Abstract
AbstractIt has long been recognized that the Milton Friedman’s 1953 essay on economic methodology (or F53, for short) displays open-ended unclarities. For example, the notion of “unrealistic assumption” plays a role of absolutely fundamental importance in his methodological framework, but the term itself was never unambiguously defined in any of the Friedman’s contributions to the economics discipline. As a result, F53 is appealing and liberating because the choice of premises in economic theorizing is not subject to any constraints concerning the degree of realisticness (or unrealisticness) of the assumptions. The question: “Does the methodology of positive economics prevent the overlapping between economics and science fiction?” comes very naturally, indeed. In this paper, we show the following theorem: the Friedman’s methodology of positive economics does not exclude science fiction. This theorem is a positive statement, and consequently, it does not involve value judgements. However, it throws a wrenc...
Highlights
In economics, it is customary to develop formal models of imaginary worlds based on assumptions that may have remote connection with the economic reality
It should hardly be necessary to mention that the use of models of imaginary worlds involving unrealistic assumptions does not of itself prove that there exists a non-empty intersection between economics and science fiction
An illustration of the Inconvenient Theorem immediately suggests itself. It is based on the rational expectations assumption (REA), that is the assumption that people should correctly understand the economic model and be able to form correct predictions from it about future outcomes
Summary
It is customary to develop formal models of imaginary worlds based on assumptions that may have remote connection with the economic reality. We show the following theorem: the Friedman’s methodology of positive economics does not exclude science fiction.
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