Conceptual progress in economics. Abstraction of social kinds vs idealization
09 / 2001 - 09 / 2007
The aim of the project is to find concepts of scientific progress that fits the practice of economic theory makers. I choose an a posteriori (sometimes called a 'naturalistic') approach: no prescriptions for good practice can be expected from philosophers. I want to depict what economists in fact are doing. There are several ways to conceive of progress in economic research. One of these involves the assumption that idealisations are necessary starting points in modelling the economic world, but that subsequent concretisations bring theories closer to some 'truth' in economics. This is the approach taken by the Poznan' school. However, idealisations proceed by giving limit values to specific variables. Thus, any idealisation involves falsity. Once the assumptions involved are dropped, then, these variables regain their values that are supposed to be the true ones. Abstraction, in turn, is an epistemic operation that does not involve the introduction of falsehoods at all. Its reverse is, evidently, concretisation. It follows that the opposite of idealisation cannot be concretisation, but merely de-idealisation. The domain of my research includes the ways in which economists use abstraction and idealisation as heuristic engines to find explanations of economic phenomena. I expect conclusions on this topic to explain how economic policy recommendations, given the difficult relation these entertain with theory, can be understood. A second idea, introduced by Bert Hamminga, is that economists seek to find Interesting Theorems inferred from the assumptions of economic theories. Both conceptions, of the Poznan' tradition and of hamminga, take a weakening of the specified limiting conditions as steps forward. The Lakatosian idea of theoretical and empirical progressiveness of non-degenerating research programs is a third way to see it. Most contemporary philosophers of economics have given up this view on the matter, as it turned out impossible to identify clear cut research programmes in economics, let alone hard cores and positive heuristics of such programmes. Still another conception of scientific progress is embodied in truth approximation. A realist approach to science takes it that the concepts of economic theory denote something real in economies. Such a stance is compatible both with constructive realist and with essentialist epistemologies. The different approaches need not be mutually exclusive. Which concept fits economics best? Is it a single sort of progress that steers theoretical and empirical economic research? Most scientists, and economists no less, talk about their research as though they are plain essentialists. Even the alleged champion of instrumentalism, Milton Friedman, shows essentialist inclinations in his work. One objective of my investigations is to see if these essentialist inclinations can be taken charitably, i.e. to follow many economists in their self image and try to philosophically defend essentialism in economics, albeit hesitantly, while at the same time trying to do justice to the fact that any knowledge is of course indexed to conceptual schemes. The different approaches need not be mutually exclusive. Which concept fits economics best? Is it a single sort of progress that steers theoretical and empirical economic research? My conceptual research will be butressed by one case study from Austrian neo-classical economics (Eugen von Böhm-Bawerk and Knut Wicksell). Another case study projected deals with Milton Friedman's natural rate hypothesis (the long run Philips curve).