Karl Pribram on Economic Fictions (1958)

Karl Pribram’s journal book review of Paul K. Crosser’s Economic Fictions—A Critique of Subjectivistic Economic Theory turns an assessment of Crosser’s polemic into a concise argument about the legitimacy of theoretical fictions. Its central objection is methodological: identifying assumptions as fictitious does not establish that they are intellectually illegitimate. What matters is how those assumptions organize reasoning and whether they produce erroneous interpretations of economic relationships.

Pribram begins by describing Crosser’s book as a series of essays on representative “subjectivistic” economists, including Thünen, Menger, Wieser, Böhm-Bawerk, J. B. Clark, Jevons, Schumpeter, Keynes, and Spann. Crosser presents their departures from Smith and Ricardo as a dissolution of meaningful economic concepts. Pribram treats the book’s philosophical vocabulary skeptically, suggesting that labels such as intuitionism, alogism, and mysticism substitute denunciation for analysis. The review then moves from this characterization to the underlying issue: Crosser’s definition of fiction makes subjectivistic reasoning appear to abolish the distinction between reality and appearance.

Against that definition, Pribram invokes an alternative understanding of fiction as a statement acknowledged to diverge from observation and to contain a false element. Such acknowledgment need not invalidate its analytical use:

Thus defined, "fictions" have been a perfectly legitimate, even indispensable instrument of all patterns of thought which are not based on the belief that "reality" can be grasped directly by human reason and that "truth" can be established directly with the aid of appropriate concepts.

The qualification is decisive. Pribram connects the use of fictions to an epistemology in which thought constructs representations rather than directly apprehending reality. He challenges Crosser’s opposition between sound classical reasoning and fictitious later theory by pointing to fictions within the authorities Crosser invokes. In Pribram’s account, Newton’s atom functions as a fictitious standard unit, while Smith and Ricardo sometimes treat the standard unit of labor costs similarly. He also cites Vaihinger’s discussion of fictions in Smith. These examples undermine the claim that fiction is a distinctive defect of postclassical economics.

Pribram nevertheless recognizes a historical change in the intensity and self-consciousness of its use:

It is obvious that an intensified use of fictions has been made by subsequent authors who realized far more clearly than had Smith or even Ricardo, that the human mind can, at best, arrive at coherent and consistent pictures of reality constructed in accordance with the rules of human reasoning.

This does not amount to a blanket defense of marginalism. Pribram explicitly leaves open how far particular fictions may have generated mistaken economic interpretations. His proposed alternative to Crosser’s polemic is a historical and logical inquiry into their changing functions. Such an inquiry would contribute both to the history of economic thought and to the broader history of Western reasoning.

The review closes by identifying what Crosser’s attack positively defends: value as “societal appraisal,” distinctions between essential and nonessential properties, lasting and passing phenomena, intrinsic nonmonetary and extrinsic monetary value, and explanations of distribution through social rather than functional relationships. Pribram reads these commitments as expressions of a deeper conceptual allegiance:

On closer analysis it appears that, what Crosser is fighting for is the preservation of a medieval heritage: the belief that the substance concept and the consequences drawn from it are indispensable elements of economic analysis.

The concluding charge shifts the dispute from particular economic doctrines to their philosophical foundations. For Pribram, Crosser assumes that stable essences must anchor economic explanation, then condemns theories that proceed through constructed representations. The review’s lasting relevance lies in its distinction between criticizing an abstraction’s explanatory consequences and rejecting abstraction because it is knowingly fictitious.