ABSTRACT
Friedman does endorse usefulness in making predictions as a criterion for a successful economic theory. The sociology of finance, e.g. the heavy consulting on a subject one of whose irreducible components is risk or uncertainty, requires a body of theory which can be invoked even if of only marginal use. So bad theories persist. So it has always been in finance, even before the emergence of finance as an academic discipline. Therefore, examining the foundational issues whereby theories are accepted or rejected in this murky area deserves ongoing examination and critique. Although Friedman’s view is probably the most frequently quoted whenever a view is given, it is less clear that this is not merely lip service largely unrelated to the practice of the field.
