ABSTRACT

Prior to the 1970s, philosophical and methodological reflection on economics was provided mostly by working economists. During that decade, the philosophy and methodology of economics started taking shape as a separate research field, prompted

by changes in economics and in the philosophy of science. Themes and concepts adopted from karl Popper and Imre Lakatos first became popular. This was largely due to authors who worked at the interface of the philosophy and history of economics and who were concerned that economists had accepted theories without sufficiently strong evidential warrant. Others looked for ways of discriminating between schools of economic thinking that again had started to proliferate. Popper and Lakatos seemed to offer appropriately stringent standards for assessing – and improving – a discipline that aspired to be an empirical science. In 1938, Terence Hutchison had incorporated falsificationist elements in his otherwise logical positivist account of economic theory. Between years 1957 and 1963, Popper’s falsificationism was more seriously entertained by the “M2T” group of economists and philosophers at the London School of Economics. They examined a variety of economic theories against falsificationist standards, and concluded that there is an irresolvable tension: economic theories are not strictly falsifiable. One of them had to go, and it was falsificationism that was to be sacrificed (see De Marchi 1988). In the 1970s, falsificationism made a comeback, both in Popper’s and in Lakatos’s modified versions. It was again soon concluded that any simple version of falsificationism in economics would be descriptively inadequate and normatively utopian, thus in a sense itself falsified – even though commentators, like Mark Blaug (1992 [1980]), kept insisting that economists should just try harder to meet falsificationist standards. Others, like Larry Boland, have defended Popper’s more general doctrine of critical rationalism. Lakatos’s methodology of scientific research programs (MSRP) has enjoyed a longer life. It was introduced to economics by Spiro Latsis, a student of Lakatos, soon to be adopted by others (Latsis 1976). Fifteen years later, it was almost unanimously dropped (De Marchi and Blaug 1991). Meanwhile, numerous applications and case studies were undertaken and employed in arguments either about economics or about Lakatosian methodology. Research programs were identified by formulating their hard cores, protective belts, and heuristics, and they were assessed in terms of progress (De Marchi and Blaug 1991). The MSRP had obvious advantages. It helped see that the unit of assessment is larger than a single hypothesis or theory, and that not all parts of a theory are equally flexible when confronted with empirical evidence. It helped highlight the ongoing adjustment of theories in economics. The idea of predicting novel facts captured a notion held by many economists: predicting data that were not used in the construction of a model yields it greater support than predicting data that were so used. When applied to economics, the MSRP suffered from obvious problems. The identification of research programs – choosing their scale and drawing their boundaries – turned out to be somewhat arbitrary, making it unclear how one can assess their relative performance in a sensible way. The hard cores of many candidate programs are not as hard as the MSRP would require. The MSRP lacks other resources needed for recognizing programs as rivals that can be reasonably compared; that would require pointing out their shared goals. This is made harder by further problems in reliably identifying cases of progress and degeneration. And, again, economists’ actual

decisions as to whether to accept or reject a program seemed to have little to do with their apparent progress or degeneration. Popperian and Lakatosian frameworks were dropped also because they lacked the resources needed for addressing many core issues in the philosophical reflection on economics. Much has happened after (and parallel to) this episode, such as philosophical analyses of causation in macro-economics and econometrics, and of experimental economics, by specialists like kevin Hoover and Francesco Guala (see Further reading). In what follows I select four other core themes: theoretical models; rhetoric of economics; use of economics in the socialization of the philosophy of science; and the interdisciplinary relations of economics.