View More View Less
  • 1 Budapest Business School
Restricted access

Purchase article

USD  $25.00

1 year subscription (Individual Only)

USD  $700.00

For the last few decades, considerable attention has been paid to the methodology of mainstream economics. It is not mere chance that economics is surrounded by methodological debates. If its relevance is at stake, this can be either refuted or proven most efficiently at a methodological level. Arguments for and against mainstream economics underline the methodological homogeneity of mainstream economics, while serious, though almost neglected, arguments can be found for a view according to which the long history of mainstream economics can be described as a sequence of methodological breaks. I argue, firstly, for a sharp demarcation by new classical macroeconomics from the Friedmanian instrumentalism and, secondly, for the realism of new classicals. I strive to identify the epistemological principles underlying Lucas’ models and to highlight the signs of that demarcation as well. I concentrate on the techniques by which new classicals could set their models into an indirect relationship with reality. It is also highlighted that the common terminology, according to which the assumptions of abstract economic models are uniformly regarded as “unrealistic”, actually refers to two different techniques. From these approaches, there is only one which can be justifiably labelled as realist.

  • Angner, E. (2015): To Navigate Safely in the Vast Area of Empirical Facts. Ontology and Methodology in Behavioural Economics. Synthese, 192(11): 35573575.

    • Search Google Scholar
    • Export Citation
  • Barnes, B.Bloor, D.Henry, J. (1996): Scientific Knowledge. A Sociological Analysis. London: Athlone Press.

  • Boland, L. (1979): A Critique of Friedman’s Critics. Journal of Economic Literature, 17(2): 503522.

  • De Vroey, M. (2016): A History of Macroeconomics from Keynes to Lucas and beyond. Cambridge: Cambridge University Press.

  • Deichsel, S. (2011): Against the Pragmatic Justification for Realism in Economic Methodology. Erasmus Journal for Philosophy and Economics, 4(1): 2341.

    • Search Google Scholar
    • Export Citation
  • Friedman, M. (1953): The Methodology of Positive Economics. In: Friedman, M. (1966): Essays in Positive Economics. Chicago: University of Chicago Press, 343.

    • Search Google Scholar
    • Export Citation
  • Friedman, M. (2009): The Optimum Quantity of Money. New Brunswick — London: Aldine.

  • Galbács, P. (2015): The Theory of New Classical Macroeconomics. A Positive Critique. New York: Springer.

  • Hacking, I. (1983): Experimentation and Scientific Realism. In: Leplin, J. (ed): Scientific Realism. Berkeley — Los Angeles — London: University of California Press, pp. 262275.

    • Search Google Scholar
    • Export Citation
  • Hahn, F. H. (1971): Professor Friedman’s Views on Money. Economica, 38(149): 6180.

  • Hausman, D. M. (1981): John Stuart Mill’s Philosophy of Economics. Philosophy of Science, 48(3): 363385.

  • Hausman, D. M. (1992): The Inexact and Separate Science of Economics. Cambridge: Cambridge University Press.

  • Hausman, D. M. (2009): Laws, Causation, and Economic Methodology. In: Kincaid, H.Ross, D. (eds): Oxford Handbook of the Philosophy of Economics. New York: Oxford University Press, pp. 3554.

    • Search Google Scholar
    • Export Citation
  • Hindriks, F. (2013): Explanation, Understanding, and Unrealistic Models. Studies in History and Philosophy of Science. Part A. 44(3): 523531.

    • Search Google Scholar
    • Export Citation
  • Hoover, K. D. (2015): The Ontological Status of Shocks and Trends in Macroeconomics. Synthese, 192(11): 35093532.

  • Hoover, K. D.Young, W. (2011): Rational Expectations. Retrospect and Prospect. A Panel Discussion with Michael Lowell, Robert Lucas, Dale Mortensen, Robert Shiller and Neil Wallace. Durham: Duke University.

    • Search Google Scholar
    • Export Citation
  • Keynes, J. M. (1936): The General Theory of Employment, Interest, and Money. London: Macmillan.

  • Kitcher, P. (1989): Explanatory Unification and the Causal Structure of the World. In: Kitcher, P.Salmon, W. C. (eds): Scientific Explanation. Minneapolis: University of Minnesota Press, pp. 410505.

    • Search Google Scholar
    • Export Citation
  • Lucas, R. E. (1972): Expectations and the Neutrality of Money. Journal of Economic Theory, 4(2): 103124.

  • Lucas, R. E. (1973): Some International Evidence on Output-Inflation Tradeoffs. American Economic Review, 63(3): 326334.

  • Lucas, R. E. (1975): An Equilibrium Model of the Business Cycle. Journal of Political Economy, 83(6): 11131144.

  • Lucas, R. E. (1977): Understanding Business Cycles. Carnegie-Rochester Conference Series on Public Policy, 5(1): 729.

  • Lucas, R. E. (1980): Methods and Problems in Business Cycle Theory. Journal of Money, Credit and Banking, 12(4): 696715.

  • Lucas, R. E. (1995): Monetary Neutrality. Journal of Political Economy, 104(4): 661682.

  • Lucas, R.E. (Various): Papers. David M. Rubenstein Rare Book & Manuscript Library, Duke University.

  • Lucas, R. E.Rapping, L. A. (1969a): Real Wages, Employment, and Inflation. Journal of Political Economy, 77(5): 721754.

  • Lucas, R. E.Rapping, L. A. (1969b): Price Expectations and the Phillips Curve. American Economic Review, 59(3): 342350.

  • Lucas, R. E.Sargent, T. J. (1978): After Keynesian Macroeconomics. In: Morris, F. E. (ed.): After the Phillips Curve. Persistence of High Inflation and High Unemployment. Edgartown: Federal Reserve Bank of Boston, pp. 4972.

    • Search Google Scholar
    • Export Citation
  • Mäki, U. (1992): On the Method of Isolation in Economics. In: Mäki, U.Dilworth, C. (eds): Intelligibility in Science. Atlanta — Amsterdam: Rodopi, pp. 317351.

    • Search Google Scholar
    • Export Citation
  • Mäki, U. (1994): Reorienting the Assumptions Issue. In: Backhouse, R. (ed.): New Directions in Economic Methodology. London: Routledge, pp. 236256.

    • Search Google Scholar
    • Export Citation
  • Mäki, U. (2003): Unrealistic Assumptions and Unnecessary Confusions. Rereading and Rewriting F53 as a Realist Statement. In: Mäki, U. (ed.): The Methodology of Positive Economics. Reflections on the Milton Friedman Legacy. Cambridge: Cambridge University Press, pp. 90116.

    • Search Google Scholar
    • Export Citation
  • Mäki, U. (2009): Realistic Realism about Unrealistic Models. In: Kincaid, H.Ross, D. (eds): The Oxford Handbook of Philosophy of Economics. Oxford: Oxford University Press, pp. 6898.

    • Search Google Scholar
    • Export Citation
  • Nagel, E. (1963): Assumptions in Economic Theory. American Economic Review, 53(2): 211219.

  • Patton, L. (2015): Methodological Realism and Model Resourcefulness. Out of the Web and into the Mine. Synthese, 192(11): 34433462.

  • Polanyi, M. (1964): Science, Faith and Society. Chicago: University of Chicago Press.

  • Polanyi, M. (1966): The Tacit Dimension. Garden City — New York: Doubleday.

  • Polanyi, M. (1967): Science and Reality. British Journal for the Philosophy of Science, 18(3): 177196.

  • Polanyi, M. (1970): Science and Man. Proceedings of the Royal Society of Medicine, 63(9): 969976.

  • Polanyi, M. (1972): Genius in Science. In: Allen, R. T. (ed.) (1977): Society, Economics and Philosophy. Selected papers of Michael Polanyi. New Brunswick — London: Transaction, pp. 267281.

    • Search Google Scholar
    • Export Citation
  • Polanyi, M. (2005): Personal Knowledge. Towards a Post-Critical Philosophy. London: Routledge.

  • Popper, K. (1963): Three Views Concerning Human Knowledge. In: Popper, K. (2002): Conjectures and Refutations. The Growth of Scientific Knowledge. London: Routledge — Kegan Paul, pp. 130160.

    • Search Google Scholar
    • Export Citation
  • Rutherford, M. (1997): American Institutionalism and the History of Economics. Journal of the History of Economic Thought, 19(3): 178195.

    • Search Google Scholar
    • Export Citation
  • Samuelson, P. A. (1958): An Exact Consumption-Loan Model of Interest with or without the Contrivance of Money. Journal of Political Economy, 66(6): 467482.

    • Search Google Scholar
    • Export Citation
  • Samuelson, P. A. (1963): Problems of Methodology. Discussion. American Economic Review, 53(2): 231236.

  • Sargent, T. J. (1977): Is Keynesian Economics a Dead End? Working Paper, No. 101. Minneapolis: University of Minnesota and Federal Reserve Bank of Minneapolis.

    • Search Google Scholar
    • Export Citation
  • Sargent, T. J. (1987): Some of Milton Friedman’s Scientific Contributions to Macroeconomics. Stanford: Hoover Institution — Stanford University.

    • Search Google Scholar
    • Export Citation
  • Shech, E. (2015): Scientific Misrepresentation and Guides to Ontology. The Need for Representational Code and Contents. Synthese, 192(11): 34633485.

    • Search Google Scholar
    • Export Citation
  • Spanos, A.Mayo, D. G. (2015): Error Statistical Modeling and Inference. Where Methodology Meets Ontology. Synthese, 192(11): 35333555.

    • Search Google Scholar
    • Export Citation
  • Syll, L. P. (2010): What Is (Wrong with) Economic Theory? Real-World Economics Review, 11(4): 2357.

  • Weber, M. (1904): Die Objektivität sozialwissenschaftlicher und sozialpolitischer Erkenntnis. Archiv für Sozialwissenschaft und Sozialpolitik, 19(1): 2287.

    • Search Google Scholar
    • Export Citation
  • Weber, M. (1978): Economy and Society. Berkeley: University of California Press.