumptions are useless, they can have instrumentalist benefits at best.

Then Melissa Vergara Fernández talked about what philosophical theories say about model failure. Her point is interesting: even if we know the criteria for model success, these criteria cannot be used as a measure of theory fail. We need further criteria, for example expectations. It is expectations that make the difference between success and failure.

Matti Heinonen gave a talk about evidential looping effect which is a special form of feedback effects. However, there are serious differences. The way one classifies something will have an effect on the behaviour of the classified thing. For instance, if GDP-dynamics is regarded as of recession, it will have an effect on the investment decisions of private companies. On financial markets similar feedback effects are in the game: events are brought about individual agents with intentions and there are concepts the application of which have effects on behaviour and outcomes. For instance, a financial institution will change its behaviour in case it is reported as insolvent. In other words, using models and making predictions have effects on the behaviour of the analysed thing. I think this framework is an interesting new way of addressing the problem of self-fulfilling prophecies and spirals: if a recession is reported and the central bank cuts the rate of interest, private sector agents may regard this as a symptom of recession and will act accordingly by cutting investment activity. This may result in a spiral.

One more lecture deserves attention. It is Olga Koshovets and Taras Varkhotov’s ‘Neuroeconomics’. It is a very recent attempt to reconceptualize economics in biological terms. Maybe our very concepts can be replaced by biological notions. Maybe talking about neurotransmitters and biochemistry may be an effective framework to describe economic processes. For me, the most strinking thing was the consequence of this reasoning: economics will be a natural science. So, what proved imposissible to complete on physical grounds may be completed on biological grounds. Shocking. Neuroeconomics makes it possible to trace subjectivity back to neurophysiological predeterminacy. On these grounds neuromarketing has emerged very recently. Neuromarketing aims to understand the neurophysiological reactions of customers on the basis of their eye-movements or even mimicry. Filmmaking has already benefited from these striking results. Neuroeconomics is so recent that neuroeconomists now prefer publishing in biological-medical-biochemical journals for physically grounded economics may be averse to such achievements and theoretical developments.

I cannot resist to mention Margaret Schabas’ talk on Hume’s proto-statistical methods. In this lecture, Margaret made some really interesting points. For instance, she called attention to how extensively Hume used statistical data and how close he was to some modern concepts such as variance or regression.

It was day 1. It is time to go to sleep for tomorrow’s program is heavier than today’s schedule. Moreover, I am leaving the hotel on Thursday morning (my flight departs at 7:30) and it is problematic to get to the airport that ‘early’. Nonsense. I need to plan my way home… that I intended to be a light process. It’s a pity… Good night!


INEM 2017 Conference, Day 0

The day has come and I am on my way to San Sebastian, Spain. Even though I could spend almost two months without travelling to anywhere, travelling as such has not become more agreeable to me. Actually, I hate travelling – but flying… flying is something different. Whilst travelling by, say, train still seems to be an ordeal… or even a torture, I love to fly. I love the atmosphere of the airports, staring at my fellow passengers, guessing who they are and where they are heading to. On this day a year ago I was travelling to Durham which is still regarded as the greatest adventure of my life. Sipping my hot espresso at Budapest Airport terminal 2B, after struggling through the security check, all my memories are back… as if everything had happened the other day. I am thinking about my friends, Lisa, Paige, Victoria and the wonderful Duke Campus. But it is just nostalgy, nothing more.

But it is time to come back to present. I am making my way to INEM 2017, the exciting binannual conference of the International Network for Economic Method. This year a wonderful North-Spanish town, San Sebastian hosts the conference from Monday to Wednesday. There is an interesting venue: the full program has just been announced. However, the conference starts as early as on Sunday with a workshop (Capitalism, Technology, and Scientism: Threats to Democracy?) hosted by Philosophy of Economics working group. It is an interesting initiation that is really worth paying attention to. Melissa Vergara Fernández is charing this session. I met Melissa at the EIPE20 conference in Rotterdam this March and I have the privilge of working with her on the September special issue of Economics and Business Review. I am sure she will be one of the most influential philosophers of economics of the following years. 

What to do in San Sebastian…? San Sebastian is a beautiful town near the Ocean in the North-East of Spain… but today I am arriving very late, so no time for a sightseeing tour. The sessions start tomotrrow at 10:30, so in the morning and after the sessions I will have some time to visit the town and the shores. San Sebastian is not thar big: it is as large as my hometown. I have some maps, so it seems to be easy to come round all the beautiful places. My hotel is in walking distance from Palacio Miramar, the conference centre, so I can hardly wait to discover the surrounding districts of the town… the parish of Iglesia de San Vicente… the square of Plaza de la Constitución… or Bodega Donostiarra. Full of history. I am sure I will not have enough time to see everything, but there are some “must-sees” that I cannot miss. I need to be focused, admittedly.

That’s all for now. I am on my way and will get back with detailed daily reports on the presentaions. My lecture is on Wednesday in the “Macroeconomics” session.


Palacio Miramar



Iglesia de San Vicente



Plaza de la Constitución



Bodega Donostiarra


Acts of Violence Have Reached Duke University

This is personal. I have been reading the news with growing concern for the last few days. A year ago I spent some wonderful weeks in Durham and at Duke University, and some of my friends still live there. Unfortunately, it is only rarely that we can talk to each other, but I check Duke Today and the Herald Sun of Durham on a daily basis to follow up the latest events in the Duke community.

On Friday, I received an e-mail from the International House (or iHouse) of Duke calling the attention of the international students, scholars and spouses to stay away from Durham downtown. Hundreds are reported to have descended on downtown Durham on Friday to oppose a rumored KKK march. Even though the white supremacists didn’t show up, protesters refused to go home and the whole event ended up in a tense standoff with police wearing helmets and holding batons.

This morning Duke Today publish Duke president Vincent E. Price’s letter sent to the campus community yesterday in which the president announces his decision of removing Gen. Robert E. Lee’s statue that had stood at Duke Chapel for some 85 years.

As President Price explained, “I took this course of action to protect Duke Chapel, to ensure the vital safety of students and community members who worship there, and above all to express the deep and abiding values of our university,”

Even the Washington Post reported this decision of his:

“Duke University removed a statue of Gen. Robert E. Lee early Saturday after it was vandalized amid a national debate about monuments to the Confederacy.”

Durham has been one of the focal points of the ongoing debate over Confederate statues after protesters knocked down a bronze statue of a Confederate soldier in front of a government building downtown on Monday. Eight people are charged with rioting and damaging property. Days later, hundreds marched through Durham in a mainly peaceful demonstration against racism before an impromptu rally at the stone pedestal where the statue stood.

I hope everyone is fine. Be careful.



WP: Structuralism in modern business-cycle theory

Structuralism in modern business-cycle theory

A framework for a structuralist reconceptualization

Abstract: In this tiny paper, a possible framework for a structuralist analysis of modern
business-cycle theory is considered. In order to respond to the debates around the realist and instrumentalist interpretations of the works of Friedman I will provide a framework in which the tension between the opposite standpoints can be overcome. Based on epistemic structural realism, firstly, I will identify Friedman’s stance as a mix of agent-level instrumentalism and macro-level causal realism and, secondly, I will scrutinize the consistency of this epistemic strategy. I will argue that causal realism requires one to be realist regarding the assumptions defining agents as well.

Keywords: structural realism, entity realism, business-cycle theory, unrealistic assumptions

JEL codes: B22, B41

The full text is available here. Any comments are warmly welcome.