I don’t have time right now to read the essay which is abstracted below. But I’d love to. And I don’t really have time to defend the propositions that I’ll put before you here, nor to get them into a state that I would be confident I wouldn’t have to revise once I’d posted them. But with those caveats, here goes.
Positivism has had a profound influence on the development of what I call the practical social sciences – namely law and economics. In American jurisprudence anti-positivism held sway for most of twentieth century with legal realism being the dominant tradition – something that was an offshoot of American pragmatism – which is the most accessible, useful and democratic of the anti-positivist philosophical schools.
In economics meanwhile, pragmatism was represented by the Institutionalists in economics. Institutionalism was a quite philosophically astute school, but wasn’t much use to anyone because, like a lot of anti-positivist economics today, it spent a lot of its time in ralatively barren spats with positivism rather than getting on with its work. While it won the methodological battles in the sense that it laid bare some of the intellectual sleights of hand on which neoclassical econmics was built it lost the war on account of its own inability to build a useful body of doctrine, practice and technique (someone like Marshall * – or later on Hicks – didn’t really deny they were slights of hand, they just thought – reasonably enough – that the intellectual shortcuts they were taking were worth a try – which they were providing one kept that in mind. Alas our mind only holds so many caveats, and meanwhile there are mountains to climb). Anyway, unlike Marshall and Hicks, institutionalism in economics didn’t get very far in its first incarnation.
Meanwhile positivism kept plugging away reducing economics to the axioms of choice at the margin and gradually throwing away the crucial bridges that were present until around the 1950s between the mathematics and the passages that justified the use of the mathematics and argued that the methodological sacrifices made in making increasingly Herculean abstractions were worth making.
We ended up with a very disturbed discipline in which it was seriously argued that the realism of assumptions could be dispensed with (Friedman argued this largely in defence of the assumption of perfect competition even where it wasn’t quite realistic – a position I’d support – but Friedman ended up unimpressed by more full blooded – and basically nutty – applications of the principle he’d advocated as for instance in the theory of real business cycles (which shows how the Great Depression was really a spontaneous decision by workers to take a holiday). People like Krugman and Delong have been bemoaning the nuttyness and forgetfulness of modern economics of late, though their explanation of the source of the problem is ideology rather than methodology. (I’m not saying it’s all methodology by the way, but I’m dead sure it plays its part).
Anyway, the second wave of institutionalism borrows heavily from neoclassical method and is a kind of positivism, though it is much closer to the ‘soft’ empirically focussed positivism of Hicks and Marshall. Today the strongest cell of anti-positivist thinking is Austrian economics.
Anyway, the article to which I’ve linked above by Becchio Giandomenica (University of Turin) has the following title:
A historical reconstruction of the connections between the Viennese neopositivists and the American pragmatists: economic theory in the project for the International Encyclopaedia of Unified Science.
And here’s the abstract.
Persuaded by the fact that the philosophical debate in Vienna during the 1930s deeply influenced the subsequent American developments of economic theory, my purpose is to reconstruct, from a historical and theoretical point of view, how Austrian interests in economics (which spread in the interwar period) moved to the USA, and what the subsequent developments were. From a historical point of view, I shall focus on the genesis of the International Encyclopaedia of Unified Science promoted by philosophers belonging to the Vienna Circle (Otto Neurath, Rudolph Carnap and Philipp Frank) and American pragmatists (John Dewey and, above all, Charles Morris) between 1938 and 1969. From a theoretical point of view, I shall focus on the development of economic theory within this project, which was regarded as the most important outcome of logical positivism or new empiricism, this being the common philosophical outlook that they shared. The aim of this paper is to show how the original meaning of economics (as formulated by Neurath) within the Vienna Circle was changed in its transition from Vienna to the USA (when the International Encyclopaedia was organized) and was finally radically transformed in the American context during the following decades.
I expect this post will mean very little to lots of people. And the intriguing thing is that sometimes the anti-positivists point predominantly left – as in the case of legal realism and institutionalism – and sometimes right – as in the case of Austrian economics. My interest is mainly epistemological. I think positivism is a kind of epistemological baby talk. But it needn’t matter a great deal. It is simply not the case that you’ve got to get your foundations right to do good economics (Well foundations are a positivist preoccupation, so I guess that’s a victory for anti-positivism right there). But just as great scientists often have a philosophically naive understanding of their own methodology (what matters is how well they do the science, not how well they can theorise their method invariably after the event), Paul Krugman is a damn good economist, even if when he writes about methodology he writes sentences which make me cringe – for instance implying that formalisation is somehow inherently superior to informal (verbal) reasoning. I’d say it always depends, there are costs and benefits of both modes and it depends on their balance in any specific situation. Indeed every useful application of formal reasoning relies to some crucial extent on informal reasoning, both to motivate it and to indicate its relevance to the empirical world.
Anyway, it’s probably taken the time that it would have taken me to read the article to write this post. But now it’s here and a record of these loose thoughts I’ve had for a long time. I’ll leave off here and leave readers to make of this post what they will. Rafe will be interested I suspect, he may even agree with me. This may have some Troppodillians worried. Some will worry about me. Others Rafe.
* Intriguingly, Marshall started out life as a devoted Hegelian – and at least from my limited knowledge, Hegel is the first and archetypal anti-positivist philosopher. Since Hegel there has been positivism and post Hegelian philosophies (though some who have fought the fight against the cruder forms of positivism – and this includes both Hayek and Popper – would describe themselves as post-Kantian. They regarded Hegel as a menance and/or a crank).