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Epistemology of economics

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Summary

Methodological disputes in economics have been with us since Mill and Senior fought over the nature of economic science in the first half of the 19th Century. Progress has been extremely slow, and there is good reason for this as the present essay hopes to show.

Three important methodological positions are examined critically: the “ultra-empiricism” of T.W. Hutchison, the “moderate empiricism” of Milton Friedman, and the “extreme a priorism” of Lionel Robbins and Ludwig Von Mises. The argument between Guttierrez and Block inTheory and Decision over praxiology is discussed in connection with the last mentioned position. The paper concludes that “extreme a priorism,” though very much out of fashion is not without its resources. The work of the contemporary German philosopher, Paul Lorenzen, is enlisted to bolster this position.

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References

  1. Scientific Papers of T. C. Koopmans, Springer 1970, p. 148: New Epistemology for Economics: Berlin, New York.

  2. For the development of Popper's philosophy, seeConjectures and Refutations andObjective Knowledge. Popper's truly fundamental work remainsThe Logic of Scientific Discovery. See also I. Lakatos' penetrating discussion of Popper's thought in Lakatos-Musgrove volume,Criticism and the Growth of Knowledge.)

  3. T. W. Hutchison,The Significance of Basic Postulates in Economic Theory.

  4. M. Friedman,Essays in Positive Economics, pp. 3–9.

  5. “The Construction of Economic Knowledge” in Brodbeck M. (ed.),Readings In The Philosophy of the Social Sciences, New York/London21968, p. 536.

  6. Fritz Machlup,Verification in Economics, SEJ, 55–56.

  7. F. Machlup, Reply to a Reluctant Ultra-Empiricist, SEJ 1955, p. 484.

  8. p. 484.

  9. L. Robbins,The Nature and Significance of Economic Science, pp. 99–100.

  10. Ibid., p. 105.

  11. See F. Hayek's discussions of this point in hisScience, Economics, and Politics, first essay “Degrees of Explanation.”

  12. What we have in Robbins is what Karl Popper termed the method of essentialist definition. Popper saw that this Aristotelian procedure was just the kind of procedure that his own methodological views could not tolerate. The method of essentialist or somewhat less extravagantly, simply real, definition is of course one of the main ways of defending something like thesynthetic a priori. Popper's most penetrating discussion of essential definition is found in his discussion of Aristotle's conception of knowledge in the second volume ofOpen Society and its Enemies. We have begged off confronting these issues. One suggestion, though, at this point, may be of some value. It might be that the appeal to real or essential definitions does have some place but only where one is dealing with the fundamental (defining) terms or concepts of a theory. Beyond this, they might, as Popper states, simply get in the way of empirical investigation.

  13. Ibid. p. 116–117.

  14. See J. Agassi, “Tautology and Testability in Economics,” Phil. Soc. Sci. 1 (1971), 46–63.

  15. p. 123.

  16. As we mentioned, this is what Popper terms essentialism as a philosophy of science — see Popper'sOpen Society and Its Enemies, vol. II).

  17. For a full systematic presentation of praxiology, see Ludwig von Mises,Human Action, Yale, 1963. On specifically methodological issues, see the same author'sEpistemological Foundations of Economics, Van Nostrand. See also two important papers of Murray Rothbard, “Mises ‘Human Action’: A Comment,”American Economic Review, March 1956, “Praxeology: Reply to Mr. Schuller,American Economic Review, December 1951, and “The Defense of Extreme A Priorism,”Southern Economic Journal.

  18. Theory and Decision 1, (1971), pp. 327–336.

  19. p. 328.

  20. But see, for a discussion of the complexities involved in idealization, Stephan Körner'sExperience and Theory.

  21. Theory and Decision, Vol. 3, 1972.

  22. p. 377, (1973), vol. 3.

  23. See for instance Paul Lorenzen:Methodical Thinting, Ratio 1967.

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Sagal, P.T. Epistemology of economics. Zeitschrift für Allgemeine Wissenschaftstheorie 8, 144–162 (1977). https://doi.org/10.1007/BF01800420

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