Fallacy of Composition: Science vs Engineering

 

Many a macroeconomist refers to “empirical science.” Is physics one? Is chemical engineering another? Is economics a third? Is finance a fourth? Is macroeconomics yet another? What about “political science”?

Science for Abstract Theories. Through history, mathematics used to be named as “science” (e.g. J.S. Mill, 1861). In modern times, it is not so any more. Particularly in the US, the term STEM differentiates science, technology, engineering and mathematics from one another. Generally speaking:

①   Science is of idealized abstract theories from observations and experiments of the reality, natural or economic.

②   Technology is a set of theories and other knowledge more or less readily applicable to the practice.

③   Mathematics is for the sake of convenience in calculation while being silent to causality and blind to metric of dimensions and scales. By the way, measurement is one calculation is another; the former with metric the latter without.

 

Specifically, the first step in building a theory is often described as “idealization” or “abstraction” (抽象, chōuxiàng in pinyin). This is an absolute necessity in most cases because no real event takes place in a standalone simplistic environment.

             For instance, Sir Isaac Newton focuses on the apple (M for mass) and the earth (M) when he conceives the Law of Gravity, a prototypical “theory” of physics. Any of us can easily imagine what if he tried to take all the environmental elements into account. What about the mass (M) of his own? What if the assistant on site snatches the apple in the drop?

             After all, theories are approximations as Eugene Fama from Chicago once quipped. Truthfully, the more precise a theory the more useless it becomes; again, the descriptive prescription of theory “is useless until it is” idealized (from Irving Fisher, 1930). 

Engineering of Practical Art. Arriving at Engineering, we are to take into consideration much more, way much more information than a theory or a technology. In short, engineering is no less a practice than The Practice of Management (Peter Drucker, 1954). In other words, both engineering and business management are more of art than of science.

Fatal Misnomer of Macroeconomics. Some economists would claim that economics be no science because, for instance, there is no such thing as a “free” market. Well, they are right or wrong depending on their definition of “science.”

            To be fair among the rest of us, economics is an abstract science, no question asked. On one hand, “freedom” or liberty is not feasible without “the rule of law” F.A. Hayek talked about (1944 and on). On the other hand, laissez-faire Adam Smith talked about is all about the idealized market fully armed with the rule of law.

             Somehow, we have macroeconomics. Could it be a science? No, probably not primarily because there is no way to abstract the national economy. Even more so when the times are particularly difficult with “major breakdowns of the financial system” Ben Bernanke talks about (2022 at Stockholm).

A Naïve Question. Which would be more difficult to manage, a firm or the macro-economy? Would managing, policing or guarding the economy be an art or an “empirical science”? The answer is up for grabs.

             At any rate, the fact of economics being a science does not grant the so-named “macroeconomics” to be so. No wonder, what the gargantuan system of Fed does in practice of “macroeconomic” policy is often described to be “fine-tuning.” How proximate or approximate is fine-tuning to science?

             Some macroeconomists might still exclaim, “¿Y qué?”