RH351

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RH351 Rhetoric of Economic Thought Transparencies
Set 9 Methodological Disputes
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Epistomology
Epistemology is that branch of philosophy that
concerns the study of knowledge and justified
belief. As the study of knowledge, epistemology
deals with the following questions

• What are the necessary and sufficient conditions
  of knowledge? What are its sources? What is its
  structure, and what are its limits?
• How are we to understand the concept of
  justification? What makes justified beliefs
  justified? Is justification internal or external
  to one's own mind?
• Understood more broadly, epistemology is about
  issues having to do with the creation and
  dissemination of knowledge in particular areas of
  inquiry.

Stanford Encyclopedia of Philosophy,
http//plato.stanford.edu
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Philosophy of Science

• Positivism (Compte, 1798 1857 Durkheim, 1858
  1917)
• Replacement of metaphysics by the scientific
  method
• Progress through accumulations of scientific
  knowledge
• Logical Positivism (Vienna Circle, 1922 1936)
• Stricter version of positivism fiercely
  empiricist
• Statements that cannot be subjected to empirical
  tests have no cognitive significance.
• Critical Rationalism (Karl Popper)
• Critical Rationalism Scientific theories are
  abstract, and can be tested only indirectly by
  reference to their implications.
• Verification vs. Falsification
• Scientific Revolutions and Paradigm Shifts
  (Thomas Kuhn, 1962)
• Methodological Pluralism and Rhetorical
  Approaches
• Paul Feyerabend, Against Method (1975)
• A view that there are no methodogical rules
  defining a unique scientific method

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Milestones in Economic Methodology
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Economic Methodology The Deductive Approach
The propositions of economic theory, like all
scientific theory, are obviously deductions from
a series of postulates These are not
postulates the existence of whose counterpart in
reality admits of extensive dispute once their
nature is fully realized. We do not need
controlled experiments to establish their
validity they are so much the stuff of our
everyday experience that they have only to be
stated to be recognized as obvious.
Lionel Robbins
An Essay on the Nature and Significance of
Economic Science (1935)
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Economic Methodology The Positivist View
The reason why scientists, unlike philosophers,
can build on and advance their predecessors' work
rather than each being simply "influenced" by it
and starting afresh right from the beginning at
the same problems with some complete new system,
is that "scientists" have definite, agreed, and
relatively conclusive criteria for the testing of
propositions, solutions, and theories which
"philosophers" do not accept.
Terrence Hutchison
The Significance and Basic Postulates of Economic
Theory (1938)
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Economic Methodology The Modernist Approach
The ultimate goal of a positive science is the
development of a theory or hypothesis that
yields valid and meaningful predictions about
phenomena not yet observed Factual evidence
can never prove a hypothesis it can only fail
to disprove it, which is what we generally mean
when we say, somewhat inexactly, that the
hypothesis has been confirmed by experience
the relevant question to ask about the
assumptions of a theory is not whether they
are descriptively realistic, for they never
are, but whether they are sufficiently good
approximations for the purpose in hand. And
this question can be answered only by seeing
whether the theory works, Which means whether it
yields sufficiently accurate predictions.
Milton Friedman
The Methodology of positive economics (1953)
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Economic Methodology The Functional Approach
The view that the worth of a theory is to be
judged solely by the extent and accuracy of its
predictions seems to me wrong ... a theory is not
like an airline or bus timetable We are not
interested simply in the accuracy of its
predictions. A theory also serves as a base for
thinking. It helps us to understand what is
going on by enabling us to organize our
thoughts. Faced with a choice between a theory
which predicts well but gives us little insight
into how the system works and one which gives us
this insight but predicts badly, I would choose
the latter, and I am inclined to think that most
economists would do the same.
Ronald Coase
How Should Economists Choose? (1981)
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McCloskey on the Rhetoric of Economics
Economists do not follow the laws of enquiry
their methodologies lay down. A good thing, too
Economists in fact argue on wider grounds,
and should. Their genuine workaday rhetoric, the
way they argue inside their heads or their
seminar rooms, diverges from the official
rhetoric.
Donald McCloskey
Economists should become more self-conscious a
bout their rhetoric, because they will then
better know why they agree or disagree, and will
find it less easy to dismiss contrary arguments
on merely methodological grounds By rhetoric
is not meant a verbal shell game, as in empty
rhetoric or mere rhetoric Rhetoric is the
art of probing what men believe they ought to
believe, rather than proving what is true
according to abstract methods Rhetoric is
exploring thought by conversation.
The Rhetoric of Economics (1983)
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Economic Methodology
Scientists constantly utilize parables,
paradigms, strong polar models to help understand
more complicated reality. The degree to which
these do more good than harm is always an open
question, more like an art than a science.
Paul Samuelson, Theory and Realism A Reply,
American Economic Review (1964)
Paul Samuelson
Economics and other social sciences deal with
knowledge and truth of a different category from
that of the natural sciences, truth which is
related to sense observation and ultimately
even to logic in a very different way from that
arrived at by the methodology of natural science.
But it is still knowledge of reality.
Frank Knight
What is Truth in Economics? (1940)