Why did Mill draw such a firm line between nature and society, and what did he mean by the claim that only permanent or necessary truths could be gleaned in nature? Why are the laws of production able to transcend the social realm and thereby attain a higher epistemological standing? Was Mill the first to make this distinction, or does it conform with a long tradition within the history of economic thought?

What Daniel Hausman has called “the simple criticism of economic theory”1 is succinctly conveyed by the following passage: “We know full well not only that commodities are not infinitely divisible (which is only intended as a simplification), but businessmen do not always attempt to maximize profits and that the preferences of consumers are not always transitive. ‘Businessmen maximize profits’ and ‘a consumer’s preferences are transitive’ are fundamental economic ‘laws’. How can economists rationally accept a theory which is so full of (...) falsehoods?” (1981a, p. 382). In a recent paper Hausman considers several defenses of neoclassical microeconomics against the simple criticism. One of them is the modal view which Hausman initially characterizes in the, following admittedly vague and ambiguous manner: “Microeconomic general statements are modal (counter-factual) claims. (shrink)

John Stuart Mill had strong sympathies with a liberal form of market socialism based on worker-owned and worker-managed firms. He thought that only very few government interventions were needed to trigger a peaceful and spontaneous transition to such an economic system. This article recapitulates his thesis and argument by focusing on his major workPrinciples of Political Economy, which is rather neglected by philosophers, especially in the German-speaking world. I will argue that Mill was too optimistic in his hope for a (...) spontaneous transition without government intervention. Since it is possible to reconstruct how Mill thought this transition would proceed, it is also possible to identify at what point the transition did not advance in the way envisioned by him, but was blocked by antagonistic forces. I will argue that this insight is not only of historical value, but still poses a serious problem for John Rawls’s theory of justice. Rawls follows Mill closely in his discussion of the proper economic system and he faces the same problem of transition. (shrink)

In the latter half of the 19th century, economic thought in the Germanspeaking world was dominated, both intellectually and academically, by the so-called historical school, from Wilhelm Roscher to Gustav Schmoller and others. In 1871, the Austrian Carl Menger published his Grun&tze der Volkswirtschaftslehre (Menger, 1976 (1871)), customarily referred to as one of the three simultaneous discoveries of marginalist economics-the other two marginalist ‘revolutionaries’ being Jevons in England and Walras in France. Twelve years later, in 1883, Menger published a major (...) methodological treatise entitled Untersuchungen iiber die Methode der Socialwissenschaften und der Politischen Oekonomie insbesondere (Menger, 1963 (1883)). This book included criticisms of some of the historicist principles of doing economics. In the same year, Schmoller, leader of the German historicists, wrote a critical review of Menger’s book (Schmoller, 1883). Menger reacted forcefully with a more straightforwardly polemical small book, Die Irrthiimer des Historismus in der deutschen National6konomie (Menger, 1884). Commentaries by others appeared in later years, but this brief episode amounted to what has thereafter been called the Methodenstreit between Menger and Schmoller. It has been established as perhaps the most famous methodological controversy in the history of the social sciences. (shrink)

This article disputes the common view that social science explanations depend on discovery of lawlike generalizations from which descriptions of social outcomes can be derived. It distinguishes between governing and phenomenal regularities, and argues that social regularities are phenomenal rather than governing. In place of nomological deductive arguments, the article maintains that social explanations depend on the discovery of causal mechanisms underlying various social processes. The metaphysical correlate of this argument is that there are no social kinds: types of social (...) entities that share a common casual constitution giving rise to strong regularities of behavior. The article turns next to a consideration of the character of social causation and argues for a microfoundational interpretation of social causation: social causal powers are embodied in the constraints and opportunities that institutions present to individual agents. Finally, it is noted that these arguments have consequences for the credibility of social predictions: it is argued that predictions in social science are generally unreliable. (shrink)

We claim that the process of theoretical model refinement in economics is best characterised as robustness analysis: the systematic examination of the robustness of modelling results with respect to particular modelling assumptions. We argue that this practise has epistemic value by extending William Wimsatt's account of robustness analysis as triangulation via independent means of determination. For economists robustness analysis is a crucial methodological strategy because their models are often based on idealisations and abstractions, and it is usually difficult to tell (...) which idealisations are truly harmful. (shrink)

Hausman has argued that Mill in the Logic demands verification of qualified, inexact statements if they are to be considered lawlike. This puts Mill in line with a reasonable interpretation of what modern microeconomists are about, but requires the additional hypothesis that Mill abandoned his earlier stress on modal truth in his 1836 essay on the method of economics. The paper maintains that neither textual nor contextual evidence supports this hypothesis. Moreover, it is superfluous if one attends carefully to how (...) Mill conceived economic science, which occupied a peculiar, somewhat isolated place in his own views on the deductive method and on verification. (shrink)

According to the instrumentalism of Friedman and Machlup it is irrelevant whether the explanatory principles or “assumptions” of a theory satisfy any criterion of “plausibility,” “realism,” “credibility,” or “soundness.” In this view the main or only criterion for selecting theories is whether a theory yields empirically testable implications that turn out to be consistent with observations. All we should require or expect from a theory is that it is a useful instrument for the purpose of prediction. Considerations of the “efficiency” (...) of a theory for the purpose of ordering our experiences are permitted, but considerations of “plausibility” are not. “Explanatory assumptions” are not really explanatory in the sense that they claim to represent underlying causal processes in reality; they only serve to generate, by deduction, implications that are in accordance with as many observations as possible. (shrink)

Le modèle déductivo-nomologique domine depuis longtemps la réflexion philosophique concernant l’explication en science économique. Or, pour plusieurs, comme James Woodward et Tony Lawson, ce modèle ne considère pas suffisamment la causalité dans l’explication. L’objectif de cet article est double : 1- renforcer la critique que Tony Lawson adresse à l’économie contemporaine et 2- évaluer la théorie alternative qu’il propose, le « réalisme critique », qui tente de réintroduire la causalité dans l’explication en science économique. Nous conclurons que les considérations causales (...) sont très importantes pour l’explication en science économique mais aussi pour bien comprendre les limites de cette science. (shrink)

The study analyzes Mises‘s approach to the question of apriorism in a broader methodological context. It shows that it is not inevitable to advocate the aprioristic character of economics (resp. science of human action), as Mises does, to maintain the subjectivist-individualist methodology and the effort to adequately grasp the general laws of human action from its perspective. The present redefinition of apriorism is developed on the basis of thoughts of Barry Smith and Alfred Schutz. It suggests abandoning the apodictic character (...) of apriori (which is untenable) and move closer to a broadly defined empiricism. The methodological insights developed in the paper are finally used to contribute to the debate between the behavioral economists and the proponents of rational choice theory. (shrink)