. . . since we are all humans everything reduces to psychology.  (Boland, 2003, p. 107)

 

We content ourselves therefore with the following simple psycho-economic postulate: Each individual acts as he desires. (Fisher, 2006, p. 11), original emphasis

 

Mises' contribution was very simple and at the same time extremely profound. He pointed out that the whole economy is the result of what individuals do. (Foreword, von Mises, 2007, p. v)

 

But a method that can explain everything that might happen explains nothing. (Popper, 1960, p. 154)

 

***

 

Psychologism is the most congenial mode of explanation. The ancient Greeks regarded myths as ‘true stories’ and distinguished them from fables as ‘false stories’. Xenophanes made his contemporaries aware that their true stories were what is now called a projection (cf. Popper, 1994, p. 39).

 

With this, the problem of demarcation arose for the first time. And it was easily solved. The Pre-Socratics rejected the mythological explanations of the world because they saw that everything could be explained by the human-like actions of gods which meant on closer inspection: nothing. This methodological insight set science on its track. 

 

Rejecting gods as valid explanation, however, caused an obvious problem. If myth is not truth, what then is truth? And to this question the Pre-Socratics could not offer an immediate answer but only a vague research program. They sought the material principle of things and they came up with different answers. This was not an entirely satisfactory outcome because, as a matter of principle, only one of the answers could be true. The demarcation problem appeared in a new form within  the compass of the infant science.

 

All finer points of methodology are derivatives of the primordial demarcation.

 

The finer points arose quite naturally. It is easy to keep Zeus out of the discussion. But what about notions like the Absolute, the One, Logos; and what about the invisible atom or the somewhat fantastic harmony of numbers, music, and celestial spheres? Demarcation became more subtle. Basically however, it remained a purely methodological question.

 

The problem of finding a criterion which would enable us to distinguish between the empirical sciences on the one hand, and mathematics and logic as well as ‘metaphysical’ systems on the other, I call the problem of demarcation. This problem was known to Hume who attempted to solve it. With Kant it became the central problem in the theory of knowledge. (Popper, 1980, p. 34), original emphasis

 

Being humans, ‘a muddled horde of erring mortals, always in two minds about things’ (Parmenides), it was inevitable that demarcation eventually became a social issue. The early philosopher-scientists organized themselves in schools and this brought with it the necessity to define their relations towards their social and political surroundings. This they did. The Pythagoreans preferred to keep their thoughts and findings for themselves. Others spoke on the agora to their fellow citizens. Demarcation was a real issue. 

 

In our day McCloskey, among others, solved the demarcation problem by simple deconstruction, that is, by muddling the epistemic and the social. After all, the pursuit of scientific truth, whatever that may be, is undeniably a social activity and, as things are, ultimately boils down to the usual social status quarrels:

In practice methodology serves chiefly to demarcate Us from Them, demarcating science from nonscience. Once the modernist have found a Bantustan for nonscience such as astrology, psychoanalysis, acupuncture, nutritional medicine, Marxist economics, spoonbending, or anything else they do not wish to discuss, they can get on with the business at hand with a clear head. Methodology and its corollary, the Demarcation Problem (What is Science? How is It to be distinguished from nonscience?), are ways at stopping conversation by limiting conversation to people on our side of the demarcation line.  (McCloskey, 1998,

p. 161)

 

Popper, for one, was as clear on the difference between epistemic demarcation and social discrimination as anyone could wish. And he was quite explicit that he was not much interested in the latter:

And my doubts increase when I remember that what is to be called a ‘science’ and who is to be called a ‘scientist’ must always remain a matter of convention or decision.  (Popper, 1980, p. 52)

 

Within McCloskey's framework of rhetoric the demarcation problem is correctly perceived as a conversation-stopper. And that is meant as denial because for the socio-psychological mindset communication is the summum bonum.  However, conversation per se  is the ideal of the talk-show, not of science. Here, the regulative idea is quite different:

A critical discussion is well-conducted if it is entirely devoted to one aim: to find a flaw in the claim that a certain theory presents a solution to a certain problem. ... Thus critical discussion is essentially a comparison of the merits and demerits of two or more theories ... The chief demerit is inconsistency, including inconsistency with the results of experiments that a competing theory can explain. (Popper, 1994, pp. 160-161)

 

Demarcation cannot be debunked as social ostracism and the demarcation problem cannot be solved once and for all:

... we have seen that a characteristic feature of science is that it develops canons of rationality for evaluating knowledge claims and deciding what to admit into the domain of knowledge. ... these canons of rationality change, evolve, and become more sophisticated as science develops. (Suppe, 1977, p. 724)

 

The task of methodology is to defend the integrity of science and this means to demarcate. To preach anything-goes, Verstehen, methodological opportunism,  to describe what scientists are actually doing, to certify the ruling paradigm, all this is no part of the methodologist's job description. Methodologists, above all, take care that demarcation is not abused for other purposes. The methodologist who complains that no foolproof criteria to discriminate between science and nonscience are available does not understand his very task. The methodologist's professional risk is to reject the true theory and to accept the false theory. This risk is eliminated by reverting to pluralism. Pluralism is the self-abandonment of methodology.

 

We are in danger of losing our grip on the concepts of truth, evidence, objectivity, disinterested inquiry.  (Haack, 1997, p. 1)

 

To date the demarcation problem has not been answered satisfactorily for economics:

Economics is a perplexing subject. Though I have spent the better part of my academic career thinking about its aims and methods, I have never been confident that I or anyone else for that matter really understand its cognitive status. ... Without assurance about the cognitive status of the theory; there is no basis of confidence in it.  (Rosenberg, 1994, pp. 216-217)

 

This neutral resume is, with different accentuation, shared by Blaug, Mirowski, and Klant, to name only a few methodologists who do not see economics on the safe side of the line that demarcates science from nonscience.

 

***

 

Modern psychology and psychotherapy have made us familiar with a habit of our mind we call rationalization. This habit consists in comforting ourselves and impressing others by drawing a picture of ourselves, our motives, our friends, our enemies, our vocation, our church, our country, which may have more to do with what we like them to be than with what they are. (Schumpeter, 1994, pp. 34-35)

 

Rationalization is the most reduced form of psychologism. Psychologism has not achieved much of scientific value in economics.

 

It is possibly very encouraging for the economist to hear that compared with the natural scientist the psychological method saves him “ages of laborious research” but it is curious and a pity that this huge start has not enabled him to formulate any considerable body of reliable prognoses such as the natural sciences have managed to achieve. (Hutchison, 1960, p. 132)

 

***

 

Why, indeed, is economics not yet a science — in the sense of representing a body of knowledget hat grows cumulatively over time and has something of value to teach men and women of practical affairs? (Eichner, 1983, p. 508)

 

When Galileo stood in the cathedral of Pisa and watched the swinging chandelier, as certainly many had done before him without much reflection, he asked himself: how much time does the pendulum need for a full swing and what does the period depend on? He did not ask: do my fellow citizens pursue happiness, or do they maximize utility, or who will eventually go to heaven, to hell, or to Bedlam? He somehow felt that the chances were good that he could answer the first question and nil that he could answer the second. As a genuine scientist he was content with the petty problem of time, length and weight and left the really big, important, interesting, fateful and insoluble questions of humankind to the so-called social sciences. And there they remained, after countless promising attempts and the application of the most powerful analytical tools, unsolved up to the present day.

 

When they founded science and sought the material principle of things, the ancient Greeks in effect excluded psychology. We know today that this was a wise demarcation. Confronted with Boland's, Fisher's, von Mises's or McCloskey's populist trivialities, the founding fathers would find "almost inbelievable the degradation in standards of analysis" over two millenia (cf. Suppes, 1968, p. 660).

 

Economics could not emancipate itself from the social sciences. The axioms of rationality formalize a rather unconvincing variety of psychology. There is nothing wrong with axiomatization to be sure, only with psychology. An economist who philosophizes about optimizing human behavior is dislocated — he finds himself on the wrong side of the line that demarcates science from nonscience. Neither naive empirical realism, nor ill-understood formalization, nor rhetoric helps to the other side. Demarcation may be difficult in every concrete case, but it is not negotiable. No serious methodologist could ever let standard economics pass as science. The flaws are obvious and numerous.

 

The role of philosophy in science is to clarify conceptual problems and to make explicit the foundational assumptions of each scientific discipline. The clarification of conceptual problems or the building of an explicit logical foundation are tasks that are neither intensely empirical nor mathematical in character. They may be regarded as proper philosophical tasks directly relevant to science. (Suppes, 1968, p. 653)

 

Instead:

Much of the work in methodology over the last ten years has thus consisted of methodological analysis of what economists do and how they argue. (Dow, 1997, p. 78)

 

Economic methodology has given up demarcation, because of this economic methodology has to be given up.

 

***

 

Psychologism inverts the Midas touch of science — to turn whatever it might touch into knowledge — into Midas curse: to turn whatever it might touch into opinion and balderdash.

 

 

References
Boland, L. A. (2003). The Foundations of Economic Method. A Popperian Perspective. London, New York, Ny: Routledge, 2nd edition.

Dow, S. C. (1997). Mainstream Economic Methodology. Cambridge Journal of Economics, 21: 73–93.

Eichner, A. S. (1983). Why Economics Is Not Yet a Science. Journal of Economic Issues, 17(2): 507–520. URL

Fisher, I. (2006). Mathematical Investigations in the Theory of Value and Prices. New York, Ny: Cosimo, (1892).

Haack, S. (1997). Science, Scientism, and Anti-Science in the Age of Preposterism. Skeptical Inquirer, 21(6): 1–7. URL
Hutchison, T.W. (1960). The Significance and Basic Postulates of Economic Theory. New York, Ny: Kelley.
McCloskey, D. N. (1998). The Rhetoric of Economics. Madison, WI, London: University of Wisconsin, 2nd edition.

Popper, K. R. (1960). The Poverty of Historicism. London, Henley: Routledge and Kegan Paul.

Popper, K. R. (1980). The Logic of Scientific Discovery. London, Melbourne, Sydney: Hutchison, 10th edition.
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality. London, New York, Ny: Routledge.
Rosenberg, A. (1994). What is the Cognitive Status of Economic Theory? In R. E. Backhouse (Ed.), New Directions in Economic Methodology, pages 216–235. London, New York, Ny: Routledge.

Schumpeter, J. A. (1994). History of Economic Analysis. New York, Ny: Oxford University Press.
Suppe, F. (1977). Afterword. In F. Suppe (Ed.), The Structure of Scientific Theories, pages 615–730. Urbana, IL, Chicago, IL: University of Illinois Press.

Suppes, P. (1968). The Desirability of Formalization in Science. Journal of Philosophy, 65(20): 651–664.

von Mises, L. (2007). Human Action. A Treatise on Economics, volume I. Indianapolis, IN: Liberty Fund. (1949).

 

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