This review essay critically discusses Andre Kukla's Methods of theoretical psychology. It is argued that Kukla mistakenly tries to build his case for theorizing in psychology as a separate discipline on a dubious distinction between theory and observation. He then argues that the demise of empiricism implies a return of some form of rationalism, which entails an autonomous role for theorizing in psychology. Having shown how this theory-observation dichotomy goes back to traditional and largely abandoned ideas in epistemology, an alternative is presented in the guise of the pragmatist or functionalist tradition, where the interdependence of theory, observation and action is emphasized and the positivist dichotomy of pure observations and pure theory is rejected. Furthermore, we show how recent work on "active" perception supports the functionalist approach. Although the authors agree with Kukla that theory has a legitimate place in psychology, it is suggested that he needlessly limits its scope to autonomous domain-neutral theorizing, and that broadening its perspective to analyzing the presuppositions and implications of empirical work is a more fruitful approach. In fact, the attempt to find the epistemological and philosophical implications of empirical work in perception that is sketched in this review essay is, in the authors' view, a case of theorizing in psychology.