Through the sixteenth and seventeenth centuries, European science slowly lifted itself out of the fog of Mediaeval scholasticism. A rational, quantified and mechanised world picture emerged. In 1769 an essay questioned why economics benefited so little from the use of mathematics and quantification. Today the opposite may be argued – the increasing loss of relevance of economics is associated with the use of mathematics. Based on Francis Bacon's criticism of scholasticism, it is argued here that strong parallels exist between the decay of scholasticism and the decay of modern economics. From being a science of practice, late neoclassical economics has degenerated into ‘‘working upon itself ‘’, as Bacon says about late scholasticism. Since the 1769 essay, economics has come ‘‘full circle’’. The problem for economics is not then mathematics per se – mathematics is just one language in which science may decay.
Keywords Economics, History, Mathematics
‘‘Never will man penetrate deeper into error than when he is continuing on a road which has led him to great success’’, says Hayek (1952) in his book, The Counter-revolution of Science. Studies in the Abuse of Reason. In the context of Kuhnian paradigm shifts, Hayek pictures a process of scientific decay that grows out of the excesses that follow from the very success of a particular set of ideas.
Scientific paradigms may, in this way, be seen as moving in trajectories similar to the trajectories of technologies. Mature technologies and mature scientific paradigms unleash search processes for fundamentally new ideas. Confronted with mature technologies, the markets for new ideas often provide a large diversity of solutions – the steam-powered car, the electrical car and the petrol-driven car were all competing at the turn of the last century. The market for ideas in economics, however, seems to become oligopolistic and less diverse, particularly after a great success as described by Hayek.
An increasing number of observers, both inside and outside of the economics profession, argue that the use of mathematics in economics in some areas has reached a point of diminishing or even negative returns. In Hayek's terms, reason is in a sense being ‘‘abused’’. Nowhere is the effect of this abuse more obvious than in the reality of economic development, where the increasingly globalised economy seems to produce opposite effects of what standard economic theory predicts.