An Australian friend of mine tweeted that he was seeing economists criticizing #MMT for its lack of microfoundations:
This typical display of ignorance—by economists, not Con!—masquerading as wisdom prompted me to reply:
Looking for an accessible PDF of Anderson’s 1972 paper {Anderson, 1972 #4697} led to finding the one linked in the tweet above: an open access reprint of the article in a 2014 issue of the journal Emergence: Complexity & Organization. I’ve attached that reprint to this post, and encourage you to read it, both the original and the fascinating commentary on how the article came to be.
The introduction to Anderson’s paper, written by Jeffrey Goldstein, explains that Anderson was involved in an acrimonious debate within physics over the role of reductionism, and it had echoes of the obsession with microfoundations that Con had experienced in his Twitter feed:
It is worthwhile to recognize that Anderson’s paper was written within the context of an ongoing, and at the time vituperative debate, between particle physicists, on the one hand, with their highly effective Standard Model of the so-called fundamental forces (such as weak, strong, electro-magnetic on up to their final unified “theory of everything”) and mostly negative attitude towards emergence in the past, and solid state or condensed matter physics, on the other hand, whose investigations into phenomena such as phase transitions, superconductivity, ferromagnetism and so on required the introduction of constructs and methods pertaining to higher scale dynamics, organizing principles, and emergent collectivities. Two of the chief antagonists in this conceptual battle have been the Nobel Laureate particle physicist Steven Weinberg known for his work on the unification of the electro-magnetic and the weak forces and Anderson who of course is another Nobel Prize winning physicist (on this dispute see Silberstein, 2009). This clash shows itself in this classic paper through Anderson’s attack on strident reductionism, of which Weinberg has long been a vigorous proponent, along with Victor Weiskopf whose reductionist stance involving extensive and intensive explanatory strategies Anderson takes on in his paper. (Goldstein, pp. 118-19)
The key point in Anderson’s paper was not a rejection of reductionism per se, but the obverse of reductionism, which he termed “constructionism”:
In his classic paper, Anderson did not then, nor does he now, completely renounce reductionism as such as if he were calling for an embrace of some kind of “holism”. Instead his criticism is of the totalizing type which he describes through his notion of the “constructionist hypothesis”: “The ability to reduce everything to simple fundamental laws does not imply the ability to start from those laws and reconstruct the universe“. (Goldstein, p. 119)
This attitude is the essence of the microfoundations obsession: the belief that everything should be constructed from its lower level foundations: that macro should be constructed from micro. Leaving aside that Neoclassical micro itself is a logical and empirical travesty, Anderson’s key point was that, though a hierarchy of sciences can be constructed:
according to the idea: The elementary entities of science X obey the laws of science Y. But this hierarchy does not imply that science X is “just applied Y*” At each stage entirely new laws, concepts, and generalizations are necessary, requlring inspiration and creativity to just as great a degree as in the previous one. Psychology is not applied biology, nor s biology applied chemistry. (Anderson, p. 393).
Likewise, macroeconomics is not applied microeconomics—but that is what economists have been trying to do ever since Muth developed the fantasy of “rational expectations” {Muth, 1961 #1900}.
It would be better to start with Anderson’s paper, rather than the introduction—ironically the introduction is more difficult and more specialized than the original paper (though it is still worth reading if you’re, like me, an obsessive about these things.