A Lesson from Economic History: Idealization and Ceteris Paribus Clauses

Jennifer Jhun

University of Pittsburgh

Abstract: 
This paper investigates the historical background of ceteris paribus usage in economics. I argue that the explicit invocation of idealization via ceteris paribus, or the ``all-other-things-equal” clause, that is used in order to construct economic models differs from the notion often debated in standard ``completer”-accounts in the contemporary literature. The naïve view espoused is that ``If A, then ceteris paribus B” is an abbreviation for “If A, then also if X and Y and Z…then B,” where X, Y, Z are blanks to be filled in either by appeal to more ``fundamental sciences” or by information that too inconvenient to make explicit (if we know it at all). But the history of economics reveals a different usage. Using economics as a case study, I will clarify its use, in particular with respect to partial and general equilibrium analysis. My starting point is Alfred Marshall’s seminal 1890 work, The Principles of Economics, in which the ceteris paribus is spelled out as a tool for being able to effectively circumscribe economic problems by specifying the relevant variables (and ruling out others). In his writings, Marshall was clearly concerned with the advantages and disadvantages of what one might call idealization. Furthermore, the motivation for idealization via ceteris paribus was not merely to make a problem computationally manageable. The current philosophical literature concerning the status of social science laws as hedged ceteris paribus statements misses entirely specific methodological considerations actual economists have had in mind for some time when they formulate economic laws. The historical trajectory onward also shows that the kinds of problems that economists were concerned with – with Piero Sraffa’s 1920’s papers as paradigmatic – diverge from the straightforward complication that completer-style accounts put forth to be solved. That is, more complicated economic models that shave away idealizing assumptions do not do so by filling in more blanks; nor is this endeavor the kind of thing that economists do or should engage in. What this investigation reveals is an alternative conception of ceteris paribus (and a different set of accompanying difficulties) that breaks away from presumptions about what scientific laws do. This allows us considerable space to reformulate the aim of economic statements in a way that is faithful to economic practice and history itself.