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If You’re So Smart: The Narrative of Economic
Expertise. By Donald N. McCloskey. Chicago:
University of Chicago Press, 1990.

he book If You're So Smart continues and extends the anal-

ysis of positivism in economics presented in The Rhetoric of

Economics. Here, once again, Donald McCloskey champions
the claims of rhetoric. He applies his approach to several issues of
economic history and lambastes economists who don the mantle of
science for their forecasts of the future.

McCloskey’s critics often condemn him as an irrationalist who
wishes to substitute myths of his own devising for the dictates of
reason.’ This accusation the author firmly rejects. He does not wish
to expel fact and reason from economics; instead, he wishes to clear
a space for literary understanding. Method, in his view, rests on
a “rhetorical tetrad—fact, logic, metaphor, and especially story”
(p. 24). Economists cannot proceed untrammeled by the constraints
of fact; however, the world does not compel a simple response but
leaves room for alternative accounts.

These accounts make use of the devices of literary persuasion.
Rather than speak of a theory that confronts reality, McCloskey
prefers to talk of “metaphorical and narrative questions [which]
answer each other” (p. 10). The use of rhetoric aims to convince. Truth
in economics, as in other academic disciplines, rests to a large extent
on consensus among the subject’s practitioners.

McCloskey writes with clarity and force, ably applying in practice
the literary skills he endeavors to promote. His views on proper
method, however, strike me as largely unpersuasive. The positivists
whom McCloskey opposes divide meaningful statements into two
classes: empirical and necessary. Only the former type secures new
tnowledge since logical necessity is a matter of linguistic convention
and analytic statements are tautologies. (Necessarily false state-

lan example of such is Hans-Hermann Hoppe, “In Defense of Extreme Rationalism:
Thoughts on Donald McCloskey's The Rhetoric of Economics,” Review of Austrian
Economics 3 (1989): 179-214.

The Review of Austrian Economics, Vol. 5, No. 2 (1991): 123-127
ISSN 0889-3047

123


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124 The Review of Austrian Economics, Vol. 5, No. 2

ments are meaningful, but for obvious reasons these need not be
taken up here.) Whatever in language is neither empirical nor neces-
sary is in strict terms without meaning. To claim that murder is
wrong, e.g., is simply to express one’s rejection of killing. Nothing
factual has been asserted.”

McCloskey remains the prisoner of the positivist theories he so
roundly condemns. If positivists dismiss the unverifiable as poetry,
McCloskey simply reverses the usual moral positivists draw from
their partition of language. “Poetry” is not bad but good: science
extends far beyond the limits to which positivists desire to confine it.
Nowhere does McCloskey challenge the positivist theory of meaning
itself. He fails to consider the view that strict knowledge may be
obtained through other methods than those favored by positivists.
(The praxeology of Mises is of course a key instance of such a view.)
Instead, he tacitly agrees with his professed foes about scientific
knowledge but calls for the inclusion in science of the emotive lan-
guage that positivist method has as a principal aim to expel.

McCloskey states, e.g., “a metaphor used in an economic story is
not ‘true’ in a simple way” (p. 64). By “metaphor” McCloskey does not
intend a particular trope alone but rather all use of language which fails
to be strictly factual in the positivist sense. Almost all statements used
in economics count as metaphorical for McCloskey; since these state-
ments are not fully verifiable they cannot be literally true. Of course, a
metaphor in ordinary language is literally false: but, unless one accepts
McCloskey’s view of literal meaning, a “metaphor” is his extended sense
can be an ordinary language sentence that is true without qualification.
“The value of an economic good depends on its marginal utility” is,
if IT have understood McCloskey’s usage, a metaphor, since the
statement can be tested only approximately. But why not take the
statement as non-metaphorically true, in the Austrian manner? I
wish that McCloskey had examined the Austrian view, rather than
simply embrace what his quondam Chicago colleagues reject while
leaving unchanged their underlying analysis. Like them, he believes
that the extent a statement cannot be verified, it lacks literal meaning.

One may, I think, go further. Even if McCloskey holds the view of
literal meaning I have attributed to him, he ought still to examine
the Austrian position. Praxeology starts from the axiom of action and
a few additional assumptions and attempts to deduce the body of
economic theory through common-sense reasoning. Mises devoted
considerable effort to a refutation of positivism, and to good purpose.

2 do not wish to claim that all logical positivists adopt the group of positions noted
here.


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Book Reviews 125

But do his own findings require one to reject the positivist criterion
of meaning? I do not think so, unless one adds (as nearly all positivists
do) that a scientific statement must be subject to continual experimental
test. But why must it? The common-sense reasoning used by Austrians
seems to generate propositions that are empirical, to the satisfaction of
the strictest supporter of verifiability. The fact that Austrians hold a
different position about what sort of tests need to be used in science is
altogether a different question. I do not wish to defend the verifiability
criterion—quite the contrary. But even those who acknowledge it have
no excuse to turn a blind eye toward praxeology.

McCloskey might reply that he has not neglected the deductive
method. Praxeology claims to establish truth. In so doing, it falls victim
to an argument McCloskey advances to show that we have no direct
access to reality. (The argument is found in Rhetoric rather than If You're
So Smart.) The argument is this: To determine whether our concepts
accurately grasp reality would require us to examine reality without
using our concepts, since it is their ability to convey truth which we wish
to assess. But this we cannot do: We use concepts in all our knowledge.
Absent any direct, non-conceptual grasp of reality, we must stay within
the circle of our concepts. Once our inability to free ourselves from our
conceptual net is accepted, we cannot shrink from the next step. We
must recognize that we construct our concepts: they are found rather
than made. To the extent that the Austrian method of deduction claims
that its results are literally true, it must be rejected.

The argument just presented lacks the decisive force McCloskey,
closely following Richard Rorty, attributes to it. What exactly is
meant by the possibility that none of our concepts enables us accu-
rately to grasp reality? “Negation” and “identity” are concepts we use:
is there a “world-in-itself” to which they do not apply? The assumed
non-conceptual world is, ex hypothesi, incapable of description. Why
assume that it is possible?

The foregoing remarks do not suffice to dissolve skepticism. Even
if some of our concepts cannot be imagined incapable of application,
it does not follow that all of them share in this privileged status. Does
not McCloskey’s problem then recur? To determine whether a concept
applies to reality, must one not “step outside” the concept and exam-
ine reality directly? And how exactly is one to do this?

This skeptical question cannot easily be answered, and I fear that
I must take refuge in the evasion that this is not the place to address
difficult issues in the theory of knowledge. Before turning from the
issue, one needs to ask: Does McCloskey’s problem require us to
regard claims to knowledge as at least in part constructions based on
metaphor rather than depictions of an independent world? Not at all.


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126 a The Review of Austrian Economics, Vol. 5, No. 2

McCloskey’s difficulty has to do with verification—how do we know
that our claims to depict. the world accurately are trué? Even if the
question cannot be answered, our claims have not been undermined. To
elicit a skeptical outcome from his question McCloskey needs to add the
controversial “KK” principle— if S knows p, then S knows that 'S knows
p. (Perhaps a weaker variant of the principle will do:) Suffice it to say
that the principle is a dubious one: absent an argumént for it, McCloskey
has succeeded only in raising an interesting question. -

In any event, even if one were to grant McCloskey the gap he
alleges between our concepts. and reality, economics emerges un-
scathed. Economics is concerned with human action: questions about
the world independent of our concepts-do not arise in it. One might
object that economics deals with land, natural resources, techniques
of production, etc., as well as action. But this is not to the point, since
the items just mentioned do not belong to the noumenal world. They
fall under our concepts, whatever else might not. McCloskey’ s foray
into epistemology, though valuable, is not relevant to economics:

Though I have considerable reservations about McCloskey on the
theory of knowledge, he seems.to me much better when he takes up
questions within economics. He discusses insightfully the views of
several economic historians on, the British economy in the late-nine-
teenth century. He questions whether it is useful to speak of decline,
‘when in point of fact the British economy was expanding. The higher
growth rate of Germany in some industries. hardly suffices to show
disaster for Britain. Here McCloskey makes an excellent case for the
value of attention to metaphor. His discussion of what “decline” means
is a model of acute literary analysis. His presentation of the career of
Alexander Gerschenkron, 6ne of his teachers, is also informative.

Unfortunately, McCloskey cannot leave philosophy alone; and in
the central issued addressed i in his book, he mars an otherwise useful
treatment by dubious remarks.’ He denies that economists can accu-
rately foresee the future of the economy. Toward those who make such
predictions, he asks the ¢ ‘American question” that forms his title: If
you're so smart, why aren’t you rich? If anyone could foretell the
economic future, he would bein a position to gain for himself fabulous
wealth. Why would he disclose his goldmine to others? :

McCloskey's skepticism about economic predictions fits in well

3McCloskey makes several technical ‘mistakes. The statement about, inflation in a
parallel world should be in the indicative, not the conditional sense (p. 91). Leibniz did
not hold that no possible worlds are similar to the actual world (p. 93). Church’s
theorem does not say that it is ‘impossible: to predict the future ‘of mathematics (p. 131).

A Pareto-superior change is confused with a condition of Pareto optimality; and. a
change that does not meet McCloskey’ s ‘condition can be Pareto superior (p. 136).


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Book Reviews 127

with the Austrian view, and his ironic account of economic forecasting
amuses and instructs. At times, McCloskey fails to distinguish two
separate issues: is it possible to predict the future of the economy? If
it is, why would the information be disclosed to the public? Perhaps,
for all McCloskey has shown, there are successful predictors who keep
their methods to themselves. Of course, McCloskey does not deny that
there are successful entrepreneurs. The point at issue is whether
there are methods of foreseeing the future.

Worse is to come. McCloskey informs us: “Humans react to
economic predictions in ways that dampen or magnify the predic-
tion” (p. 121). Hence the disclosure of a prediction will result in its
falsification, as people take account of it in guiding their behavior.

This argument begs the question. If a prediction is correct, then
people will not react to it in a way that falsifies it. It is logically
possible that they modify their behavior in the ways McCloskey
specifies, but a successful prediction does not require logical neces-
sity. To say that people will modify their behavior is just to assume
that the prediction will fail, the presumable point of the argument.

McCloskey’s claim that self-prediction is impossible fails for the
same reason. He states: “The impossibility of self-prediction has
become ‘a commonplace in philosophy. You do not know today what
you will decide tomorrow, unless you have already decided it, in which
case it is not tomorrow but today that you decided it” (p. 130). Is that
so? I know what I shall have for breakfast tomorrow, but I have not
now decided what to have. That I shall do tomorrow. The impossibility
involved in this last remark I am entirely unable to fathom.

Returning to his epistemological theme, McCloskey offers his
readers an important lesson: “Dogmatic Marxists, dogmatic neoclas-
sicals, dogmatic Austrian economists, dogmatic institutionalists, who
have put each other’s writings on an index of forbidden books, are
ethically dangerous, all of them. They are true believers, or rather,
believers in truth. The best lack all conviction, while the worst / Are
full of passionate intensity” (p. 146).

McCloskey has misread the familiar lines: Yeats did not praise
tolerance but described an imminent apocalypse. No doubt McC-
loskey, whose analysis of a Wallace Stevens poem (pp. 97-99) shows
remarkable skill, knows “The Second Coming” perfectly well. Perhaps
he is making a small joke at the unwary reader’s expense. In any
event, non-dogmatic is, if not the last adjective one would apply to
McCloskey, very near the last.

David Gordon
The Ludwig von Mises Institute