Logic and truth
27 Nov, 2025 at 19:39 | Posted in Theory of Science & Methodology | Leave a comment
To be ‘analytical’ and ‘logical’ is a quality most people find commendable. These words carry a positive connotation. Scientists are thought to think more deeply than most because they employ ‘logical’ and ‘analytical’ methods. Dictionaries often define logic as “reasoning conducted or assessed according to strict principles of validity” and ‘analysis’ as concerning the “breaking down of something.”
But this is not the whole picture. As used in science, analysis usually implies something more specific. It means to separate a problem into its constituent elements, thereby reducing complex — and often complicated — wholes into smaller, simpler, and more manageable parts. One takes the whole and breaks it down (decomposes it) into its separate parts. By examining the parts individually, one is supposed to gain a better understanding of how they operate. Built upon this more or less ‘atomistic’ knowledge, one then expects to be able to predict and explain the behaviour of the complex and complicated whole.
In economics, this means taking the economic system, dividing it into its separate parts, analysing these parts one at a time, and then, after separate analysis, putting the pieces back together.
The ‘analytical’ approach is typically used in economic modelling, where one begins with a simple model containing few isolated and idealised variables. Through ‘successive approximations,’ one then adds more variables, aiming finally to arrive at a ‘true’ model of the whole.
This may sound like a convincing and sound scientific approach.
The approach, however, rests on a precarious assumption.
The procedure only works effectively when one has a machine-like whole — a system or economy — where the parts exist in fixed and stable configurations. And if there is anything we know about reality, it is that it is not a machine! The world we inhabit is not a ‘closed’ system. On the contrary, it is an essentially ‘open’ system. Things are uncertain, relational, interdependent, complex, and ever-changing.
Without assuming that the underlying structure of the economy you are trying to analyse remains stable and invariant, there is no chance the equations in your model will hold constant. This is the very rationale for economists’ use — often only implicitly — of the ceteris paribus assumption. But — nota bene — this can only be a hypothesis. You must argue the case for it. If you cannot supply any sustainable justifications or warrants for the adequacy of that assumption, then the entire analytical economic project becomes pointless, uninformative nonsense. Not only must we assume that we can shield variables from each other analytically (external closure), we must also assume that each variable itself is amenable to being understood as a stable, regularity-producing machine (internal closure). We know, of course, that this is generally not possible. Some things, relations, and structures are not analytically graspable. Trying to analyse parenthood, marriage, or employment piece by piece does not make sense. To be a chieftain, a capital-owner, or a slave is not an individual property of a person. It can only exist when individuals are integral parts of certain social structures and positions. Social relations and contexts cannot be reduced to individual phenomena. A cheque presupposes a banking system, and being a tribe-member presupposes a tribe. By failing to account for this in their ‘analytical’ approach, economic ‘analysis’ becomes uninformative nonsense.
Using ‘logical’ and ‘analytical’ methods in the social sciences often means economists succumb to the fallacy of composition — the belief that the whole is nothing but the sum of its parts. In society and the economy, this is arguably not the case. An adequate analysis of society and the economy, a fortiori, cannot proceed by merely adding up the acts and decisions of individuals. The whole is more than the sum of its parts.
Mainstream economics is built on using the ‘analytical’ method. The models built with this method presuppose that social reality is ‘closed.’ Since social reality is known to be fundamentally ‘open,’ it is difficult to see how such models can explain anything about what happens in such a universe. Postulating closed conditions to make models operational and then imputing these closed conditions to society’s actual structure is an unwarranted procedure that fails to take necessary ontological considerations seriously.
In the face of the methodological individualism and rational choice theory that dominate mainstream economics, we must admit that whilst knowing the aspirations and intentions of individuals is necessary for explaining social events, it is far from sufficient. Even the most elementary ‘rational’ actions in society presuppose the existence of social forms that cannot be reduced to individual intentions. Here, the ‘analytical’ method fails once more.
The overarching flaw with the ‘analytical’ economic approach, using methodological individualism and rational choice theory, is that it reduces social explanations to purportedly individual characteristics. But many of an individual’s characteristics and actions originate in, and are made possible only through, society and its relations. Society is not a Wittgensteinian ‘Tractatus’-world characterised by atomistic states of affairs. Society is not reducible to individuals, since the social characteristics, forces, and actions of the individual are determined by pre-existing social structures and positions. Even though society is not a volitional individual, and the individual is not an entity existing outside society, the individual (actor) and society (structure) must be kept analytically distinct. They are tied together through the individual’s reproduction and transformation of already given social structures.
Since at least the marginal revolution in economics in the 1870s, it has been an essential feature of the discipline to ‘analytically’ treat individuals as essentially independent and separate entities of action and decision. But, in truth, in a complex, organic, and evolutionary system like an economy, that kind of independence is a profoundly unrealistic assumption. To simply assume strict independence between the variables we try to analyse does not help us in the least if that hypothesis proves unwarranted.
To apply the ‘analytical’ approach, economists must essentially assume that the universe consists of ‘atoms’ that exercise their own separate and invariable effects, such that the whole consists of nothing but an addition of these separate atoms and their changes. These simplistic assumptions of isolation, atomicity, and additivity are, however, at odds with reality. In real-world settings, we know that ever-changing contexts make it futile to seek knowledge through such reductionist assumptions. Real-world individuals are not reducible to contentless atoms and are thus not susceptible to atomistic analysis. The world is not reducible to a set of atomistic ‘individuals’ and ‘states.’ How variable X works and influences real-world economies in situation A cannot simply be assumed to be understood by looking at how X works in situation B. Knowledge of X probably tells us little if we do not consider its dependence on Y and Z. It can never be legitimate simply to assume the world is ‘atomistic.’ Assuming real-world additivity cannot be correct if the entities around us are not ‘atoms’ but ‘organic’ entities.
If we want to develop new and better economics, we must give up the single-minded insistence on using a deductivist straitjacket methodology and the ‘analytical’ method. To focus scientific endeavours solely on proving things within models is a gross misapprehension of the purpose of economic theory. Deductivist models and ‘analytical’ methods disconnected from reality are not relevant for predicting, explaining, or understanding real-world economies.
To have ‘consistent’ models and ‘valid’ evidence is not enough. What economics needs are real-world relevant models and sound evidence. Aiming only for ‘consistency’ and ‘validity’ sets the aspirations of economics too low for developing a realistic and relevant science.
Economics is not mathematics or logic. It is about society. The real world.
Models may help us think through problems. But we should never forget that the formalism we use in our models is not self-evidently transportable to a largely unknown and uncertain reality. The tragedy of mainstream economic theory is that it believes the logic and mathematics it uses are sufficient for dealing with our real-world problems. They are not! Model deductions based on questionable assumptions can never be anything but pure exercises in hypothetical reasoning.
The world in which we live is inherently uncertain, and quantifiable probabilities are the exception rather than the rule. To every statement about it is attached a ‘weight of argument’ that makes it impossible to reduce our beliefs and expectations to a one-dimensional stochastic probability distribution. If “God does not play dice,” as Einstein maintained, I would add, “nor do people.” The world as we know it has limited scope for certainty and perfect knowledge. Its intrinsic and almost unlimited complexity and the interrelatedness of its organic parts prevent us from treating it as if it were constituted by ‘legal atoms’ with discretely distinct, separable, and stable causal relations. Our knowledge, accordingly, has to be of a rather fallible kind.
If the real world is fuzzy, vague, and indeterminate, then why should our models be built upon a desire to describe it as precise and predictable? Even if there always has to be a trade-off between theory-internal validity and external validity, we must ask ourselves if our models are truly relevant.
‘Human logic’ must supplant the classical — formal — logic of deductivism if we wish to say anything interesting about the real world we inhabit. Logic is a marvellous tool in mathematics and axiomatic-deductivist systems, but a poor guide for action in real-world systems, where concepts and entities lack clear boundaries and continually interact and overlap. In this world, we are better served by a methodology that acknowledges that the more we know, the more we know we do not know.
Mathematics and logic cannot establish the truth value of facts. Never have. Never will.
