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on September 30, 1999
This is probably the best introduction and overview to a broad range of philosophical concerns within the discipline of economics. It is accessible to the lay reader but is not dumbed down in order to be popular. It does not require any particular knowledge of economic theory but instead deals with general philosohical and methodological issues in economics. Nonetheless, the reader is engaged with key methodological debates within the discipline of economics.
The book implicitly contains a number of critiques of the (neoclassical) economic orthodoxy, set in their historical perspective. The basic concern of the book is with the influence of logical positivism and its descendants on economic theorising and accepted methodologies, and the book concludes with Caldwell's suggesting an approach to resolving many of these issues, called "methodological pluralism".
If you are interested in examining the philosophical foundations of economics, this is probably the best book around. If you are interested in the philosophy of economics, there is also a reader entitled "The Philosophy of Economics" by Daniel Hausman which would make a good companion. "Why Economics is not yet a Science", Alfred Eichner, 1983 is an interesting questioning of approaches and methodologies in economics. If you are interested in alternatives to mainstream economic approaches, then "A Modern Guide to Economic Thought" by Maire and Miller, 1991 is a good introduction (aimed at an interested university undergraduate without necessarily having a strong current background in economics studies).
There is also a large literature on the sociology of economics, examining how the discipline of economics adapts to new ideas and criticisms. "Canonizing Economic Theory : How Theories and Ideas Are Selected in Economics", Christopher D. MacKie, ME Sharpe, 1998 is a good starting point for this.
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on February 21, 2002
The author had two broad objectives in this book. The first was to provide a critique of positivism, including logical positivism, logical empiricism, operationalism and falsificationism. The second was to identify the implications of this critique for economic methodology.
The first part of the book describes the role of the Vienna Circle in the rise of logical positivism during the 1920s and 1930s, followed by the maturation of the tradition in the form of logical empiricism, then the philosophical attack and the emergence of the "growth of knowledge" tradition with Popper, Kuhn, Lakatos and Feyerabend.
The second part of the book consists of essays on various aspects of positivism and alternative approaches including the "Austrian" approach of Robins and Machlup (each pitted against Hutchison), Friedman's instrumentalism and Samuelson's "descriptivism".
The third part provides some provisional answers, notably a case for methodological pluralism.
In view of the way that positivism dominated the philosophy of science during the 20th century this scholarly appraisal of the rise and fall of the movement is a valuable contribution to the history of ideas. However as a contribution to contemporary thinking on these matters it would have been a more original and challenging enterprise if positivism had not already been devastated by Popper, who replaced justificationism and inductivism with critical rationalism and the non-authoritarian theory of knowledge.
This is a new edition of Caldwell's 1982 book but it is not really revised and so it does not do justice to his "mature" thinking which can be found in an article "clarifying Popper" in the Journal of Economic Literature, March 1991. This article draws on Popper's theory of metaphysical research programs and shows that when he is depicted as a critical rationalist instead of a falsificationist, several pieces of the jigsaw fall into place, including Popper's re-invention of "Austrian" praxeology and Talcott Parsons' "action frame of reference" under the heading of "situational analysis".
It seems that the field of economic methodology has been unduly influenced by Mark "Bluster" Blaug's commitment to Lakatos rather than Popper, to "falsificationism" rather than critical rationalism and to the Kuhn/Lakatos notion of research programs with inviolable "hard cores" rather than the Popperian program which subjects "hard cores" to critical appraisal. Lakatos, as a Hegelian, attempted a synthesis of Popper and Kuhn, to capture the Spirit of the Age, as it was, becoming in the process a Historical Figure. This grand scheme did not work out and the tormented progress of the Lakatosian World Spirit continued to cause confusion on several continents (and in the isles of Greece) even after Lakatos himself had gone.
When the idea of Popper as a critical rationalist is taken on board, as Caldwell appeared to be doing in his "clarification" paper, then some really interesting results emerge, as indicated by Boland in 1982. It may be that the real impediment to progress in economics is not the failure to be serious about falsification (as Blaug has argued) but the failure to recognize that the real driving forces in methodology are Instrumentalism (as per Friedman) and Conventionalism (as per Samuelson). These need to be subjected to critical appraisal, in the context of ongoing research, not merely as a part of the history of ideas.
In this book Caldwell has shown a remarkable open-mindedness to the much-maligned ideas of the Austrians. This would have taken a deal of nerve in view of the hard things that are said about them by his peers and by luminaries such as Samuelson. (There again, it was Samuelson who, up to the Fall of the Wall, thought that the Soviet economy was doing well and catching up fast with the US). Similarly, it was bold to champion Popper's ideas on the metaphysical aspects of scientific research programs. This is exciting stuff and one hopes that Caldwell is prepared to continue the maturation process that was apparent in his article, even to the extent of producing a seriously revised edition of this book.
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on October 21, 2010
Much positivism, little "beyond", and some skepticism

Caldwell is a professor of economics at the University of North Carolina at Greensboro. This book written in 1982 (revised edition, 1994) contrasts the methodological views of several economists with various philosophies of science, especially positivism. The author has read his sources carefully and criticized them thoughtfully.

The book is subdivided into three parts. The first part is titled "Twentieth Century Philosophy of Science" and consumes 93 of the book's 250 pages. The first 60 pages discuss positivism, and amounts to an autopsy of what Caldwell recognizes to be a dead philosophy. The next 25 pages discuss post-positivist philosophy of science, which Caldwell characterizes as "The Growth of Knowledge Tradition", which he finds in Popper, Kuhn, Feyerabend and Lakatos. These authors were contributors to Criticism and the Growth of Knowledge (1970, ed. Lakatos). In a section titled "Contemporary Philosophy of Science - A Dilettante's Review and Commentary" Caldwell writes (p. 90) that the major difference between more contemporary approaches and those of the positivists is that the former give emphasis to the role history of science as a check with which to test the rational reconstructions of philosophers.

Contemporary philosophy of science has been more empirical than that of the logical positivists. But Caldwell's valid observation about the role of history of science together with his characterization of contemporary philosophy as "growth-of-knowledge tradition" offers little insight.

Caldwell's rendering of contemporary philosophy of science is somewhat shallow and miscellaneous; he describes himself as a dilettante commentator, and indeed he is. He fails to see that the post-positivist philosophy is the contemporary pragmatist philosophy that derives much coherence from the pragmatist philosophy of language; it is not just post positivist philosophy - it is a new philosophy.

He would have done well to read Quine's philosophy of language, which contains such integrating concepts as a relativized semantics and ontological relativity. Language is as fundamental to philosophy of science as money is to economics, and philosophers use linguistic analysis to analyze the history of science as economists use monetary analysis to analyze economic history.

The second part is titled "Some Essays on Positivism and Economic Methodology" and is 106 pages. Caldwell the economist is both more secure and more adequate in these essays than in his philosophical discussion. And having spent two semesters studying history of economic thought in graduate school, I found Caldwell to be quite respectably erudite here, and his discussions to be competent and keen.

Caldwell's archetypal positivist economist is Hutchison, who he reports is the first to introduce positivism into economics in an explicit methodological treatise. Caldwell contrasts Hutchison with Robbins and the Austrian school and with Malchup. Truly a striking contrast. His discussion of Malchup includes an interesting and lengthy examination of the empirical testability of the rationality postulates. He than takes up Friedman, whom he characterizes as an "methodological instrumentalist" who believed that the unrealism of the rationality postulates is irrelevant. He finally turns to Samuelson and his operationalism and doctrine of revealed preference in opposition to the Austrians.

There is irony in Caldwell's treatment of economics methodology, because what is historically "beyond" positivism is the more recent contemporary pragmatism. Yet there is no mention of pragmatism in these essays or even in the book's index. What one actually finds instead are contrasts between positivist and romanticist philosophies in economics. Romanticism including notably the economists' rationality postulates is not "beyond" positivism, but rather is "before" positivism.

The third part is titled: Provisional Answers to Some Unsettled Questions." In the first chapter heading in this part Caldwell asks: "Is Philosophy of Science Useful for Understanding Methodology?" Caldwell answers that philosophy of science can be a valuable tool for studying economic methodology. But he adds that one should neither expect nor welcome a single, ultimate methodology to be forthcoming when philosophical tools are applied to economic methodology. Given his fragmentary understanding of post-positivist philosophy of science (and ignoring his "ultimate methodology" caricature) this conclusion is not altogether surprising. There is now much more coherence contributed by contemporary pragmatism than is to be found in Caldwell's rendering of post-positivist philosophy of science. Caldwell is uncomfortable with "conventionalism", which is his way of describing the artifactual semantics of descriptive language that is characteristic of pragmatism today.

Having concluded that the "growth-of-knowledge" philosophers have shown that the theory-choice problem is unsolvable, and that they have demonstrated that the quest for a single, universal, prescriptive methodology is quixotic, Caldwell advocates "methodological pluralism." Examination of the condition of methodology in economics would justify this skepticism, but contemporary philosophy of science does not. Such a conclusion is the product of Caldwell's fragmented and miscellaneous understanding of post-positivist philosophy of science. Many economists will be gleeful to read that there is a place for every methodological persuasion. But Caldwell's diplomacy invites chaos. Proliferation in theory development is productive, but proliferation in the criteria for criticism, the nature of explanation and the aim of science is counterproductive.

Here are a few selected quotes from Caldwell:

1. "One approach which to my knowledge has been completely ignored is the integration of economic methodology and philosophy with econometrics." (P. 216)

I comment: This is true to the extent that economists have not referenced the philosophy of science literature. But it is disappointing that Caldwell has not examined and discussed the methodological paper by Nobel laureate Trygve Haavelmo, "The Probability Approach in Econometrics" Econometrica. Vol. 12 (July, 1944), Supplement. Haavelmo's many-leveled semantical analysis is as sophisticated as Duhem's and in many respects similar.

2. "Malchup's insistence that empirical studies can never establish nor falsify a theory, but can be used to judge its applicability, also strikes me as wise counsel." (P. 167)

I comment: Caldwell is sympathetic to Malchup's ideas, but Malchup's is not wise counsel: it says a theory is true where it is applicable and not applicable where it would be falsified. It thus makes a theory unscientific and reduces it to an unfalsifiable tautology.

3. "[Malchup's] observation that even a disconfirmed theory will not be rejected unless a suitable replacement exists, only agrees with the findings of Kuhn and Lakatos regarding theory change, it anticipates them by a decade." (P. 167-8) See also his discussion of Kuhn, Feyerabend and Lakatos on theory choice. (pp. 223-228)

I comment: Malchup - like many early pragmatists including Kuhn, Feyerabend and Lakatos - indulged in much weasel wording with the term "theory." Today the pragmatist defines "theory" language pragmatically rather than by its semantics including such semantics as rationality postulates. "Theory" is language that is proposed for testing as opposed to test design language that is presumed for testing. Theory language is that which is relatively more hypothetical, and is defined by reference to the function of criticism in science. However, while theory language is identified pragmatically, theories are individuated semantically. And as a result of the pragmatist thesis of relativized determination of semantics, any attempt to correct or modify a theory in response to a test outcome changes the theory's semantics, such that it is no longer the same theory. And a decision to develop another theory is prime facie evidence that a tested theory has been falsified and rejected.

Caldwell believes that the theory choice problem is unsolvable. Wrong! It is not, after one deletes that semantic "incommensurability" nonsense that these early pragmatists advocated incorrectly. Caldwell never mentions the semantic incommensurability thesis.

I invite interested readers to view my ebook Twentieth-Century Philosophy of Science: A History. BOOK VIII in this book pertains to philsoophy of economic science. Also see my Philosophy of Science: An Introduction (Second Edition).

Thomas J. Hickey
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on November 7, 2009
This book gives a good, straightward account of some of the main 'lines of thought' in economic methodology in the 20th century in so far as they have been influenced by the philosophy of science (starting with logical positivism). Part 1 deals with philosophy of science, Part 2 deals with economic methodology (and despite the author's apparent intention, could well be read without reference to Part 1), and Part 3 deals with a number of methodological issues (here the author expresses personal views and his preferred position of pluralism).

The book has a somewhat 'textbookish' feel to it in that it is clearly written, is fairly comprehensive, and does not foist upon the reader too many personal, idiosyncratic opinions (at least for Parts 1 & 2, which make up the bulk of the book).

It was good to see the Austrian School was included in Part 2, as the Austrians are often unfairly dismissed as nutters. It would have been good to see a section on Marxist thinking on methodology too - although this might have involved opening a large can of large worms. A criticism that might be made these days (though not at the time the book was originally written) is that it does not pay too much attention to the issue of whether the methodological views of economists are actually put into practice, and whether or not the best way to understand economists' methodological views is to look at their applied work (see e.g. Theory and Measurement: Causality Issues in Milton Friedman's Monetary Economics (Historical Perspectives on Modern Economics) for this kind of approach).
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