Realism In Economics Research Articles

Behavioral and cognitive background of psychological realism in economics

Behavioral and cognitive background of psychological realism in economics

Apparent micro-realism in mainstream orthodox economics

As reiterated for a long, mainstream economics mainly relies upon a set of unrealistic axioms and deductive assumptions, which, nevertheless, are what underpins its core postulates. They are unnecessarily unrealistic assumptions, mainly because the empirical evidence for contrasting them is as overwhelming as old. Even the claim for (returning to) realism in economics is already old within part of the profession. However, most mainstream academics tend to consider that their research works have in fact empirical contents insofar as they usually start by considering simplified cases, situations, or descriptions that allude to some real economic facet; this, in the way of specificities to be introduced into the standard General Equilibrium model. This seeming paradox is discussed in this paper, and as a result, it is argued that there do is a predominance of a research programme in mainstream orthodox economics (modern neoclassical “economic theory,” plus “econometrics”) that is mainly characterized, more than by micro-empirical precisions, by a sort of abstract micro empiricism. It is also argued that the outcomes brought about by such a “mode of research production” (contributions) do not appear significantly relevant in terms of the quantum of knowledge provided about the functioning and problems of our economies.

Critical Realism and Institutionalism in Economics: A New Perspective on an Old Debate

:Richard Langlois supports the contribution of New Institutional Economics (NIE) to Economics, contrasting the following assertions: (i) Original Institutional Economics (OIE) wanted institutions but without theory; (ii) Neoclassical Economics (NE) wants an economic theory without institutions; and (iii) NIE wants both institutions and theory. This article uses the approach of Critical Realism with the aim of counteracting the suggestions of Langlois, who considers the advances of institutionalist schools by contrasting the theoretical (scientific) and anti-theoretical (naive empiricism) institutionalism. Instead of sustaining a criterion of scientificity founded on the assumption of a world composed of isolated and atomized events, Critical Realism treats the real unity of human activity and social structure as a condition of knowledge in the social domain. This implies the adoption of a structured ontology that deals with the opening of social systems, the existence of emerging phenomena, and the rejection of the notion of cause as a constant conjunction of events.

Critical Realism and the ontological critique of economics methodology

The objective of this paper is to defend the importance of ontological critique of the mainstream economics. To do so, we examine the methodological arguments of Tony Lawson who, inspired by the critical realism philosophy, advocates in favor of realistic, non-deductive and ontology-aware economics to solve problems of contemporary economic theory. This article proposes that, although correct in the logic of its argument, Lawson’s critique of the mainstream is not able to explain the social reasons for its existence and reproduction. And if so, Lawson's critique is not ontological. It can be stated that a project of generally reorienting economics methodology is impossible in case the social reason for its orthodox existence is maintained. Some substantial insights can be found in the Marx’s ontological critique of capitalism and also in the Critical Realism philosophy. Therefore, we propose an explanation for the enduring deductivism and empirical realism in economics from a Marxist perspective.

Ronald H. Coase (1910-2013)

The purpose of this chapter is to link Ronald Coase’s methodological approach to what he ‘learned’ when he was at the London School of Economics (LSE) from Edwin Cannan and Arnold Plant. The main lesson Coase taught us and insisted upon was that economics should not be too ‘abstract’ and should not rely on a priori categories. He pleaded for more realism in economics, for a form of ‘political economy’: economists should use theory to generalise what facts tell us rather than trying to interpret facts by using a priori and abstract categories. This conception of economics is closer to the LSE of Cannan and Plant than to the Chicago of Stigler, Friedman, Becker, or Posner.

Realism in economics: The new classical case

For the last few decades, considerable attention has been paid to the methodology of mainstream economics. It is not mere chance that economics is surrounded by methodological debates. If its relevance is at stake, this can be either refuted or proven most efficiently at a methodological level. Arguments for and against mainstream economics underline the methodological homogeneity of mainstream economics, while serious, though almost neglected, arguments can be found for a view according to which the long history of mainstream economics can be described as a sequence of methodological breaks. I argue, firstly, for a sharp demarcation by new classical macroeconomics from the Friedmanian instrumentalism and, secondly, for the realism of new classicals. I strive to identify the epistemological principles underlying Lucas’ models and to highlight the signs of that demarcation as well. I concentrate on the techniques by which new classicals could set their models into an indirect relationship with reality. It is also highlighted that the common terminology, according to which the assumptions of abstract economic models are uniformly regarded as “unrealistic”, actually refers to two different techniques. From these approaches, there is only one which can be justifiably labelled as realist.

Realism in Economics: The New Classical Case

For the last few decades, considerable attention has been paid to the methodology of mainstream economics. It is not accidental that economics is encircled by methodological debates. If its relevance is at stake, this can be either refuted or proved most efficiently at a methodological level. Arguments for and against mainstream economics underline the methodological homogeneity of mainstream economics, while serious though almost neglected arguments can be found for a view according to which the long history of mainstream economics could be described as a sequence of methodological breaks. I will argue, firstly, for a sharp demarcation by new classical macroeconomics from the Friedmanian instrumentalism and, secondly, the realism of new classicals. Efforts will be made to identify the epistemological principles underlying Lucas’ models and the signs of that demarcation will also be highlighted. I will concentrate on the techniques through which new classicals could put their models into an indirect relationship with reality. It will also be highlighted that the common terminology, according to which the assumptions of abstract economic models are uniformly regarded as “unrealistic”, actually refers to two different techniques. From these approaches, there is only one which is justified to be labelled as realist.

Seeing the Potential of Realism in Economics

In this article, I clarify some of the key concepts and commitments of realist social ontology in economics. To do so, I make use of a recent critique of Lawson’s Reorienting Economics by Mohun and Veneziani. Their article provides a useful foil because responding to their critique allows us to emphasize that realism’s claims are more conditional and less controversial than one might otherwise anticipate. The basic claim is that ontology matters and that explicit recognition and consideration of ontological issues can be beneficial. However, developing a focus on ontology can create problems of interpretation among economists regarding what is being claimed and offered. I discuss some of these with reference to an adaption of Maki’s concept of economics imperialism and also with reference to Mary Morgan’s recent typology of experiments.

The Oomph in Economic Philosophy: A Bibliometric Analysis of the Main Trends, from the 1960s to the Present

In this essay, I quantitatively analyze the significance of scholarship in economic philosophy since the 1960s. In order to do so, I examine, through the number of publications and citations, the evolution of the main trends in economic philosophy over a fifty years period. This paper will develop a better conception of how the pathways of major debates, in particular rhetoric of economics (RoE) versus realism in economics (RiE), helped economic philosophy achieve its present status in economics. Viewed through this lens, it is clear that the main trends in the recent history of the discipline have emerged out of the concerns of non-mainstream economists since the 1980s.

Utopias and realism in ecological economics — Knowledge, understanding and improvisation

“What we are going through at the present time is not just an economic-financial crisis, but a crisis of humanity” (Max-Neef, 2010, p. 200). Despite problems within it, it is ecological economics which is now emerging as the most potent opponent to neo-classical economics. “It is ecological economics which addresses the most profound failure of neoclassical economics, the failure to deal adequately with resource depletion and environmental destruction both locally and globally” (Costanca, 1991). The complex challenges are anchored in a deep conflict between mainstream economics and the natural and social conditions, to harmonize this connection it would seem necessary to develop a valid understanding of the interconnectedness between economy, nature and society. The idea behind this article is four-fold. Firstly, we describe and discuss the ontological worldview in ecological economics. Secondly, the epistemological consequences of the ontological preconditions are discussed. Thirdly, some of the main concepts and principles in ecological economics are focused on. Fourthly, we discuss the realism of radical solutions in ecological economics.

MATHEMATICS IN ECONOMICS: REDUCIBILITY AND/OR APPLICABILITY?

The use of mathematics in physics is not restricted to non-formal use with emphasis on approximation and computability. There is also a domain of creative use of symbolic manipulation as well as of metaphoric imagination that makes applicability in the sciences so effective. The challenge to mathematical use in economics is to find ways to use it in these creative ways, including finding new discursive and writing strategies. For this to be possible, the nature of realism in economics has to be delineated since the way in which mathematics is used in economics seems to be in the "reductive" mode instead of the "applied" mode.

Economics Critique

In the following review essay I explore the limitations of effective and constructive critique of Tony Lawson's realism in economics as articulated in Ontology and Economics. In the first section I summarize the different framing procedures that shape the different critiques. In the second section I illustrate the limitations this creates using Caldwell's contribution and in the third section I explore the way Lawson is conditioned to respond in terms of contestation, clarification and restatement. In the fourth section I add some additional detail based on Samuelson's approach to modelling in order to illustrate what is at issue between Caldwell and Lawson and to emphasize what this suggests in terms of a common pattern across the contributions to the text. In the fifth section and in the conclusion I link the limitations of the various critiques found in Ontology and Economics to a basic issue of the vulnerability of realism to critique in order to make some suggestions regarding constructive critique and development for realism in economics.

Realism, Commonsensibles, and Economics: The Case of Contemporary Revealed Preference Theory

Uskali Maki has long argued that realist interpretations of economics do not face a challenge regarding the ontological status of non-observable theoretical entities. He argues that in economics, unlike physics, the theoretical entities are – entities familiar from our common sense everyday life – and are thus unproblematic. This paper challenges Maki's commonsensibles argument by offering a case study from contemporary revealed preference theory (CPRT) where terms like preference, and to some extent choice, are radical departures from the common sense meanings of these terms. The paper argues that even though the terms used in CRPT depart from our common sense notions of preference and utility, this fact actually provides support for Maki's broader thesis regarding the importance of realism in economics.

Critical realism, Marxism and the critique of neoclassical economics

This paper argues that while critical realist insights are important for heterodoxy, any engagement with the economic mainstream must remain faithful to Bhaskar’s original formulation with its explicit focus on ‘ideology critique’. The article proceeds by distinguishing Bhaskar’s more Marxian-inspired realism from the broadly heterodox variety of the ‘critical realism in economics’ (CRE) project. It then highlights the weaknesses of the CRE critique of the economic mainstream before positing an alternative critique in terms of ideology.

Le réalisme critique de Tony Lawson : apports et limites dans une perspective institutionnaliste

Résumé Cet article est une présentation critique du courant du réalisme critique en économie. Principalement issu des travaux de Tony Lawson, le réalisme critique peut être décomposé en deux moments : l’élaboration d’une critique ontologique de la théorie économique standard et le développement d’une ontologie sociale. Après avoir été présentés, ces deux aspects sont soumis à une analyse critique. Si la critique de la théorie standard pose problème, on montre toutefois que l’ontologie sociale du réalisme critique peut constituer un support d’importance pour tous les travaux s’inscrivant dans une perspective institutionnaliste. Classification du JEL : B15, B41

Cambridge social ontology: an interview with Tony Lawson

The Erasmus Journal for Philosophy and Economics is very pleased to present this interview with Tony Lawson in which he discusses his work on various issues including social ontology and critical realism in economics, along with the differences that he perceives between his position and those of Uskali Mäki and Nancy Cartwright. We had the opportunity to sit down and talk with Lawson about all these issues following his presentation this past spring at the research seminar series at the Erasmus Institute for Philosophy and Economics (EIPE), in Rotterdam.

Realism and comprehension in economics: A footnote to an exchange between Oliver E. Williamson and Herbert A. Simon

The correspondence between Herbert Simon and Oliver Williamson reveals a history of disagreement ultimately resolved by a reinstatement of mutual respect and agreement. On the surface, the disagreements concern questions about the appropriate trade-offs between realism and comprehension in economic theory, on the extent to which the theory should be based on realistic behavioral assumptions. At another level, however, the disagreements expose a different issue: Whether the sacrifices of realism involved in seeking comprehensible theory are to be experienced as unfortunate but necessary costs or as agonizing falls from grace that may be forgiven but only if accompanied with pain and contrition.

On some criticisms of critical realism in economics

Methodological comments on critical realism in economics have proliferated over the past decade—typically focusing on Tony Lawson's Economics and Reality and Reorienting Economics, which constitute the core of this project. In the present paper we select a series of important, mostly very recent arguments against critical realism in economics and assess their merits and demerits.

Economics, realism and reality: a comparison of Maki and Lawson

There is presently considerable debate about the application and interpretation of realism in economics. Interest in this area of the philosophy and methodology of economics has intensified over the last twenty years, especially owing to the substantial contributions by Uskali Mäki and Tony Lawson, respectively. Although their work falls under the same banner of realism in economics, their projects differ significantly in many important respects. This review tries to clarify the contrasting approaches of each author and explains the main reasons for the differences between them. The emphasis is on clarification of their respective positions rather than a comprehensive critical evaluation as such.

The scope of ontological theorising

In recent years there have been an increasing number of contributions to economic methodology that develop or seek to reveal ontological positions. Despite this there is no agreement about either what ontology is or how it can contribute to economics. For some ontological theorising reveals the presuppositions of economists and its role is largely descriptive. Others see ontology as primarily engaged in setting out and defending a general account of some domain of reality and suggest that such a conception can help us evaluate the appropriateness of the methods economists deploy. In this paper I clarify the scope and role of such theorising in economics by considering two projects with ontological orientations, namely critical realism in economics as developed by Tony Lawson and Nancy Cartwright’s work on the nature of economic theory. I argue that there are similarities between these two projects but also differences and show that these can be better understood once we recognise that each draws on a distinct conception of the legitimate scope of ontological theorising. I use Peirce’s writings on the nature of sustainable metaphysical analysis to clarify certain aspects of the approach to ontological theorising that Lawson favours.