Jack Wiseman is a great writer. He was often thought of by many as a radical right wing person and thus, many dismissed what he had to say. Though I would question his ‘radical right wing’ label because relative to other Austrians, especially the anarchists, he was not that radical.
Wiseman’s way of thinking is almost from a radical subjectivist perspective, and he talks more about policy than economic theory (as opposed to Lachmann or Shackle who preferred to talk about theory). He might of also been thought of radical because of his distaste for neoclassical economics and he extends his criticism towards neoclassical economics to policy making. What he states insightful passages and why he isn’t recognized by other economist, especially Austrians, is unknown to me. On a side note, some Austrians that do know who he is would just call him a fellow traveller, but I do think that is highly debatable.
(the article I quote from Wiseman’s on uncertainty is one called Costs and Decisions though there are plenty of articles by Wiseman to chose from. This is simply my favorite on uncertainty )
My favorite contribution has to be what he writes in concerns about uncertainty. He seems to come very close to my overall interpretation of what uncertainty implies, though not quite. He also notes that his idea of uncertainty comes in part from Shackle, even though for most of his career he was always participating in Austrian circles.
Uncertainty is here because people do not know the future. But this idea of uncertainty is applied to everything, thus we can have the same analysis when looking at markets and policies.
At the time, the equilibrium theorists during his time (search theorists, temporary equilibrium theorists, the ‘new’ new welfare economics theorists based on information theory) were theorists who went beyond the ‘Walrasian god’ of conditions of general equilibrium, but nevertheless were still ignorant of the unknown future. The future may not be predetermined in the same sense as earlier theories, but it is still known. These theories incorporate probabilities and risk attitudes, or equilibrium is a condition were individual ‘theories’ and policies with emerging outcomes are conformed.
Decision makers are ‘clockwork Bayesians’ programmed to respond to changes in conditions but in preordained ways and within a defined system. This of course ignores or puts aside the fact that decision makers may experience surprise or experience new opportunities not anticipated as possibilities in the model, they can ‘learn’ but only in a restricted sense. In other words, this is a nice stable system choosing to assume away reality because of instability. He went on to consider this vision of uncertainty as the “new uncertainty school”, which he would of course categorize Shackle as one of his members and presumably, Lachmann.
But of course it was his view of uncertainty which was the main bait for critics. If I was to summarize the main argument against Wiseman, it would be, “Well, can you do better?” Wiseman’s answer is along the lines of, “Well to say this is to imply that you reject the evolutionary aspect of economics. There is no argument of principle against such an evolution.” The italicized part are his words, quite wonderfully said. What of arguments that reject this notion of uncertainty and fail to apply its implications but yet argue “current theory is the best we got”?
One of my favorite passages by Wiseman is when he draws two points about uncertainty and economics:
I shall content myself with two [inferences] by way of illustration, one positive, one negative. The positive one is that ‘higgledy-piggledy growth’ is a natural consequence. The past (recorded) performance of decision makers does not provide a simple guide to their likely future performance, and… ‘learning’ can never provide a more sophisticated fully trustworthy ‘investment rule’. The negative proposition is perhaps more disturbing: what becomes of positive economics once it is recognized that the basic econometric data (recorded prices etc) is, and always going to be, the outcome of mistaken predictions?
It’s note mentioning that even by friend and early mentor at LSE, Lord Robbins,
states that he shouldn’t overestimate the influence of uncertainty upon the thinking of future compatriots.
One thing that I do find fault in Wiseman’s talks on uncertainty is changing of institutions may indeed reduce or eliminate uncertainty. Though he does only say this once and quite vaguely, I still am at awe of the fact that he says this and yet also questions the state of positive economics.
At least though, he acknowledges the idea that we may never find a formal analysis embodying the unexpected. We need to get out of the “this is the best we can do” mentality for this only seems to appeal to elegance not relevance.
I always keep in back of my mind that we may never satisfy a clear theory of Economics with uncertainty but I do not let that dominate my overall thoughts. Economics is an evolutionary science, and this leaves room for optimism, this is to say, a feeling that we may find a satisfying theory of economics and uncertainty.
Group Behavior and Action
Another major contribution has to do with his research on group behavior. While still having a view of methodological individualism, he acknowledge that groups may act too. But because groups are composed of individuals, and thus with different ends and means, groups are often not just perusing one goal and quite often, groups are constantly fighting in trying to ‘change the rules of the game’ for their favor. By this in mind, we should imply that treating firms with a tendency of an extension of the lone entrepreneur is faulty. The mainstream treatment of firms is dealing with things one thing at a time with assumed profit constraints and no quarreling. This also may question some government policies like subsidies. To Wiseman, having a vast amount of subsidies in various countries led him to believe that there is more to subsidy policies than just economic reasons. Of course when talking about things abstract to the mainstream, like various ends and different means for individuals, we can now see that there can be some policies simply to ‘favor’ a particular thing and allow the changing of the rules for individuals. See his article Some Reflections on the Economics of Group Behavior for more info.
I will conclude by quoting a passage of Wiseman’s in which he concluded one of his articles on uncertainty:
I hope that I have persuaded you that there is here something more than a straw man: those of us who are interested in the study of a truly uncertain world could do with some help.