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Marginal analysis a replacement for ceteris paribus clauses?

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Inquisitor Posted: Wed, Apr 9 2008 6:39 AM

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So I just finished reading Dr Long's article Realism and Abstraction in Economics: Aristotle and Mises versus Friedman... and he made some interesting points in it. One was that economic laws as described by the Austrians tend to be non-precisive, that is to say, they omit certain non-essential factors (contrast this with precisive abstraction, in which case what is omitted is specified, e.g. the absence of entrepreneurial error under perfect competition.) He makes a comment in the article to the effect that by thinking in terms of non-precisive abstraction, one can almost entirely eliminate ceteris paribus clauses, or at least narrow them heavily. My thought was that this sounds an awful lot like marginal analysis - i.e. a phenomenon's effect is that which would not have taken place in its absence (e.g. if a minimum wage were absent, unemployment would not have risen to the extent that it had, or conversely employment fallen to the extent that it had.) So, could this sort of counterfactual marginal analysis be a way of ridding of ceteris paribus clauses entirely?

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MacFall replied on Wed, Apr 9 2008 10:01 AM

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I wouldn't say "entirely", because ceteris paribus is an efficient way to explain a concrete (if unrealistic) model. However I think it could relegate ceteris paribus clauses to basic micro classroom discussion (and people who are lazy or short on time).

Pro Christo et Libertate integre!

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Inquisitor replied on Wed, Apr 9 2008 10:20 AM

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I suppose there would be some limited scope left for them. At any rate, it would render the explanation of economic laws far more plausible, IMO.

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Ego replied on Wed, Apr 9 2008 2:01 PM

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Apparently I can't read! Could you try to clarify what you mean?

I understand marginal analysis, I understand ceteris paribus clauses, and I sort of understand precisive and non-precisive abstraction. I don't really understand how you are tying non-precisive abstractions to marginal analysis though!

I'm trying my best; do you mean the following?

"Marginal analysis doesn't require that all other things be equal, so ceteris paribus clauses aren't needed. Because non-precisive abstraction implicitly takes everything into account, ceteris paribus clauses aren't needed, either."

[edit]:clarity

Don't allow leftists to play games with definitions! Some of the libertarian-leaning leftists at this forum will try to redefine "left-wing" back to its original defition (Third Estate, limited government, free-markets, laissez-faire reforms, etc.). Fine! We non-leftists can't stop them from using their own personal definitions; they can use whatever labels they want to describe any concept they want.

However, they have the audacity to then use their personal definition of "left-wing" (remember, the original definition, which is no longer valid) to prove that modern leftists are more libertarian than modern rightists! They will say that libertarianism is "inherently leftist" (again, using the original, no longer valid definition), and use that to insist that we should prefer and side with modern leftists over modern rightists.

Question their motives.

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Inquisitor replied on Wed, Apr 9 2008 2:44 PM

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Well ceteris paribus clauses are typically attached so that a theory will not be falsified by the simplest variances with empirical evidence. If, however, a phenomenon is analyzed in terms of how much it contributes to a given outcome, and what its absence would mean (this is essentially the marginal bit), ceteris paribus clauses can be narrowed greatly or even eliminated in some cases. This is what Long seems to imply, and I think he's right.