Methodology of Economics

We study a case that applies hermeneutics to social sciences, in particular to the Austrian School of economics. We argue that an inaccurate treatment of hermeneutics contributed to an epistemological downgrade of the Austrian School in the economic scientific community. We discuss hoe this shortcoming can be fixed and how a proper hermeneutic application to the Austrian school explains why this school of thought is neither positivist nor postmodern.

"David Ricardo has been acclaimed - or vilified - for merits he would never have dreamt of, or sins for which he was entirely innocent. Entrenched mythology labels him as a utilitarian economist, an enemy of the working class, an impractical theorist, a scientist with 'no philosophy at all' and the author of a formalist methodological revolution. Exploring a middle ground between theory and biography, this book explores the formative intellectual encounters of a man who came to economic studies via (...) other experiences, thus bridging the gap between the historical Ricardo and the economist's Ricardo. The chapters undertake a thorough analysis of Ricardo's writings in their context, asking who was speaking, what audience was being addressed, with what communicative intentions, using what kind of lexicon and communicative conventions, and starting with what shared knowledge. The work opens in presenting the different religious communities with which Ricardo was in touch. It goes on to describe his education in the leading science of the time - geology - before he turned to the study of political economy. Another chapter discusses five 'philosophers' - students of logic, ethics and politics - with whom he was in touch. From correspondence, manuscripts and publications, the closing chapters reconstruct, firstly, Ricardo's ideas on scientific method, the limits of the 'abstract science' and its application, secondly, his ideas on ethics and politics and their impact on strategies for improving the condition of the working class. This book sheds new light on Ricardian economics, providing an invaluable service to readers of economic methodology, philosophy of economics, the history of economic thought, political thought and philosophy. Sergio Cremaschi is a former Reader of Moral Philosophy at the 'Amedeo Avogadro' University at Vercelli"--. (shrink)

I appraise some areas of recent achievement in economic methodology by identifying four topics on which there will likely be heavy exogenously generated demand for methodological innovation over co...

Behavioural economics has taught us that human agents don't always display consistent, context-independent and stable preferences in their choice behaviour. Can we nevertheless do welfare economics...

Despite the conclusions from the contemporary philosophy of science, many economists cherish the ideal of positive science. Therefore, value-free economics is still the central paradigm in economics. The first aim of the paper is to investigate economics' axiomatic assumptions from an epistemological perspective. The critical analysis of the literature shows that the positive-normative dichotomy is exaggerated. Moreover, value-free economics is based on normative foundations that have a negative impact on individuals and society. The paper's second aim is to show that (...) economics' normativity is not a problem because the discussion concerning values is possible and unavoidable. In this context, Weber and other methodologists are investigated. The conclusion of the paper is that science can thrive without strict methodological rules thanks to institutional mechanisms. Therefore, economists could learn from artists who accept the world without absolute rules. This perspective opens the possibility for methodological pluralism and normative approaches. (shrink)

"F. A. Hayek and the Epistemology of Politics is an exploration of an important problem that has largely been ignored: the problem of policymaker ignorance, and the limits of political epistemology. Scott Scheall explores Hayek's attitude to the philosophy of science and political philosophy, arguing that Hayek defended a philosophy of science that implied certain potential dangers of politicized science, and that his political philosophy established the potential dangers of misapplying scientific methods and results to matters of public policy. The (...) book offers an explanation for why policymaking often fails and why constituents, whatever their political affiliations, are so often disappointed with political leaders. In this primarily philosophical examination of his work, Hayek's ideas are not merely discussed, analysed, and contextualized, but extended; the book both draws and defends previously unrecognized implications from the Hayekian canon. The book also explores the historical context within which these ideas flourished. The book will be of interest to scholars and researchers of the works of F.A. Hayek, policymakers, and to those of all political, philosophical, and social-scientific persuasions"--. (shrink)

Hayek and the Efficient Market Hypothesis are often seen as proposing a similar theory of prices. Hayek is seen as proposing to understand prices as information conveyer, incorporating inform...

In just over 30 years, Geoff Hodgson has made substantial contributions to institutional economics, evolutionary economics, economic methodology, the history of economic thought and social theory. To mark his seminal work, this volume brings together original contributions by world-leading scholars in specific areas that have played a significant role in influencing his thinking or represent key debates to which he has contributed. Building on some of the most significant philosophical and methodological foundations underlying Hodgson's work, the volume is organised around (...) the recurring themes of institutions, evolution and capitalism. (shrink)

La discusión acerca de los modelos en ciencias sociales, en particular en economía, es central a la disciplina, especialmente si se intenta mediante estas construcciones teóricas no sólo comprender sino también transformar el mundo social. ¿Qué son los modelos? ¿Para qué sirven? ¿Cómo tienen que ser? Estas preguntas se encuadran en la cuestión acerca de cómo tiene que ser la economía como ciencia en el marco de la epistemología de la economía. Popper, Lawson y Mӓki se plantean estas preguntas y (...) ofrecen posiciones diferentes respecto de la naturaleza, el uso, y el alcance de los modelos. Las propuestas de estos autores aportan en nuestro tiempo al debate acerca de cómo debe ser la economía como ciencia y sus métodos para poder explicar y predecir en el mundo social. (shrink)

In the wake of the global financial crisis of 2008, the greatest economic disaster since the Great Depression, the cover story of the July 18th 2009 issue of The Economist, entitled “What went wrong with economics,” opened with an unequivocally incriminating statement: “Of all the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself.” In the months surrounding this indictment, many influential economists, including several Nobel laureates, were drawn to the same embarrassing (...) conclusion. Despite the existence of a handful of Cassandras, economists, as a group, had failed to foresee the crash. This short essay reviews the criticisms addressed to modern economic theory in the immediate aftermath of the crash. Overall, the main issues raised by critics were that (a) economists versed in the dominant models in macroeconomics and finance have been blinded to the possibility that we live in an uncertain and complex world; and (b) that the content of current economics education has sidelined many of the relevant insights to be found in the history of the discipline. This has led the critics to call for changes in the institutional structure of discipline, with a particular emphasis on the promotion of interdisciplinarity, and theoretical and methodological pluralism. (shrink)