Fritz Machlup as a precursor of the Semantic Conception in Philosophy of Science

rbeltramino@ucel.edu.ar

1. Introduction

Few authors in the Austrian Tradition are more frequently overlooked as Fritz Machlup, probably

his proverbial Viennese politeness and his intellectual moderation contributed to this.

Nowadays he remains quite in the shadow of more known authors like Mises or Hayek, although

in the particular field of Philosophy of Science, he was by far one of the most important authors

coming from the Austrian Tradition into the mainstream. His discussions with Terence W.

Hutchison about empirism and verification and with Richard Lester about firm’s theory premises

are still studied and quoted widely and his position is still considered an interesting alternative to

what he once labelled ultraempirism. Machlup was through all his life, very interested and very up

to date with the developments and different currents in Philosophy of Science1. So when he wrote

about economic methodology he was a rara avis, a successful practitioner who was also well read

in Philosophy of Science.

In that, he followed his own rule, which he clearly stated as a piece of advice to every economist:

“I often tell my students that they should not publish any methodological notes, papers or

books until they have done years of substantive research in their field and attained

recognition for their mastery of its technical aspects” (Machlup 1978 p.X)

Unfortunately the development of the Methodology (with capital M, notwithstanding Mc

Closkey’s criticism of it) of Economics as a separate field made that piece of advice obsolete. In

our time is practically impossible to join the two characters, the successful practitioner and the

well read philosopher in one individual. Machlup could and that is the reason why is so interesting

to rightfully understand his position. There is so much sheer ignorance of Philosophy of Science in

nearly every economist writing about Philosophy of Science2 that Machlup’s work stands out from

the group.

Machlup himself felt necessary to explain his “strong taste” for methodology and he did so,

pointing to the Viennese intellectual milieu3 where he grew up as the reason:

“I have often been asked how I developed such a strong taste for methodological discourse.

The answer is easy: in the intellectual milieu in which I lived it would have been surprising

for any student to remain uninterested in methodology.” (Machlup 1978 p.I)

1 Most of his articles in this matter are included in Machlup (1978) 2 On the opposite not many philosophers of science wrote about economics. Caldwell (1994) shows the problems and confusions that this economist’s lack of knowledge while writing about Philosophy of Science had caused through the twentieth century. 3 The classic book about that irrepetible viennese millieu is Janik and Toulmin (1973) and his sequel Janik (2001)

Then, the Austrian author gives an impressive list of some of the most relevant individuals

in that milieu. The list is a who’s who of twentieth century intellectuals and consists of: Menger, Mach, Weber, Schlick, Waismann, Carnap, Neurath, Hahn, Feigl, Wittgenstein, Popper, Gödel, Mises, Kaufmann y Schütz. I have not omitted anyone, because Machlup didn’t.

It’s for Machlup’s “strong taste” in these matters that I think is particularly interesting to read and understand Machlup’s position in the light of some of the most promising developments in Philosophy of Science and make a critical comparison of his work and this recent developments.

As Caldwell (1982) says:

“… it is still clear that Machlup had a better understanding of the philosophy of science that was contemporaneous with his efforts than did Hutchison” and “Machlup’s methodological schooling allowed to formulate a position consistent with the philosophy of science of his time” (Caldwell 1982 p.145)

The main danger of the kind of reinterpretation that is here proposed is always to fall prey of some empty scholasticism. To avoid it, the emphasis must be put in the actual practitioners of Economics because we wish to interrogate Machlup about his methodological position not for Machlup’s memory sake4. This work intends to show that Machlup’s well known and influential position in Economic Methodology can be better understood in the frame of the Semantic Conception, therefore allowing a better elucidation of economists’ practice of science for Philosophy of Science.

In the following section (II) I will briefly analyze Machlup’s position through primary and secondary sources, then in section III I will again briefly but sufficiently for the purpose of this article characterize the Semantic Conception in Philosophy of Science. Later in section IV, I will try to show the coincidences and differences between them and finally in section V, I will extract some conclusions for future work.

II. Fritz Machlup as a Lakatosian precursor

The idea of understanding Machlup’s work as a precursor of Lakatos came to me when I

was introduced to Lakatos’s work in graduate school. I thought I knew Machlup’s work and

Lakatos’conception of science appeared strikingly similar. Apparently I had found my

thesis theme.

Later I discovered that an Argentinian author Gabriel Zanotti had not only thought, but

written and published something very similar5 several years before.

So for some time I shared Zanotti’s interpretation. I will try to summarize it in order to be

able to discuss it. I still share Zanotti’s characterization of Machlup ideas, but I think now,

that they can fit more into the Semantic Conception’s frame than in Lakatos’ Methodogy of

Scientific Research Programs.

Zanotti points two key ideas in Machlup’s position: the notion of indirect testing and his

conceptions of the fundamental assumptions in Economics which he derives from A.

Schütz’ ideal types theory.

4 Although this concern with practicing economists is an important part of Machlup’s legacy. 5 Zanotti (1991). Gabriel has become a dear friend, since then.

As Zanotti rightly states Machlup’s position was refined through his discussion with

Hutchison, and his new understanding of Mises’ apriorism. This new understanding gave

an alternative to Murray Rothbard’s well known position.6

Machlup's position

For Machlup, the main problem in Hutchison’s position was its naivety of not recognizing

different levels of hypothesis. Machlup, instead, distinguished between them a group he

called fundamental assumptions which are not testable but indirectly and in group, not in

isolation.

Therefore to an assumed change, there must be added the assumptions about the conditions

which are empirical... They can be of three different kinds or types: A, B. and C.

Assumed Conditions type A or “type to case” refers to conditions that are normally present.

In Machlup`s words: these refer to conditions that may vary from case to case and

influence the outcome significantly, but are sufficiently common to justify the construction

of types (Machlup 1978 p.150)

The examples include: types of goods involved, cost conditions, elasticity of supply or

demand

The Type B Assumed Conditions or “type of setting” in Machlup words

"refer to conditions which may change over brief periods of time –say, with a change of

government or of the political situation, or during the business cycle- and are apt to

influence the outcome in definite directions." (Machlup 1978 p.150)

Examples of them are bank credit availability, fiscal and monetary policies, trade union

policies, etc.

Asssumed Conditions of the C type or type of economy, refer to

"conditions which may vary from country to country and over larger periods of time, but

may be assumed to be settled for a sufficient large number of cases to justify taking these

conditions as constant" (Machlup 1978 p.151)

Examples of them are social institutions, private property, social customs and usages, etc.

Then, with the interaction of an assumed change, with the fundamental assumptions and

assumed conditions of type A, B and C, a deduced change may be inferred. Only in the case

of this deduced change being repeatedly disconfirmed by experience will fundamental

assumptions be considered, through this indirect testing disconfirmed.

Later, Machlup states clearly that the only flaw he finds in Friedman's classic article7 is that

Friedman forgets that the fundamental assumptions of Economics "should be required to be

understandable, in the sense in which man can understand the actions of fellowmen"

(Machlup 1978 p.153).

6 Rothbard (1957) Rothbard’s article was written to state his differences with Machlup. In the article he calls Machlup several times and in different ways, a “positivist”. So in fact, the first of Mises’s interpretation was chronologically speaking, Machlup’s not Rothbard’s, however Rothbard’s understanding of apriorism has become standard. 7 Friedman (1953)

In one of his last published materials, (Machlup 1980) Machlup says about the discussion if

models are “a priori”

“You may call any model “a priori” because you can “build” the model according to your

own specifications”… Construction is always “a priori”even if you construe with some

experience in mind. The domain of construction needs constructs and postulated

relationships between constructs, but it is itself not the result of observation; it is a

priori”…But it is only a skeleton without flesh” (Machlup 1980 p.1)

Zanotti's interpretation of Machlup

In support of his interpretation of Machlup as a Lakatosian precursor, Zanotti quotes an

article in which Machlup even adopts the same expression than Lakatos, when he refers to

fundamental assumptions as the "hard core" of a theory. And as the article is from 1974

Zanotti considers that Machlup has explicitly accepted his past position as very similar to

Lakato's formulation of Scientific Research Programmes8.

I do not deny that Zanotti seems to have a point, particularly if ones considers Machlup's

semantic meticulosity of which his book on semantics (Machlup1963) is enough evidence,

and his knowledge of Philosophy of Science. I even add to Zanotti's argument another

astonishing linguistic coincidence; in his famous article on verification which sets the

foundations of his position he states that other name that may be given to fundamental

assumptions is "heuristic principles"9. Of course, this is not Lakatos' position which clearly

distinguishes between hard core and heuristic instructions but proofs that Machlup was not

far from it.

Langlois' and Koppl 's position

In their article (Langlois and Koppl) (1991) state the importance of understanding “these

more recent developments” referring specially to Lakatos’ Methodology of Scientific

Research Programs, among others.

“Understanding these more recent developments in philosophy of science is useful for

understanding Machlup’s methodological views. For, in many respects, his position is

precisely an anticipation of these modern developments”10

Langlois and Koppl suggest that Machlup’s compromise between ultraempirism and

apriorism was similar to Lakatos’ compromise between Popper and Kuhn. I agree that there

is a resemblance but that is superficial: Machlup was a practicing economist with a serious

knowledge of philosophy of science, trying to help stating some methodological guidance

for other practicing economists. Lakatos was a philosopher trying to find a middle way

between to other philosophers’ position, his main purpose was that. Machlup’s purpose was

different he tried to make better economics.

The authors note that Machlup uses sometimes “model” instead of “theory” but they don’t

stress the importance of that change, and the reason he gives for that change11

, by doing this

I think they miss a very interesting point.

8 Machlup uses the expression while referring to the concept of "model". 9 Machlup 1978, p.145 10 Langlois and Koppl (1991) p.88 Emphasis in the original. 11 See Section IV.

Langlois and Koppl analyze Alfred Schütz’s influence on Machlup and conclude that his

position is basically derived from Schutz’s. I do not deny his influence, but I disagree in its

degree. Nevertheless I subscribe to one of the authors conclusions:

“For one thing, Machlup recognized more clearly than Schutz, that our choices are not

between individual models, but among theoretical systems -among hierarchical or quasi-

hierarchical structures of inter-related models” (Langlois and Koppl p.92)

This is precisely a compelling reason to consider Machlup a precursor of the Semantic

Conception, which can be rightly described as considering theoretical systems as

hierarchical structures of inter-related models.

Other opinions

Wenceslao González in his article (González 2009) makes a brief reference to Machlup

while analyzing Lakatos: quoting Spiro Latsis approvingly he states that Machlup's position

is closer to Lakatos' idea of hard core, but he underlines also, that there is nothing in

Machlup about predicton of new facts.

In spite of these arguments, I believe that Machlup's position is better understood within the

framework of the Semantic Conception in Philosophy of Science as a precursor of this

family of thought in Philosophy of Economics more than a Lakatosian precursor.

Before arguing in that way, I will briefly characterize the Semantic Conception in

Philosophy of Science, for the reader who is not familiar with it. Therefore, anyone with a

working knowledge of Philosophy of Science can safely skip next section and go straight to

the fourth

III. The Semantic Conception

For the purposes of this work I will follow a quite standard textbook in Philosophy of

Science from two authors that happen to be part of the Structuralist current, one of the main

ones within the Semantic Conception. (Diez y Moulines 1999)

They refer to the “family of the semanticists” as including some positions that, although

their family features allow calling them part of a certain family, also show individuating

differences. 12

I will concentrate particularly on those common features that allow including a particular

position within the Semantic Conception, as I intend to show that Machlup’s work is better

understood as a precursor of this particular family in Philosophy of Science.

Starting from its chosen name, the Semantic Conception tries to establish its differences

with the Received View that emphasizes the syntactic aspects of science. For the semantic

conception a scientific theory is formulated by a set of models, not formulated by

presenting a series of axioms, because theories are not only a set of propositions13

. As a

consequence of this enlargement of the concept of theory, a term can be labeled

“theoretical” or non-observable only in reference to a theory T, therefore calling them t-

theoretical. Thus it proposed a solution to one of the more difficult questions of the

12 The Wittgensteinian reference is, of course, intended by the authors. 13 I will use “proposition” as used in modern logic of first order, also called propositional logic.

Received View, the definition of terms that were defined only negatively as non-

observables. And as the conception of model is fundamentally semantic, the chosen name

intends to underline that idea.14

A classic work of the Structuralist branch of the Semantic Conception (Balzer, et.al 1987)

says:

“The fundamental intuition underlying our approach is that the smallest significant or

interesting parts of empirical science –things like empirical laws- are best characterized, not

as linguistic entities, but as model-theoretic entities – classes of set-theoretic structures”

(Balzer, et.al p.xxi)

Of course is a matter of emphasis, because it is not true to say that the Received View has

overlooked totally the semantic aspects involved in Philosophy of Science15

That is why the

Semantic Conception must be understood as an intent to answer some critiques targeted

originally to the Received View.

The common family features in the Semantic Conceptions can be summarized in three

characteristics: a) a theory is a set of models b) that set of models is identified by the

empirical phenomena that it intends to explain c) that pretension, creates the empirical

assertion of the theory, which consists in asserting that, between the models determined by

laws and the empirical phenomena, there is some kind of relationship, that must be cleared.

The first common feature states that theories are not a set of propositions, but a set of

models. These models are determined by a set of principles, also called laws or usually

axioms that point out to what entities or class of entities it is going to make reference. They

delimit the universe of discourse.

The second feature adds the empirical aspect, pointing the empirical phenomena that the

theory pretends to explain. Models are not determined as a self-contained activity, but to

explain empirical phenomena. These empirical targets are called “intented

applications”(Balzer et.al) or “intended scope” (Suppe 1977)

The last feature makes the theory’s empirical pretension explicit; that there is a relationship

between its models and empirical phenomena. This relationship can be of very different

kinds according to different members of the Semantic Conception: can be one of identity,

of approximation or of subsumption. But the point is that models “fit” the systems the

theory wants to explain.

In order to end this brief characterization of the Semantic Conception, another key

consequence of considering a theory a set of models instead of a set of propositions is that

truth can not longer be predicated about theories, that means that theories can not longer be

directly true or false, because they are not propositions and truth or falsehood can be only

predicated about propositions. The attribution of truth or falsehood can only be made to a

theory indirectly thorough its empirical assertions, which are propositions.

14 Other usual way to refer to the Semantic Conception is as the Model-Theoretical Conception 15 Particularly Rudolf Carnap wrote extensively about semantically aspects of the language of science in Carnap (1942) Carnap (1945),Carnap [1947] (1970) and of course in Carnap [1963] (1997)

IV. Machlup as a precursor of the Semantic Conception

The key article in which the similarities between Machlup’s position and the Semantic

Conception are clearly stated is originally from 1960. (Machlup [1960](1978). In that

article in a part titled Construct and Model, Machlup states two points I will analyze

with some detail: the definition and the form and composition of models.

a) The Definition of Model

The first point that gets Machlup’s attention is the definition of a model. Initially, he

condemns its reckless and sometimes sloppy usage. Of course, none of these

accusations can be directed to the Semantic Conception which shares with Machlup a

careful attention to detail and precision.

Machlup then provides his own definition of a model as a system of interrelated

constructs and distinguishes it from a theory, stating that a theory is more than a model.

His definition of theory is strikingly similar to the Semantic Conception. In his words:

“A theory may be regarded as a model plus a specification of the empirical observations to which it applies”16

And later, in the same page, he adds

“Thus, to repeat applicable or applied theory consists of two parts 1) a pure model and 2) a specification of the empirical facts (described ordinarily in terms of real types or operational concepts) whose changes it will explain or predict.17”

Machlup’s definition of theory is nearly identical to the Semantic Conception’s, it includes

a model and an empirical aspect. There is not just a terminological coincidence, there are

not just using the same terms, they are saying something very similar.

b) The form and composition of models

After suggesting taxonomy of models, Machlup states that the only pertinent for his

analysis are the verbal and the symbolic ones, which he divides between geometric and

algebraic. But states that in any model its function is to show connections, relationships

and interdependences. In his words:

But in all forms the function of a model is to exhibit connections, relationships,

interdependences. There would be no reason for making a model except to show how some

things “hang together” or of what “elements” they are composed or how they “work” or

are “adjusted”18

16 Machlup [1960](1978) p. 178 emphasis added. 17 Machlup [1960](1978) p.178 18 Machlup [1960]1978 p.176

Again, we can see similar characteristics with the Semantic Conception, since both state the

key aspect of empirical phenomena in model building. As a difference I must point that

some authors within the Semantic Conception (Moulines particularly) have repeatedly

affirmed also the unavoidable intertheorethical aspect of model building. But this is not a

feature that can be attributed to all members of the Semantic family.

Of course these references, although very clear, are not of much value is they are isolated.

Therefore, I will try to show next that this is not the case with Machlup.

For example during his famous discussion with Hutchison (Machlup 1956) on referring to

Hutchison’s problem to understand the notion of indirect testing, he states that the root of

the problem is Hutchinson’s not acceptance of the existence of a third kind of proposition19

which although truth or falsehood can not be predicated of them, they still have empirical

content.

In his words:

If so, he rejects a third category of propositions used in most theoretical systems: the

heuristic postulates and idealized assumptions of abstract models of interdependent

constructs useful in the explanation and prediction of observable phenomena. Such

propositions are neither “true or false” nor empirically meaningless. They cannot be false

because what they predicate is predicated about ideal constructs, not about things or

events of reality. Yet they are not empirically “meaningless” because they are supposed to

“apply” or correspond broadly to experienced events. They cannot be “falsified” by

observed facts, or even be “proved inapplicable” because auxiliary assumptions can be

brought in to establish correspondence with almost any kind of facts; but they can be

superseded by other propositions which are in better agreement with these facts without

recourse to so many auxiliary assumptions”20

Then in a foot note he points out that these were call “procedural rules” by Kaufman,

“complex analytical propositions” by Montague and “constitutive, non epistemic” by

Margenau.21

I think that this particular passage which I quoted extensively shows the main problem with

sintacticism that reduces a scientific theory that is a complex social construct to a group of

propositions. May be that’s why Machlup as many others started later to talk about

“models”, although he did not like much this polysemic term.22

In a previous work, Machlup after stating that models are indispensable for thinking

although like the famous Monsieur Jordan of Moliere with prose, we may not be aware of

using them, affirmed that there is no need to use that particular term “model”.

19 I called these linguistic entities propositions after Machlup, but by definition an atomic proposition is the smallest unit of meaning of which truth or falsehood may be predicated. 20 (Machlup [1956] (1978)p.496 21 Caldwell (1994) correctly states that this third category is unnecessary if the principle of indirect verification is applied. 22 For Machlup it was a weasel word” and “catch-all word” ,in other words, a term that through its careless and polisemic usage, keeps it outside intact but is has no meaning inside, as an egg which was sucked by a weasel, See also Machlup (1963) p73-96 where “structure” is analyzed About “model” see Machlup (1978) p.175

Again, in his words:

“We think with the aid of models, whether we know it or not… Of course there is not need

to use the word “model”. Other words have been used in the same sense –for example

“construct” and “schema”23

Then in a later work (Machlup1961) Machlup quotes Richard Braithwaite and in his

distinction between higher level hypothesis which can be never be directly nor indirectly

verified isolately but together and the low level generalizations that can and are

permanently tested in social sciences.

Machlup’s quote is this:

Only a whole system24

of hypotheses can be tested by deducing from some set of general

postulates and some sets of specific assumptions the logical consequences and comparing

these with records of observations regarded as the approximate empirical counterparts of

the specific assumptions and specific consequences (Machlup,1978 p.354)

Finally in one of his last published works on the matter, (Machlup 1978) Machlup makes

an erudite description of different authors and their methodological positions. When he

analyzes Hans Reichenbach’s work he chooses to quote the preface of “Experience and

prediction” and precisely Reichenbach’s reference to indirect propositions which only their

relationship to direct ones (referred to physical facts immediately observable) gives them

some degree or probability.

It’s seems clear that Machlup saw the problems that some aspects of the Received View

presented, and he tried persistently to solve them, basically creating new categories of

propositions. The real limitation was the syntactic view that considered theories as

propositions.

Conclusions

It’s difficult to deny Zanotti’s position that makes Machlup a Lakatossian precursor

particularly because I once shared that view. Yet I believe now that Machlup’s similarity

with the Semantic Conception is deeper.

Of course this not means saying that Machlup was a crypto semanticist that will be an

exaggeration of presents25

, just to state that the well developed frame of the Semantic

Conception in Philosophy of Science allows to continue, to expand and to complete some

answers Fritz Machlup’s work aimed to.

23 (Machlup,1978 p.76) 24 Machlup’s emphasis 25 Although a degree of presentism is unavoidable in every reconstruction, making an historical reconstruction impossible, its exaggeration is usually labeled as “whiggish” after Herbert Butterfield’s (1931) book.

These conclusions do no intend to be than a scholastic reinterpretation of Machlup’s texts

but an approach trying to show that the Semantic Conception is compatible to and even

anticipated by the Austrian Economists’ work.

The main problems that Machlup confronted in the methodological area were originated in

the bounds of the Received View. Those problems are clear in the necessity of introducing

a third category of propositions which although having empirical content, truth or falsehood

can not be predicated of them. Machlup followed Kaufman and Reichenbach on that,

showing again his erudition in Philosophy of Science.

The Semantic Conception solves the problem and removes the bounds of the Received

View by changing its conception of what scientific theories are, making them complex

social constructs26

and not just propositions. Machlup shared this point as I showed

previously with a very important difference: Machlup was a part of an individualistic

tradition and therefore always thought of models as individualistic mental constructs. The

Semantic Conception denies that individualistic character and stresses instead the social

aspect of this constructs. Although Machlup worked intensively in the production and

distribution of knowledge27

- probably because of his individualistic formation- he missed

the unavoidable communality of the scientific enterprise.

It seems probable that Machlup’s rare erudition in the field of Philosophy of Science, made

him aware of the shortcomings that the Received View was showing under the heavy

criticism it was experiencing.

He dealt also with the problem of the aprioristic position of his teacher, Ludwig Von Mises,

which he cleverly solved by stating that models as mental constructs can be called “a

priori”.

It was clear that although Machlup was against using the term “model” for its polysemous

character he stills used it to show that it was a different entity than a theory, because a

theory was in Machlup’s definition a model plus a specification of the empirical

observations to which it applies. This inclusion of the empirical intends is the Semantic

Conception`s proposed solution for the famous “theoretical terms problem”

This strikingly coincident definition of one the most important elements in Philosophy of

Science – the meaning of “theory”- is the main reason to reexamine Machlup’s works as an

earlier precursor of the Semantic Conception.

To do so, may help to establish a new understanding of Machlup’s works and, more

importantly, to a new elucidation of todays practicing economists’ practice.

26 Semanticists still share Machlup’s search for clarity and content. Their conception of theories as complex social constructs does not give up on this aims. 27 Machala (1973)

.