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)

The books’ goal is to answer the question: Do the weaknesses of value-free economics imply the need for a paradigm shift? The author synthesizes criticisms from different perspectives (descriptive and methodological). Special attention is paid to choices over time, because in this area value-free economics has the most problems. In that context, the enriched concept of multiple self is proposed and investigated. However, it is not enough to present the criticisms towards value-free economics. For scientists, a bad paradigm is better (...) than no paradigm. Therefore, the author considers whether value-based economics with normative approaches such as economics of happiness, capability approach, libertarian paternalism, and the concept of multiple self can be the alternative paradigm for value-free economics. This book is essential reading to everyone interested in the current state of economics as a discipline. (shrink)

In the eyes of its practitioners, economics is both a deductive science and an empirical science. The starting point of its deductions might be thought of as first principles. But what is the status of such principles? The tension between foundationalism, the idea that there are necessary and secure first principles for economic inquiry, and fallibilism, the idea that no belief can be certified as true beyond the possibility of doubt, is explored. Empirical disciplines require some sort of falsifiability. Yet, (...) empirical inquiries also require a starting place—if not a necessarily true one, at least an indubitable one, that is, one that is not actually doubted. Indubitability appears to have necessary consequences, undercutting fallibilism, while fallibilism threatens confidence in the de facto first principles that begin inquiry. This tension is examined in three well-known attempts to define economics and its method: John Stuart Mill’s economics as the science of wealth, Lionel Robbins’s economics as constrained optimization; and George Stigler and Becker’s attempt to reformulate neoclassical economics to square empiricism with Robbins’ deductivism. (shrink)

This essay offers a history of the development of philosophy of economics from the 1830s until today, with a personal perspective on the developments of the last four decades. It argues that change...

Most methodological writing on economics is by economists. Although the bulk is produced by lesser members of the profession, almost all leading economists have at one time or another tried their hand at methodological reflection. The results are usually poor. If one read only their methodology, one would have a hard time understanding how Milton Friedman or Paul Samuelson could possibly win Nobel Prizes. It thus is less surprising that the economics profession professes such scorn for philosophizing than that its (...) members spend so much of their time doing it.Methodological reflections on economics pose other puzzles, too. Although this literature is heavily influenced by philosophy—both current and, especially, out-dated—, it is cut off from philosophical discourse. This quasi-autonomy is puzzling, since this literature is concerned with questions that appear to be instances of, if not the same as the questions with which philosophers of science are concerned. (shrink)

John Stuart Mill regards economics as an inexact and separate science which employs a deductive method. This paper analyzes and restates Mill's views and considers whether they help one to understand philosophical peculiarities of contemporary microeconomic theory. The author concludes that it is philosophically enlightening to interpret microeconomics as an inexact and separate science, but that Mill's notion of a deductive method has only a little to contribute.

This essay argues in favor of retaining the positive/normative distinction in economics, in spite of developments in methodology and epistemology that have cast doubt on the possibility of a “value-free” economics. The central claim is that it is worthwhile to distinguish between positive economic analysis and normative judgments, even if economics is viewed as being permeated with ethical values. This argument is presented without trying either to demonstrate that there is a profound epistemological difference between science and ethics or to (...) show that positive science can afford us access to objective reality. (shrink)

Normative research has nearly vanished from the academic ‘mainstream’ in accounting. Due to its prescriptive and value-driven approach, normative accounting research has been stigmatized as being unscientific and largely replaced by positive studies. We put this stigma into perspective. We first conceptualize the ‘positive-normative’ distinction and identify this dichotomy in accounting research history. We then challenge the dogmatic confinement of science to descriptive (positive) approaches. Moreover, we debate the basic conditions for normative accounting research and conclude that methodological and epistemological (...) pluralism in accounting research may help address a wide range of potential research questions. We point out that normative research approaches are essential in an applied science such as accounting, lest practical implications and prescriptions are to be the exclusive domain of accounting practice. (shrink)

The goal of this article is to provide a slightly different spin on economists' use of the positive-normative distinction by providing some context for its use. The major difference is the following: philosophers and philosophically oriented economists, such as Hilary Putnam and John Davis, see the positive-normative distinction in economics as following from the logical positivist position, and they interpret comments made by economists as reflecting scientific methodological positions that have long since been repudiated by philosophers of science. This article (...) argues that economists' use of the positive-normative distinction developed from the Mill–Keynes methodological tradition, which did not hold logical positivist views. Instead, it had pragmatic purposes and was designed to encourage economists to be more modest in their claims for the implications of economic theory. We conclude by arguing that economist's current use of the positive-normative distinction is problematic, as Davis suggests, but th.. (shrink)

This book argues for the need to put into practice a profound and comprehensive intellectual revolution, affecting to a greater or lesser extent all branches of scientific and technological research, scholarship and education. This intellectual revolution differs, however, from the now familiar kind of scientific revolution described by Kuhn. It does not primarily involve a radical change in what we take to be knowledge about some aspect of the world, a change of paradigm. Rather it involves a radical change in (...) the fundamental, overall intellectual aims and methods of inquiry. At present inquiry is devoted to the enhancement of knowledge. This needs to be transformed into a kind of rational inquiry having as its basic aim to enhance personal and social wisdom. This new kind of inquiry gives intellectual priority to the personal and social problems we encounter in our lives as we strive to realize what is desirable and of value – problems of knowledge and technology being intellectually subordinate and secondary. For this new kind of inquiry, it is what we do and what we are that ultimately matters: our knowledge is but an aspect of our life and being. (shrink)

This paper assesses James M. Buchanan's claim of following a positive approach in stark contrast to the normative approach to public finance of Richard A. Musgrave. The goal of this paper is to shed light on the foundations of modern American public finance by analysing one aspect of the methodology of its two most prominent fathers. I show (1) that it is difficult to distinguish Musgrave's and Buchanan's theories of public goods along the positive/normative dividing line and (2) that Buchanan's (...) theory can also be considered normative. In the first three parts, I follow the Weberian methodological tradition in looking for value judgements in the theories, and by reflecting on the nature of ideal types. In the last part, I propose a broader interpretation of Buchanan's methodological stance within the academic context of the 1960s. (shrink)

It can hardly be denied that each field of knowledge has its own subject-matter and aims, scope and limits, specific method and distinctive characteristics. Every science has its own historical background and dynamics which explain its emergence and raison d'etre, as well as influence its development over time, expanding and contracting as it were in response to the prevailing Zeitgeist and alongside societal, legal, and political changes. Consequently, each discipline inevitably reflects the realities, beliefs, needs, tendencies, and interests of the (...) individuals (or groups) who undertake its study and instruction, or try to apply and develop it further. In other words, each field of knowledge is mirroring a certain Weltansicht, or worldview‒that is, a comprehensive framework through which individuals or cultures interpret and understand the world around them. In scientific enterprise, worldviews not only provide a broader context for interpreting data, but also influence their research directions, methodological preferences, and final conclusions. Economics is no exception to this phenomenon. This modest essay aims to open up the epistemological foundations of modern economics to closer scrutiny with a view to pinpointing some tacit assumptions, cultural or other biases, and preconceived notions operating beneath the surface of economic models, theories, and methodologies. (shrink)

Norms—that is, specifications of what we ought to do—play a critical role in the study of informal argumentation, as they do in studies of judgment, decision-making and reasoning more generally. Specifically, they guide a recurring theme: are people rational? Though rules and standards have been central to the study of reasoning, and behavior more generally, there has been little discussion within psychology about why (or indeed if) they should be considered normative despite the considerable philosophical literature that bears on this (...) topic. In the current paper, we ask what makes something a norm, with consideration both of norms in general and a specific example: norms for informal argumentation. We conclude that it is both possible and desirable to invoke norms for rational argument, and that a Bayesian approach provides solid normative principles with which to do so. (shrink)

(2013). The systemic failure of economic methodologists. Journal of Economic Methodology: Vol. 20, Methodology, Systemic Risk, and the Economics Profession, pp. 56-68. doi: 10.1080/1350178X.2013.774848.

In the wake of the financial crisis of 2008, many economists have blamed economics for having failed to warn us. Paul Krugman, for example, in a well-known New York Times Magazine article, suggests that Classical economists were blinded by the beauty of mathematics, and that Keynesian economics is the path of the future. This paper argues that the evolution of economic thinking is much more nuanced than Krugman portrays it, and that instead of embracing what has become known as Keynesian (...) economics, macroeconomists should rather re-embrace the broader Classical economic tradition, of which Keynes was an important part. (shrink)

In the wake of the financial crisis of 2008, many economists have blamed economics for having failed to warn us. Paul Krugman, for example, in a well-known New York Times Magazine article, suggests that Classical economists were blinded by the beauty of mathematics, and that Keynesian economics is the path of the future. This paper argues that the evolution of economic thinking is much more nuanced than Krugman portrays it, and that instead of embracing what has become known as Keynesian (...) economics, macroeconomists should rather re-embrace the broader Classical economic tradition, of which Keynes was an important part. (shrink)

ABSTRACTIn Robust Political Economy, Mark Pennington argues for a minimal state founded not on neoclassical economic principles but on a return to classical liberalism. Pennington makes his case on the basis of Hayek’s “knowledge” problem and public-choice theory’s “incentive” problem. While this is a welcome start, classical liberalism is a promising agenda for a new economics, and for the “reform of capitalism,” only if it is accompanied by an explicit rejection of Milton Friedman’s subordination of normative to positive economics, and (...) by a move beyond the traditional division of the economy into twin spheres to embrace a third element: the domestic sphere. (shrink)

In this work, we present some traits of the socio-political and economic thought of Giuseppe Toniolo, who lived in Italy at the turn of the XIX and XX century, with special reference to the contribution that the Italian economist and sociologist gave to the definition and implementation of the principle of subsidiarity and to the ethical foundation of economic science. After outlining the definition of the subsidiarity principle in the first paragraph, we sketch the historical background in which Toniolo lived (...) and operated. We then focus on the ethical factor and on the concept of subsidiary State emerging from Toniolo’s writings. Finally, we present some of the main elements of Toniolo’s legacy with reference to the current economic and socio-political debate. (shrink)

This article is about the relationship between business and ethics in academic research. The purpose of this investigation is to examine the status of the separation and the integration theses. In the course of this article, I defend the claim that neither separation nor integration is entirely accurate; indeed they are both potentially confusing to our audience. A strategy of reconciliation of normative and descriptive approaches is proposed. The reconciliation project does not entail synthesizing or dividing prescriptive and empirical approaches, (...) but rather respecting the identity of both inquiries, while recognizing the limitations they place on each other. The research agenda of the reconciliation project is discussed. (shrink)

In this paper, I aim to discuss New Political Economy as a label for the economic analysis of politics, in the English language. The term 'political economy' itself, although it has ceased to be the preferred term by which economists refer to their discipline, it is still being used by a variety of scholars, especially for interdisciplinary research with political science, international relations and other social sciences. Marxist- inspired social scientists also have a claim on the term 'political economy'. The (...) term gained relevance again with economists, in the 1950s, thanks to various critiques of orthodox economics, especially to the theory of economic policy and to economic planning. They ignored issues of political economy, such as the self- interest of politicians. The public choice movement revived these issues by applying rational choice theory to politics and preferred the label “public choice” to designate its movement. Scholars and traditions not affiliated with the public choice movement prefer the label '(new) political economy' to refer to their own economic analysis of politics. The search for a proper label is still ongoing, but they show how they can differentiate their objectives and affiliations. (shrink)

The author characterizes the model of rationality devised by critical rationalism in opposition to the classic model of rationality and as an alternative to this. He illustrates and criticizes the trichotomous theory of knowledge which, going back to Max Scheler, is received in a secularized version by Habermas and Apel, also under the influence of the hermeneutic tradition of Heidegger and Gadamer and of the so-called “critical theory” of Max Horkheimer and Theodor Adorno. The author criticizes historicism as it expects (...) to be an alternative to naturalism and not to make use of the method based on scientific laws. The author proposes as an example of technological social science the model developed in economics starting from Adam Smith. With regard to legal theories, natural law is rejected because of its sociomorphic cosmology. It is proposed that legal science as social technology has two parts. One part aims at efficient interpretations of valid law (for the space-time region concerned) and a second part aims at the construction of efficient norms for the modification of valid law by legislation. (shrink)

This paper examines some connections between Hume’s epistemology in his Treatise of Human Nature and his political economy. I make three claims: First, I argue that it is the development of Hume’s account of the faculty of reason in Book I of the Treatise that leads him to emphasize social science—including political economy—and the humanities over more abstract modes of intellectual inquiry. Second, I argue that Hume’s conception of reason has implications for his methodology in political economy. His perception of (...) human reason leads him to deploy a method of qualified generalization that emphasizes the by-and-large nature of theoretical statements. Third, when it comes to policy matters, the method of qualified generalization in theory cashes out in terms of practical maxims. I suggest that two central maxims in Hume’s political economy derive from his views of the usefulness of economic liberty and the coordinating nature of the status quo. (shrink)

This paper considers the debate between economists and philosophers about the role of values in economic analysis by examining the recent debate between Hilary Putnam and Sir Partha Dasgupta. It argues that although there has been a failure to communicate there is much more agreement than it seems. If Dasgupta's work is seen as part of the methodological tradition expounded by John Stuart Mill and John Neville Keynes, economists and philosophers will have a better basis for understanding each other. Unlike (...) the logical-positivist tradition, which treats facts and values as two mutually exclusive concepts, the Mill- Keynes tradition recognizes that facts and values are intertwined. Unlike the Smithian tradition, which blends the study of facts and normative rules, it divides economics into a science that studies "what is" and an art which considers "what ought to be done". (shrink)

The goal of the article is to substantiate that despite the criticism the paradigm in economics will not change because of the axiomatic assumptions of value-free economics. How these assumptions work is demonstrated on the example of Gary Becker’s economic approach which is analyzed from the perspective of scientific research programme. The author indicates hard core of economic approach and the protective belt which makes hard core immune from any criticism. This immunity leads economists to believe that they are objective (...) scientists and, consequently, it results in epistemological hubris. Due to its tautological nature, economic approach is considered to be a degenerative programme. This conclusion is extended on value-free economics. In spite of these problems, many economists still believe in positive economics and they dismiss normative approaches. It has a negative influence on people. The conclusion of the article is that thanks to axiomatic assumptions economists do not have objective and ironclad methodology and they should accept normative values in their research. (shrink)

El objetivo de este artículo es fundamentar la aplicación de la sociología compleja del conocimiento al estudio de la formación de las principales teorías y marcos conceptuales de la historia del pensamiento económico. Tomando como punto de partida el problema de la inconmensurabilidad de los paradigmas científicos, se expone la propuesta de construcción de sistemas metateóricos para el análisis de los presupuestos no-contrastables que se encuentran en el núcleo de las teorías científicas. Posteriormente, se analizan las implicaciones principales que el (...) carácter social e histórico del objeto de estudio de las ciencias sociales tiene para esta propuesta. El artículo termina con algunas consideraciones metodológicas para la construcción de metasistemas en la historia del pensamiento económico.This article seeks to support the application of the complex sociology of knowledge to the history of economic thought, in order to study the formation of its main theories and conceptual frameworks. With the starting point of the incommensurability of research paradigms’ problem, the construction of metatheoretical systems is proposed to analyse non-verifiable assumptions at the core of scientific theories. Subsequently, the main implications of that proposal are analysed vis-a-vis the social and historical nature of social sciences. The article concludes with some methodological considerations for the construction of metasystems in the history of economic thought. (shrink)

ABSTRACT:In response to criticism of empirical or “positive” approaches to corporate social responsibility (CSR), we defend the importance of these approaches for any CSR theory that seeks to have practical impact. Although we acknowledge limitations to positive approaches, we unpack the neglected but crucial relationships between positive knowledge on the one hand and normative knowledge on the other in the implementation of CSR principles. Using the structure of a practical syllogism, we construct a model that displays the key role of (...) empirical knowledge in fulfilling a firm’s responsibility to society, paying special attention to the implications of the “ought implies can” dictum. We also defend the importance of one particular class of empirical claims; namely, claims from the field of economics. Even positive economic theory, which is often criticized for endorsing profits rather than values, can cooperate in intriguing ways with non-economic concepts in the implementation of CSR goals. (shrink)

Nous proposons dans cet article de rechercher chez les prédécesseurs de Frank Knight un peu de lumière pour éclairer sa distinction entrerisque etincertitude. D'une part, la lecture des économistes qui l'ont précédé permet de comprendre sa situation dans lapolémique sur la répartition. D'autre part, l'examen des sources philosophiques qui informent sa théorie de la connaissance conduit à analyser l'opposition risque/incertitude comme une opposition théorie de la probabilité/théorie de la connaissance (imparfaite). Le recours à l'épistémologie de Knight fait saisir en quoi (...) sa démarche philosophique le mène à conclure par l'absurde la polémique sur la répartition, et l'autorise alors à proposer une reconstruction de la théorie économique comme science des choix rationnels. (shrink)