Economics is a science - at least positive economics must be. And science is in part applied mathematics, in part empirical observations and tests. Looking at the history of economics, one cannot find much testing done before the twentieth century, and even the collection of data, even in the manner Marx engaged in, was not common in his day. It is true that economic policy is an older field, and in that field much information is deployed for the purpose of (...) prescribing a course of action. But this is not to say that the information procured for that purpose is either based on observation or has been tested. In the seventeenth century some alchemists and economists hoped to boost the economy by manufacturing gold, others feared inflation; and the British Parliament legislated against manufacturing gold. David Hume proved in the eighteenth century - quite a priori - that doubling the quantity of gold will only double the price of each commodity and he thus set things at rest for a while. Later the question was opened again when Marx, for example, showed historically how the gold robbed from the Americas started Europe's boom. Yet the theory - the quantity theory of money, as it is called - which Hume proved a priori, is still contested and still hardly tested to economists' satisfaction: is the price level fixed mainly by the amount of available money? Some economists answer yes, others no. (shrink)

Can social phenomena be understood by analyzing their parts? Contemporary economic theory often assumes that they can. The methodology of constructing models which trace the behavior of perfectly rational agents in idealized environments rests on the premise that such models, while restricted, help us isolate tendencies, that is, the stable separate effects of economic causes that can be used to explain and predict economic phenomena. In this paper, I question both the claim that models in economics supply claims about tendencies (...) and also the view that economics, when successful, necessarily follows this method. When economics licenses successful policy interventions, as it did in the case of the Federal Communications Commission spectrum auctions, its method is not to study tendencies but rather to study the phenomenon as a whole. Key Words: economic models • tendencies • economic experiments • policy making • John Stuart Mill. (shrink)

Is methodology fruitless? Intense controversy has resulted from attempts to understand economics through philosophy of science. This collection clarifies and responds to the issues raised, arguing that methodology is an essential activity.

Abstract Economic formalism crowds out the analysis of change and adjustments to change under capitalism. The style of analytical narrative that was practiced by the first generation of neoclassical economists, in contrast, is more productive of genuine economic understanding. Despite Daniel Haus?man's challenging argument to the contrary, I maintain that Joseph Stiglitz's work is formalist at its core. While I agree with Robert Heilbroner's critique of contemporary economics, there is a limited sense in which nonformalist economics can rely on universalistic (...) assumptions. And Thomas Mayer has provided useful guidelines for focusing nonformalist analysis on real?world economic problems. (shrink)

Abstract F. A. Hayek's realistic economic theory has been replaced by the formalistic use of equlibrium models that bear little resemblance to reality. These models are as serviceable to the right as to the left: they allow the economist either to condemn capitalism for failing to measure up to the model of perfect competition, or to praise capitalism as a utopia of perfect knowledge and rational expectations. Hayek, by contrast, used equilibrium to show that while capitalism is not perfect, it (...) contains error?correcting institutions that bring it closer to perfection than is intuitively apparent. (shrink)

The answer in a nutshell is: Yes, five years ago, but nobody has noticed. Nobody noticed because the majority of social scientists subscribe to one of the following views: (1) the ‘anomalous’ behaviour observed in standard prisoner’s dilemma or ultimatum game experiments has refuted standard game theory a long time ago; (2) game theory is flexible enough to accommodate any observed choices by ‘refining’ players’ preferences; or (3) it is just a piece of pure mathematics (a tautology). None of these (...) views is correct. This paper defends the view that GT as commonly understood is not a tautology, that it suffers from important (albeit very recently discovered) empirical anomalies, and that it is not flexible enough to accommodate all the anomalies in its theoretical framework. It also discusses the experiments that finally refuted game theory, and concludes trying to explain why it took so long for experimental game theorists to design experiments that could adequately test the theory. (shrink)

The focus here is Robert L. Heilbroner's critique, in the last chapter of the 7th edition of The Worldly Philosophers, of the idea that economics is, or should be, scientific. Heilbroner's conception of economics as essentially tied to capitalism is too narrow, and at odds with his own commentary on the rise of pauperism after the English common-land enclosures; and his critique of contemporary economics-as-social science is overdrawn. Nevertheless, there is indeed an important role for the “visionary” economics for which (...) Heilbroner hankers: assessing the benefits and drawbacks of different ways of ordering the production and distribution of goods and services. (shrink)

This is a comprehensive anthology of works concerning the nature of economics as a science, including classic texts and essays exploring specific branches and schools of economics. Apart from the classics, most of the selections in the third edition are new, as are the introduction and bibliography. No other anthology spans the whole field and offers a comprehensive introduction to questions about economic methodology.

This is a comprehensive anthology of works concerning the nature of economics as a science, including classic texts and essays exploring specific branches and schools of economics. Apart from the classics, most of the selections in the third edition are new, as are the introduction and bibliography. No other anthology spans the whole field and offers a comprehensive introduction to questions about economic methodology.

This article seeks to provide a characterization of theory prevalent in economics and found in many areas of social and natural science, particularly those that make increasing use of rational choice perspectives. Four kinds of theoretical project are identified in which empirical evidence plays a relatively small role in theory acceptance. The paper associates the minor role of evidence in theory formation and acceptance to a need to answer counterfactual questions and argues that is not necessarily incompatible with accounts of (...) science that emphasise truth in the development of theory. However, this view of economics does highlight factors that play a central role in theory acceptance which have not featured very strongly, if at all, in the philosophy of science literature. The article goes on to discuss four areas of economics that illustrate the consequences of using theory acceptance procedures which give relatively little weight to empirical testing. Benefits and costs of counterfactual science as it has developed in economics are discussed. It is concluded that there are good reasons why scientists may not use evidence in theory acceptance, even if an unintended consequence has been to strip economics of valuable empirical sensibilities still evident in natural sciences. (shrink)

This article is a study of the response of two heterodox schools of economic thought to ?new? philosophical ideas. Specifically, it considers the response within Post Keynesian and feminist economics to Tony Lawson's recent call for economists to pay greater attention to ontology and for economists to adopt research methods consistent with critical realism. Lawson's arguments were formally introduced to these schools over the space of a few years and continue to generate considerable discussion within their ranks. The focus of (...) analysis in this article is on the debate about Lawson's ideas published in the leading journals associated with two schools of thought: The Journal of Post Keynesian Economics and Feminist Economics. The article contrasts the reception Lawson's ideas received in each of the two journals and suggests some reasons for these differences. It argues that some barriers to the adoption of new ideas exist in each school of thought and that this has implications for the direction and content of economic thought in heterodox schools. (shrink)

This paper critiques the critical realist conception of social relations as ?deep? structures separate from ?surface? social activities. The alternative conception offered by ?systematic dialectics? is advocated. Systematic dialectics takes a system?wide perspective on the contemporary economic system. From this perspective, predominant social relations are inseparable from predominant social activities contra critical realism. For example, the predominance of commodity exchange relations across the economic system necessarily implies the predominance of the activities of commodity exchange. Likewise the predominance of monetary relations (...) across the economic system necessarily implies the predominance of the activities of monetary exchange. Maintaining this system?wide perspective on the capitalist economy, systematic dialectics furthermore offers alternative analyses to critical realism of event regularities (?closures?), of ?depth?, and of ?tendencies? (shrink)

There has been considerable discussion lately of the concept of open systems, which has revealed that different participants are using the terms ?openness? and ?closure? in different ways. The purpose of this paper is to address issues of meaning that arise in this particular discourse, with a view to clarifying both conflicts in usage and the underlying issues involved. We explore the different meanings of openness and closure extant in the literature, as applied at the ontological and epistemological levels, focusing (...) on our own use of the terms in relation to that which prevails in neoclassical economics on the one hand and to the use made of them by Tony Lawson and other critical realists on the other. (shrink)

This paper explores the influence of operationalism and its corollary, descriptivism, on Paul Samuelson's revealed preference theory as it developed between 1937 and 1948. Samuelson urged the disencumbering of metaphysics from economic theory. As an illustration, he showed how utility could be operationally redefined as revealed preference, and, furthermore, how from hypotheses such as maximizing behavior, operationally meaningful theorems could be deduced, thereby satisfying his demand for a scientific, empirical approach toward consumer behavior theory. In this paper I discuss the (...) ensuing debate during the 1950s and 1960s on Samuelson's operationalism that raised doubts about its efficacy. In addition, I argue that certain concepts (revealed preference, equilibrium) and theorems (e.g., weak and strong axioms) that are supposedly operational in revealed preference theory, lack operational meaning, not withstanding their mathematical implications. Finally, I suggest that, although Samuelson's methodological rhetoric did not correspond with his implicit aprioristic theorizing, he possibly thought that his methodology and theorizing would converge in the long run. (shrink)

This intriguing new book examines and analyses the role of critical realism in economics and specifically how this line of thought can be applied to the real world. With contributions from such varying commentators as Sheila Dow, Wendy Olsen and Fred Lee, this new book is unique in its approach and will be of great interest to both economic methodologists and those involved in applied economic studies.

There is a growing perception among economists that their field is becoming increasingly irrelevant due to its disregard for reality. Critical realism addresses the failure of mainstream economics to explain economic reality and proposes an alternative approach. This book debates the relative strengths and weaknesses of critical realism, in the hopes of developing a more fruitful and relevant socio-economic ontology and methodology. With contributions from some of the leading authorities in economic philosophy, it includes the work of theorists critical of (...) this approach. In the first part, contributors develop and deepen economics as a realist social theory by considering the work of individuals, various schools of thought, socio- economic phenomena and methodology. In the second part, contributors weigh the strengths and weaknesses of critical realism. (shrink)

This original book brings together some of the world's leading critics of economics orthodoxy to debate Lawson's contribution to the economics literature.

Milton Friedman’s 1953 essay created controversy and consternation amongst economists. It provided a prescription, based on empirically generated predictive success, of how to do economics, yet many saw it as a concession of the search for truth and theoretical beauty within the discipline. This article reviews a 50th anniversary festschrift devoted to views of the essay. The purpose of the volume is to provide today’s reader with the essay, responses, and a guide to interpreting it. The volume is selective and (...) several contributors have their own agendas, but the feeling of tumult the essay still engenders is nicely conveyed. (shrink)

A few aspects of the issue of realism are addressed in the context of a social science. The paper looks for adjustments needed in our conceptions of scientiflc realism to accommodate some peculiarities of economics. Ontologically speaking, economics appears to be closely linked to commonsense conceptions of the world, thus the problem of theoretical concepts does not emerge in the same form it is often taken to exist in physics. Theory formation is largely a matter of idealization and isolation among (...) observables rather than postulation of unobservables. Given that isolative theories violate the truth in many ways, truth is more of a problem than existence in a realism pertaining to economics. The idea of significant truth -which is able to tolerare varieties of untruths in theories- is suggested to be based on the notion of the way the world works; this is a matter of the causal structure and functioning of the world. None of this is undermined by the acknowledgement that economist’s attittudes and decisions are shapped by rhetorical persuasion. (shrink)

A rejoinder to commentators of the paper Le réalisme des hypothèses et la "Partial Interpretation View", which was published in the same journal.

The article discusses Friedman's classic claim that economics can be based on irrealistic assumptions. It exploits Samuelson's distinction between two "F-twists" (that is, "it is an advantage for an economic theory to use irrealistic assumptions" vs "the more irrealistic the assumptions, the better the economic theory"), as well as Nagel's distinction between three philosophy-of-science construals of the basic claim. On examination, only one of Nagel's construals seems promising enough. It involves the neo-positivistic distinction between theoretical and non-theoretical ("observable") terms; so (...) Friedman would in some sense argue for the major role of theoretical terms in economics. The paper uses a model-theoretic apparatus to refine the selected construal and check whether it can be made to support the claim. This inquiry leads to essentially negative results for both F-twists, and the final conclusion is that they are left unsupported. (shrink)

This paper explores the influence of operationalism and its corollary, descriptivism, on Paul Samuelson's revealed preference theory as it developed between 1937 and 1948. Samuelson urged the disencumbering of metaphysics from economic theory. As an illustration, he showed how utility could be operationally redefined as revealed preference, and, furthermore, how from hypotheses such as maximizing behavior, operationally meaningful theorems could be deduced, thereby satisfying his demand for a scientific, empirical approach toward consumer behavior theory. In this paper I discuss the (...) ensuing debate during the 1950s and 1960s on Samuelson's operationalism that raised doubts about its efficacy. In addition, I argue that certain concepts (revealed preference, equilibrium) and theorems (e.g., weak and strong axioms) that are supposedly operational in revealed preference theory, lack operational meaning, not withstanding their mathematical implications. Finally, I suggest that, although Samuelson's methodological rhetoric did not correspond with his implicit aprioristic theorizing, he possibly thought that his methodology and theorizing would converge in the long run. (shrink)

Social thinkers frequently remind us that people differ in their views on what constitutes personal well-being, but that even when they don't differ, they disagree over the extent to which one person's well-being can be permitted to be traded off against another's. In this paper I show, by offering an account of the development of development economics, that in professional debates on social policy, economists speak or write as though they agree on values but differ on their reading of facts. (...) A number of ethicists have concluded from this near-exclusive interest in facts that modern economics must be an ethical desert. It is shown here that the reason research economists analyze facts rather than values is that modern economics is built on broad ethical foundations, capable of being reduced as special cases to the various ethical theories that are currently on offer. Ethics has taken a back seat in modern economics not because contemporary economists are wedded to a “value-free” enterprise, but because the ethical foundations of the subject were constructed over five decades ago and are now regarded to be a settled matter. (shrink)

Milton Friedman’s 1953 essay created controversy and consternation amongst economists. It provided a prescription, based on empirically generated predictive success, of how to do economics, yet many saw it as a concession of the search for truth and theoretical beauty within the discipline. This article reviews a 50th anniversary festschrift devoted to views of the essay. The purpose of the volume is to provide today’s reader with the essay, responses, and a guide to interpreting it. The volume is selective and (...) several contributors have their own agendas, but the feeling of tumult the essay still engenders is nicely conveyed. (shrink)

The person arguably most responsible for the view of Hutchison as the positivist who introduced positivism into economics was Frank Knight. I argue that Knight in 1940 failed to demonstrate that Hutchison was a positivist, at least in the narrow logical positivist sense of the term. By questioning Knight's charge, I aim to challenge the conventional wisdom that identifies ?Hutchison? with ?positivism?. The paper is then a first step in the argument that positivism, even in 1938, played only an (...) inessential role in a consistent methodological position that Hutchison developed alongside his work in the history of economic thought. (shrink)

Terence Hutchison's 1938 essay has been variously interpreted as introducing positivism, ultra?empiricism and Popperian falsificationism into economics. This paper argues that such interpretations are unfair and inaccurate. Moreover, they distract from his central message. The paper is divided into three main sections. The first seeks to demonstrate the extent to which Hutchison's essay differs from these previous interpretations. The second argues that Hutchison's central concern was to highlight and demonstrate the inadequacies of the traditional deductive method of ?classical? economics. (...) The third contends that Hutchison is best interpreted as following in a long line of British empiricists and outlines some features of the ?empirical?inductive? approach that he supports. (shrink)

The pigeonholing of Hutchison's methodology as positivist, ultra-empiricist or Popperian has militated against a full appreciation of his more complex position. In this as-verbatim-as-possible account of an afternoon's discussion with Hutchison, it is the directly personal manner in which we gain insights, rather than simply the insights themselves, that we hope will help towards a re-assessment. We learn of his non-positivist view that economics is an empirical-historical discipline distinct from the natural sciences; and his rejection of Popper's view that prediction (...) in economics can and should be based on laws like the law of gravity. We hear of his wariness of relying on the hypothetico-deductivist methods of Popper and later positivists in a subject such as economics, and his support instead for the methodological views of Jacob Viner and the inductive methods associated with the historically and institutionally detailed approaches of Cliffe Leslie, Wesley Clair Mitchell and Henry Phelps Brown. (shrink)

The term neoclassical economics delineates a distinct and relatively homogenous school of thought in economic theory that became prominent in the late nineteenth century and that now dominates mainstream economics. The term was originally introduced by Thorstein Veblen to describe developments in the discipline (of which Veblen did not entirely approve) associated with the work of such figures as William Jevons, Carl Menger, and Leon Walras. The ambition of these figures, the first neoclassicists, was to formalize and mathematize the subject (...) in the aftermath of the so-called marginalist revolution. Economics is, according to one definition, the science that studies human behavior as a relationship between ends and scarce means that have alternative uses. Neoclassical economics pursues this study by means of supply and demand models that determine prices based on the subjective preferences of producers and consumers. Neoclassical economics relies on subjective preferences for determining prices in order to escape from the so-called objective value theory of classical economics, according to which the value of goods could be established by reference to some basic commodity (usually corn) or the labor input required to produce a good. Neoclassicists hoped that by jettisoning objective value, economics could be placed on a more scientific basis as an essentially descriptive and predictive theory of human behavior. Political theory, by contrast, involves both positive and normative elements. It is a positive science to the extent to which it aims to describe and predict political behavior. It is a normative science to the extent to which it prescribes how agents should behave in the political arena and what the best political institutions are. Neoclassical economics is relevant to both of these elements. (shrink)

The paper analyses economic evaluations by distinguishing evaluative statements from actual value judgments. From this basis, it compares four solutions to the value neutrality problem in economics. After rebutting the strong theses about neutrality (normative economics is illegitimate) and non-neutrality (the social sciences are value-impregnated), the paper settles the case between the weak neutrality thesis (common in welfare economics) and a novel, weak non-neutrality thesis that extends the realm of normative economics more widely than the other weak thesis does.

A rejoinder to commentators of the paper Le réalisme des hypothèses et la "Partial Interpretation View", which was published in the same journal.

The article discusses Friedman's classic claim that economics can be based on irrealistic assumptions. It exploits Samuelson's distinction between two "F-twists" (that is, "it is an advantage for an economic theory to use irrealistic assumptions" vs "the more irrealistic the assumptions, the better the economic theory"), as well as Nagel's distinction between three philosophy-of-science construals of the basic claim. On examination, only one of Nagel's construals seems promising enough. It involves the neo-positivistic distinction between theoretical and non-theoretical ("observable") terms; so (...) Friedman would in some sense argue for the major role of theoretical terms in economics. The paper uses a model-theoretic apparatus to refine the selected construal and check whether it can be made to support the claim. This inquiry leads to essentially negative results for both F-twists, and the final conclusion is that they are left unsupported. (shrink)

In this paper I study how the theoretical categories of consumption theory were used by Milton Friedman in order to classify empirical data and obtain predictions. Friedman advocated a case by case definition of these categories that traded theoretical coherence for empirical content. I contend that this methodological strategy puts a clear incentive to contest any prediction contrary to our interest: it can always be argued that these predictions rest on a wrong classification of data. My conjecture is that this (...) methodological strategy can contribute to explain why Friedman’s predictions never generated the consensus he expected among his peers. (shrink)

In this paper I explore a positivist methodological tradition in early demand theory, as exemplified by several common traits that I draw from the works of V. Pareto, H. L. Moore and H. Schultz. Assuming a current approach to explanation in the social sciences, I will discuss the building of their various explanans, showing that the three authors agreed on two distinctive methodological features: the exclusion of any causal commitment to psychology when explaining individual choice and the mandate to test (...) the truth of demand theory on aggregate data by statistical means. However, I also contend, from an epistemological point of view, that the truth of demand theory was conceived of in three different ways by our authors. Inspired by Poincaré, Pareto assumed that many different theories could account for the same data on individual choice, coming close to a kind of conventionalism -though I prefer to refer to this position as theoreticism. Moore was himself akin to Pearson's approach, which could be named descriptivist insofar as it resolved scientific laws into statistical descriptions of the data. Finally, Schultz tried to reconcile both approaches in an adequationist stance with no success, as we shall see. (shrink)

Until quite recently, some economic methodologists (particularly, those who began their careers in the late 1970s) were of the opinion that Karl Popper was misguided about economics. Some others claimed that Popper said little about economics. Yet, many economics students who began their appreciation of Popper after reading his Open Society and Its Enemies have quickly realized how easy that book is to understand because it is a generalization of neoclassical economics in terms of both methodological individualism and situational analysis. (...) While today it might be easy to complain that basing one's understanding of Popper on neoclassical economics leads to a narrow and useless appreciation of Popper, this too is misleading. The problem is not neoclassical economics but neoclassical economists. After all, Popper himself thought the best way to teach economists about his views concerning methodology was to emphasize that his views can easily be understood as a generalization of neoclassical economics. (shrink)

In a recent paper, Cavusoglu and Tebaldi (2006) provided an evaluation of neoclassical and endogenous growth theories according to Lakatos's methodology of scientific research programmes. This paper offers three criticisms of their contribution as well as a rival Lakatosian appraisal of growth theories. First, we hold that Cavusoglu and Tebaldi do not provide a proper structure of theory comparison in their contribution. Second, we argue that they use an inadequate version of Lakatos's appraisal criterion. Third, against the claim (...) of the authors, we show that there are seminal endogenous growth models, which predict income convergence among countries. Finally, in contrast to Cavusoglu and Tebaldi, our analysis suggests that by Lakatos's standards, Schumpeterian variant of endogenous growth theory is both theoretically and empirically progressive over neoclassical growth theory. (shrink)

Understanding the factors determining economic growth has been a major concern for economists and governing bodies for many years. The Solow growth model and the endogenous growth models are the main theories tested and used in the growth literature. This paper discusses the main contributions to economic methodology and uses Lakatos's scientific research program framework to evaluate the main theoretical contributions to growth theory. Based on Lakatos's ideas, Solovian models are both empirically and theoretically progressive. Endogenous growth models, on the (...) other hand, are not empirically corroborated, and thus not progressive in Lakatosian sense. However, there are many reasons for rational growth economists to continue working in this field, even facing empirical refutations of an important theoretical prediction. Endogenous growth models are promising in terms of generating enormous gains that will help us better understand the mechanisms of economic growth. (shrink)

While there exist numerous applications of Kuhn's analysis of scientific revolutions to economics, there is yet to be an application to econometrics. The present paper addresses this via an analysis of the often-documented transition between the textbook and LSE methodologies witnessed in British time series econometrics. This exercise allows a number of issues to be raised. First, it will be questioned whether the observed transition in econometrics is an appropriate subject for analysis within the Kuhnian framework. This is the primary (...) concern of the paper. Second, the adoption of Kuhn's approach will allow the witnessed transition in econometric methodology to be viewed from a different perspective to that permitted by more conventional historical accounts. This is seen to lead a number of interesting conclusions. Third, implications of the present study for Kuhn's analysis will be discussed. (shrink)

In a recent article, Cook conducted a Kuhnian analysis of the difference between the Textbook and LSE econometric approaches. This paper uses a semantic conception of theories (Suppe 1989) and a finer gradation of the theory of reduction process to clarify the apparent puzzle that exist between the Textbook and LSE approaches to econometrics. The paper demonstrates that a Kuhnian analysis in isolation can be more misleading than realized.

Ever since the formation of the field of economic methodology in the 1990s, doubts have been raised about its discursive closure from both inside and outside the field. Rather than embarking on a programmatic discussion, I present a historical narrative regarding the conditions of the formation of the field, which may have necessitated this closure. These conditions are found in the role methodological reflections played in the formalist revolution of the 1950s and in its critique in the 1970s. Both episodes (...) gave occasion to, but did not require the import of philosophy of science in the mid-1970s. Since the 1980s, when the field became separately established through post-Popperian methodology, it remains an open question whether this imposition still holds. (shrink)

Milton Friedman’s 1953 essay created controversy and consternation amongst economists. It provided a prescription, based on empirically generated predictive success, of how to do economics, yet many saw it as a concession of the search for truth and theoretical beauty within the discipline. This article reviews a 50th anniversary festschrift devoted to views of the essay. The purpose of the volume is to provide today’s reader with the essay, responses, and a guide to interpreting it. The volume is selective and (...) several contributors have their own agendas, but the feeling of tumult the essay still engenders is nicely conveyed. (shrink)

Hutchison's 1938 essay has been variously interpreted as introducing positivism, ultra-empiricism and Popperian falsificationism to economics. Yet his apparent inconsistency in maintaining all of these positions seems to have gone unnoticed in the literature. Previously I have criticized attempts to characterize Hutchison as a positivist or ultra-empiricist. In this article I argue that Klappholz and Agassi failed to support their claim that Hutchison introduced Popper's criterion to economics. That is, this paper deals with this specific question, rather than the wider (...) one of whether or not Hutchison introduced Popperian falsificationism to economics. Yet the two issues are closely connected and so the latter question is briefly discussed. To the extent that the paper succeeds, it may help to resolve the inconsistency problem. For now it is possible that Hutchison in 1938 developed his own original and consistent position. The task of substantiating such a view by providing a positive account of his methodology is one for the future. (shrink)

The person arguably most responsible for the view of Hutchison as the positivist who introduced positivism into economics was Frank Knight. I argue that Knight in 1940 failed to demonstrate that Hutchison was a positivist, at least in the narrow logical positivist sense of the term. By questioning Knight's charge, I aim to challenge the conventional wisdom that identifies ?Hutchison? with ?positivism?. The paper is then a first step in the argument that positivism, even in 1938, played only an (...) inessential role in a consistent methodological position that Hutchison developed alongside his work in the history of economic thought. (shrink)

Terence Hutchison's 1938 essay has been variously interpreted as introducing positivism, ultra?empiricism and Popperian falsificationism into economics. This paper argues that such interpretations are unfair and inaccurate. Moreover, they distract from his central message. The paper is divided into three main sections. The first seeks to demonstrate the extent to which Hutchison's essay differs from these previous interpretations. The second argues that Hutchison's central concern was to highlight and demonstrate the inadequacies of the traditional deductive method of ?classical? economics. (...) The third contends that Hutchison is best interpreted as following in a long line of British empiricists and outlines some features of the ?empirical?inductive? approach that he supports. (shrink)

The pigeonholing of Hutchison's methodology as positivist, ultra-empiricist or Popperian has militated against a full appreciation of his more complex position. In this as-verbatim-as-possible account of an afternoon's discussion with Hutchison, it is the directly personal manner in which we gain insights, rather than simply the insights themselves, that we hope will help towards a re-assessment. We learn of his non-positivist view that economics is an empirical-historical discipline distinct from the natural sciences; and his rejection of Popper's view that prediction (...) in economics can and should be based on laws like the law of gravity. We hear of his wariness of relying on the hypothetico-deductivist methods of Popper and later positivists in a subject such as economics, and his support instead for the methodological views of Jacob Viner and the inductive methods associated with the historically and institutionally detailed approaches of Cliffe Leslie, Wesley Clair Mitchell and Henry Phelps Brown. (shrink)

A rejoinder to commentators of the paper Le réalisme des hypothèses et la "Partial Interpretation View", which was published in the same journal.

The article discusses Friedman's classic claim that economics can be based on irrealistic assumptions. It exploits Samuelson's distinction between two "F-twists" (that is, "it is an advantage for an economic theory to use irrealistic assumptions" vs "the more irrealistic the assumptions, the better the economic theory"), as well as Nagel's distinction between three philosophy-of-science construals of the basic claim. On examination, only one of Nagel's construals seems promising enough. It involves the neo-positivistic distinction between theoretical and non-theoretical ("observable") terms; so (...) Friedman would in some sense argue for the major role of theoretical terms in economics. The paper uses a model-theoretic apparatus to refine the selected construal and check whether it can be made to support the claim. This inquiry leads to essentially negative results for both F-twists, and the final conclusion is that they are left unsupported. (shrink)

More than 25 years after the discovery that the equilibrium point of a general equilibrium model is not necessarily either unique or stable, there is still a need for an intuitively comprehensible explanation of the reasons for this discovery. Recent accounts identify two causes of the finding of instability: the inherent difficulties of aggregation, and the individualistic model of consumer behaviour. The mathematical dead end reached by general equilibrium analysis is not due to obscure or esoteric aspects of the model, (...) but rather arises from intentional design features, present in neoclassical theory since its beginnings. Modification of economic theory to overcome these underlying problems will require a new model of consumer choice, nonlinear analyses of social interactions, and recognition of the central role of institutional and social constraints. (shrink)

An introduction to the last article on which Terence Hutchison worked, now published under the title, ?A formative decade: methodological controversy in the 1930s?, explaining what is known about its writing, and a brief summary of such biographical information and information about his work as is necessary to understand its significance.

The models Feldstein and Rothschild, on the hand, and Jorgenson on the other adopted in 1974 to highlight the replacement ratio are identical. Yet, the authors reached opposite conclusions and the latter's view prevailed, which is weaker in terms of theoretical and empirical foundations. This paper argues that both puzzles may be resolved by reference to the differences in the methodological preconceptions of the authors involved, the operational advantages of the theorem of proportionality, the accumulated data that facilitate research, the (...) inertia of the status quo, the lack of a model leading to a more useful theorem, the lack of communication among economists and their aversion toward complex solutions and policy prescriptions. In this light it is concluded that the time has come for research efforts to be directed towards constructing and testing models in which the useful life of capital is determined endogenously in the presence of embodied technological change. (shrink)

This paper explores the influence of operationalism and its corollary, descriptivism, on Paul Samuelson's revealed preference theory as it developed between 1937 and 1948. Samuelson urged the disencumbering of metaphysics from economic theory. As an illustration, he showed how utility could be operationally redefined as revealed preference, and, furthermore, how from hypotheses such as maximizing behavior, operationally meaningful theorems could be deduced, thereby satisfying his demand for a scientific, empirical approach toward consumer behavior theory. In this paper I discuss the (...) ensuing debate during the 1950s and 1960s on Samuelson's operationalism that raised doubts about its efficacy. In addition, I argue that certain concepts (revealed preference, equilibrium) and theorems (e.g., weak and strong axioms) that are supposedly operational in revealed preference theory, lack operational meaning, not withstanding their mathematical implications. Finally, I suggest that, although Samuelson's methodological rhetoric did not correspond with his implicit aprioristic theorizing, he possibly thought that his methodology and theorizing would converge in the long run. (shrink)

The puzzle: why do so many economists in principle acknowledge the importance of creative destruction, and yet in practice give so little attention to creative destruction in what they teach and what they research? The answer lies, in part, in the difficulty of obtaining what is viewed as ?hard? evidence in support of some of the central claims. For example, one such claim is that new products contribute more to consumer well-being than price competition on old products. The only kind (...) of evidence accepted by much of the profession is the testing of econometric hypotheses generated from formal models. The sort of evidence found in persuasive sources such as DeLong's ?Cornucopia? consists of historical examples and raw time series. I argue that in the short run, a more pluralistic methodology would be better, and that in the long run, we should seek to understand which methods work best under which circumstances. (shrink)

Ever since the formation of the field of economic methodology in the 1990s, doubts have been raised about its discursive closure from both inside and outside the field. Rather than embarking on a programmatic discussion, I present a historical narrative regarding the conditions of the formation of the field, which may have necessitated this closure. These conditions are found in the role methodological reflections played in the formalist revolution of the 1950s and in its critique in the 1970s. Both episodes (...) gave occasion to, but did not require the import of philosophy of science in the mid-1970s. Since the 1980s, when the field became separately established through post-Popperian methodology, it remains an open question whether this imposition still holds. (shrink)

This paper examines two conflicting views that have emerged within the recent methodological literature regarding the relationship between Friedman's famous essay and the formalist revolution. I focus on three influential contributors to this ongoing debate: Mark Blaug, Terence Hutchison, and Thomas Mayer. Blaug and Hutchison have argued repeatedly that Friedman's essay licensed the formalist revolution while Mayer has argued precisely the opposite; the formalist revolution was a result of not following Friedman's methodological advice. The juxtaposition of these (...) views is particularly interesting since the authors disagree sharply about the impact of Friedman's essay, and yet seem to agree about most other aspects of economic methodology. (shrink)

The models Feldstein and Rothschild, on the hand, and Jorgenson on the other adopted in 1974 to highlight the replacement ratio are identical. Yet, the authors reached opposite conclusions and the latter's view prevailed, which is weaker in terms of theoretical and empirical foundations. This paper argues that both puzzles may be resolved by reference to the differences in the methodological preconceptions of the authors involved, the operational advantages of the theorem of proportionality, the accumulated data that facilitate research, the (...) inertia of the status quo, the lack of a model leading to a more useful theorem, the lack of communication among economists and their aversion toward complex solutions and policy prescriptions. In this light it is concluded that the time has come for research efforts to be directed towards constructing and testing models in which the useful life of capital is determined endogenously in the presence of embodied technological change. (shrink)

Milton Friedman's famous methodology essay is one of the most cited in economics literature. There was a time when it was usually cited as a prime example of positivist methodology. But since the publication of my 1979 critique of the critics of his essay, almost everyone now recognizes his essay as a prime example of what I called instrumentalism. Most economists, who when questioned about their views of methodology, will agree with Friedman's instrumentalism but only if Friedman's name is not (...) mentioned. But many of those same economists will claim to disagree with instrumentalism when it is explicitly identified as Friedman's methodology. Unfortunately, such disagreement leads too often to unfair criticism. The question considered is whether this unfair criticism is merely a matter of ideological hypocrisy or more likely a matter of ignorance of methodology. (shrink)

Milton Friedman’s 1953 essay created controversy and consternation amongst economists. It provided a prescription, based on empirically generated predictive success, of how to do economics, yet many saw it as a concession of the search for truth and theoretical beauty within the discipline. This article reviews a 50th anniversary festschrift devoted to views of the essay. The purpose of the volume is to provide today’s reader with the essay, responses, and a guide to interpreting it. The volume is selective and (...) several contributors have their own agendas, but the feeling of tumult the essay still engenders is nicely conveyed. (shrink)

This paper examines two conflicting views that have emerged within the recent methodological literature regarding the relationship between Friedman's famous essay and the formalist revolution. I focus on three influential contributors to this ongoing debate: Mark Blaug, Terence Hutchison, and Thomas Mayer. Blaug and Hutchison have argued repeatedly that Friedman's essay licensed the formalist revolution while Mayer has argued precisely the opposite; the formalist revolution was a result of not following Friedman's methodological advice. The juxtaposition of these (...) views is particularly interesting since the authors disagree sharply about the impact of Friedman's essay, and yet seem to agree about most other aspects of economic methodology. (shrink)

In this paper I study how the theoretical categories of consumption theory were used by Milton Friedman in order to classify empirical data and obtain predictions. Friedman advocated a case by case definition of these categories that traded theoretical coherence for empirical content. I contend that this methodological strategy puts a clear incentive to contest any prediction contrary to our interest: it can always be argued that these predictions rest on a wrong classification of data. My conjecture is that this (...) methodological strategy can contribute to explain why Friedman’s predictions never generated the consensus he expected among his peers. (shrink)

This article seeks to provide a characterization of theory prevalent in economics and found in many areas of social and natural science, particularly those that make increasing use of rational choice perspectives. Four kinds of theoretical project are identified in which empirical evidence plays a relatively small role in theory acceptance. The paper associates the minor role of evidence in theory formation and acceptance to a need to answer counterfactual questions and argues that is not necessarily incompatible with accounts of (...) science that emphasise truth in the development of theory. However, this view of economics does highlight factors that play a central role in theory acceptance which have not featured very strongly, if at all, in the philosophy of science literature. The article goes on to discuss four areas of economics that illustrate the consequences of using theory acceptance procedures which give relatively little weight to empirical testing. Benefits and costs of counterfactual science as it has developed in economics are discussed. It is concluded that there are good reasons why scientists may not use evidence in theory acceptance, even if an unintended consequence has been to strip economics of valuable empirical sensibilities still evident in natural sciences. (shrink)

This essay examines the role of data and program?code archives in making economic research ?replicable.? Replication of published results is recognized as an essential part of the scientific method. Yet, historically, both the ?demand for? and ?supply of? replicable results in economics has been minimal. ?Respect for the scientific method? is not sufficient to motivate either economists or editors of professional journals to ensure the replicability of published results. We enumerate the costs and benefits of mandatory data and code archives, (...) and argue that the benefits far exceed the costs. Progress has been made since the gloomy assessment of Dewald, Thursby and Anderson some 20 years ago in the American Economic Review, but much remains to be done before empirical economics ceases to be a ?dismal science? when judged by the replicability of its published results. (shrink)