|Edited by Bert Hamminga & Neil B. De Marchi
Amsterdam-Atlanta, GA: Rodopi, 1994
Illustrates and compares the opinions of the economists J.R. McCulloch (1825), J.S. Mill (1836), K. Marx (1864), L. Robbins (1932) and M. Friedman (1953) on the problem of idealization in economics, both from a logical point of view (the structure of economic theories) and from a social point of view (idealizational methodology as a defense of theory against skeptical outsiders).
Inventorization of the main questions for research into the idealizational character of economic theories, focusing on the new classical macroeconomic research program. It suggests a method to discriminate between rival idealized models.
When considering how economic models evolve, the main operation appearing at work is generalization, which can itself be decomposed into three basic processes, conceptually distinct although not formally independent, but more and more ambitious. The enlarging process simply consists in extending the application domain of a model without modifying its formal structure, in order to transfer its properties from one field to another. The weakening process consists in constructing a model with a less stringent specification of one or more of its assumptions, in order to account for a larger set of situations. The rooting process consists in finding out some grounding propositions which infer one or more of the model’s assumptions, in order to have a deeper explanation of its properties. Each process can be logically defined and illustrated by basic examples,may be considered at different levels and gives rise to model taxonomies, and fulfills as well a formal and an empirical role.
Analysis of a number of types of reduction to be used in “general to specific” modelling in econometric methodology. Specification of measures for the loss of information resulting from every type of reduction. Based upon this analysis, the formulation of criteria for model design in econometrics.
Discussion of idealization and concretization in economics. Fully concretized economic models are claimed to be principally beyond reach. Observed phenomena can, however, be explained on the basis of tendency laws, provided that the assumptions made in those models are consistent with the information we have about the economy or, if not, that replacing these assumptions by others that are consistent with our information should not make a significant difference for the results of the analysis under investigation.
The problem of idealization itself can be formulated thus: Important economic theories are defined by axioms (“assumptions”) that are clearly false of the objects they avowedly intend to theorize about. Does this fact make of economic theories pseudosciences? Why? At any rate, what usefulness can such theories have to know economic phenomena? The aim of the present paper is to deal with these questions by means of a real-life example taken from economic theory (consumer choice). By means of this example Musgrave’s threefold distinction between negligibility, domain, and heuristic assumptions is examined in a formal and detailed way. The problem of the usefulness of formal economic theory is approached through the idea of empirical relevance, understood in terms of statistical goodness of fit.
An analysis of the relationships between theories in terms of “dialectical correspondence” in the sense of the idealizational theory of science. Such correspondence can be observed in the history of economic theory, though somewhat less clearly than in physics, due to the secondary influence of ideology.
Challenges the widely held view that good models must necessarily be simplifications and hence cannot be true. This is done by distinguishing between whole truth (complete description) and truth (essential description, attained by the method of isolation).
This paper starts from a discussion of the opinions of John Stuart Mill and Karl Menger on idealization in economics. How can we get from studies of economic actors as ideal or quasi-ideal reasoners to policy recommendations? The focus is on the transition from the so-called “ideal” to the real (from a priori principles to accounts of empirical phenomena), especially when the theory of the ideal proceeds mathematically, with at best small glances at data.
The inter-theoretical relation between economic equilibrium theory and a theory of social institutions is studied in reduced form, i.e. by comparing the central primitives rather than the full formal models. It is shown that equilibrium can be regarded as a limit of institutions with ever more symmetrical power relations. Economic equilibrium theory thus is shown to be an idealization of the theory of social institutions. A provisional topology which gives substance to the notion of a limit is defined “internally,” i.e. by reference to items occurring in the models only. The meta-scientific status of idealization is briefly discussed.
This paper supplies a structuralist reconstruction of the Modigliani-Miller theory and shows that the economic literature following their results reports on research with an implicit strategy to come “closer-to-the-truth” in the modern technical sense in philosophy of science.
This paper is concerned with relations between highly unrealistic or idealized models and the world, with how such models can be informative, with how they can be criticized, and with how their constituents can be incorporated into other models. It will focus on only one case, and its conclusions will be skeptical and suggestive.
Discusses the econometric literature on testing the a priori plausible condition of homogeneity in consumer demand. Such usually disconfirming test did not lead to a rejection of this particular conditions, but to the rejections of other idealizations needed to perform the test. It is possible, but not necessary to describe this process in terms of idealization and concretization.
Compares Nowak’s model of concretization with another view, considered to be more appropriate, in which the categories for the concretized law arise during the development of the law, and thus are not, as in Nowak’s reconstruction, present from the start in the idealized form of the law.
A critical evaluation of Nowak’s application of the model of concretization to Marx’s model of theory development in “Capital.” It focuses on Nowak’s account of transformation and of Marx’s methods, and discusses the status of Nowak’s method.
How are idealized theories related to models that are closer to the reality of existing economics? Historical background of the method, and the problem, providing a framework for discussing some recent analyses, especially Nancy Cartwright’s. The problem must be seen as a part of the context of the logic of discovery. The relation between idealizing theories and factual models can be fruitfully analyzed in terms of a presupposition relation.
A reply to the papers by Kevin D. Hoover, Maarten C.W. Janssen, Werner Diederich, Gerard Jorland, Uskali Maki, all in the present volume. It contains some additional explanations of various elements of the idealizational methodology and more detailed extensions and developments. Some of these extensions are available only in the Polish writings of various authors from the Poznan milieu. However, there still remain some objections that challenge the conception as, even in its most developed forms, it does not contain a ready some conjectures are proposed.