Thomas A Boylan and Paschal F O’Gorman (eds) Popper and Economic Methodology: Contemporary Challenges Routledge 2008.
In recent decades the philosophy and methodology of economics has become a thriving academic industry. Ten years ago Wade Hands noted that Popper was the most influential philosopher in the movement, although there is mounting concern about the nature of that influence. This collection of papers can be seen as a response to that concern. It is number nine in the Routledge International Network for Economic Methodology (INEM) series. The first was the revised edition of Lawrence A Boland Foundations of Economic Method: A Popperian Perspective and the sixth was Stanley Wong The Foundations of Paul Samuelson’s Revealed Preference Theory, essentially a Popperian perspective due to the influence of Boland on Wong. It is helpful to note that Boland picked up his philosophy from Joe Agassi, one of the inner circle of Popper's associates. (Strangely, Mirowski played down the influence of Popper in his otherwise favourable commentary on Wong’s book ].
This book is a product of an International Symposium at the University of Galway, convened in 2002 to mark the centenary of Popper’s birth. It can be placed alongside the proceedings from Centenary Conferences that were held in Vienna and in Christchurch, New Zealand, where Popper wrote The Open Society and its Enemies and The Poverty of Historicism during World War 2. Another volume for the set is the published papers from the 2007 Prague conference on the theme Rethinking Popper.
The editors explain that the conference was designed to explore some of the major themes in Popper’s work, and to illuminate some aspects that are not generally recognised.
“Among the principal themes addressed in this volume are a number of major tensions in Popper’s contribution to economic methodology. More specifically these tensions result from two divergent trends in Popper’s thought. One trend emerges from his demarcation criterion as contained in his doctrine of falsifiability. The alternative trend is contained in Popper’s situational analysis [and] his rationality principle.” (xi)
“The second major issue explored is based on a critical reading of Popper’s later work [where] the universe is perceived as an open system, untainted by determinism. Under the shadow of this Popperian thesis, orthodox economics is the only social science to have attained the maturity of Newtonian physics. The implications of Popperian open systems for economic methodology have been ignored to-date in the literature on economic methodology. This challenge is addressed…” (xii)
Before looking at the papers, a word of caution. There is a question mark hanging over the whole field. What have working economists gained from this academic growth area? That can be regarded as an “external” critique. On the inside, what progress has been made since, say, 1980 when Blaug’s landmark work in the field was published? More on these questions later.
Half of the book (only 170 plus xiii pages in total) is written by the editors. Chapter 1 is the Boylan and O’Gorman “Popper, economic methodology and contemporary philosophy of science”. Chapter 2 is O’Gorman on “Situational analysis and Popper’s Three World Thesis”. Chapter 3 is Boylan “Challenging Popperian rationality: Wittgenstein and Quite reconsidered”. Chapter 4 is Tony Lawson “Popper and social explanation”, Chapter 5 isGiulio Giorello and Matteo Motterlini on “Metaphysics and growth through criticism”, Chapter 6 is John McCall on “Conjectures on a constructive approach to induction”, and Chapter 7 by K Vela Velupillai on “Demystifying induction and falsification: Trans-Popperian suggestions”.
The editors have a special interest in what they call the “realism/anti-realism debate” and the way this plays out in evaluating equilibrium theories in economics, especially the mathematical core of the general equilibrium theory. They note Maki’s work on realism in economics over three decades and they write “We contrast Popper’s rich and sophisticated version of realism with the ‘weak conception of realism’ used by Maki in elucidating this economics-realism nexus” . They look at three aspects of Popper’s realism, first the way his thinking changed after he encountered Tarski’s theory of truth, second, Popper’s realist reading of logic and they way that this legitimates the mathematical modeling of general systems theory, and finally, they extract some of the implications of Popper’s “Three-World” thesis which finds ontological space for (1) physical objects, (2) subjective thoughts and (3) abstract ideas.
The introductory section of the first chapter on Popper and economic methodology sketches the history of the field from Hutchison’s confrontational introduction of positivism and Popperism in 1938. Despite the reference to “an extraordinarily insightful paper” by Klappholz and Agassi (1959) and the description of Lawrence Boland as “the most influential advocate of critical rationalism in economic methodology” they do not explain just how little influence those authors influenced the other players in the game. This issue will be discussed later to consider whether Popper’s own ideas (as opposed to straw versions of them) have really been influential in the debate at all. In the second section of the paper where they use Popper’s program in logic to defend the rationale of general systems theory, but the connection is not easy to see and the value of general systems theory for investigating the real world needs defence in its own right. The final section on Popper’s three worlds is a handy introduction to a little-discussed part of Popper’s work but no connection is made to economics.
The second chapter contains more discussion of Popper’s three worlds and several other topics including the Popperian problem-solving schema, models and situational analysis, practical problems and piecemeal engineering, methodological individualism, and hermeneutics with reference to Ricoeur and Gadamer. This can be read as another introduction to Popperism for people who know little about it.
The third chapter focuses on the most confused and unsatisfactory part of Popper’s work, his account of situational analysis and the rationality principle. Regrettably this contribution does not get past the introductory stage, although there is a helpful summary of Popper’s “on again, off again” relationship with the social sciences. Possibly the heart of the problem, as they suggest, was Popper’s unwillingness to engage seriously with the substantive and technical contents of economics. This is most unfortunate because Popper was a fast learner and if he had only had access to the right books and some good people while he was in New Zealand he might have gone a lot further. He grew up in a house with more books than the university library in Christchurch at the time. And with due respect to my good friend, the late Colin Simkin, who was Popper’s closest associate in Christchurch, he was then a very young social democrat, probably a Keynesian, a macro economist and a mathematical economist (with Popper’s encouragement). I think it has to be said that Boylan has not advanced the discussion, (again no relation to concrete economic problems) and he has not added value by introducing the Duhem thesis and Wittgenstein’s challenge to the rationality principle.
Tony Lawson is a part of the Critical Realism movement, inspired initially by Roy Bhaskar. Critical realism has some affinity with the ideas of Popperian Critical Rationalism and it is sometimes remarked that the Critical Realists could usefully refer to Popper more often. That situation has been rectified by Lawson’s contribution, although the paper is exasperating because he gives a fair description of some important ideas by Popper but does not see to see how they answer the primary question that concerns him.
The main question which he poses at the start of the paper is (1) “How can social explanatory work proceed in an open system context that lacks the possibility of experimental intervention?” A supplementary question (2) is “Whether the current orientation to social explanation in modern economics warrants the label Popperian?”
He sketches Popper’s framework for situational analysis, using models of an idealised situation to locate the causal factors. He notes the development in Popper’s thought (dating from about 1950) when Popper put forth his theory of indeterminism and Lawson notes how this approach evolved into Popper’s theory of propensities, in objective probability theory and in cosmology – the “world of propensities”.
Lawson seems to think that testing theories in the natural sciences depends on stable models, like the relatively isolated solar system and the models constructed for controlled experiments in the laboratory. He writes that we are “left wondering” about question (1) above.
“Given the fundamental openness of the social system and the recognition that the method of logic or situational analysis requires local closure, it is difficult to discern how to proceed”.
But why does he assume that situational analysis requires local closure? Scientists in agriculture and biology at large are dealing all the time with open systems: sometimes it is possible to use models with “local closure” and sometimes it is not, hence the use of many techniques to handle the situation, like measuring uncontrolled variables and making adjustments to take account of them. Hayek addressed this situation a long time ago when he addressed the methodological problems of investigating spontaneous orders and complex system. He opted for “explanations in principle” using “pattern prediction”, looking for tendencies without demanding precise predictions and strict relationships between cause and effects. This is much the same as the quest for Popperian propensities. It is possible to work with the idea of exact laws (like the laws of physics) while accepting that real (complex) systems do not permit the laws to be expressed precisely (and that applies as much in physics as in economics). Lawson’s second question will be considered below.
The paper by Giorello and Motterlini is very interesting and makes important points, regrettably in relation to physics rather than economics. Giorello and Motterlini challenge Popper’s early view that metaphysics is meaningful and indispensable as the starting-point for science but it does its work by turning into testable scientific theories. They reject that view, claiming that disagreement and debate over the metaphysical core and heuristic power of different research programs is “a prerequisite for scientific progress”. A major and incomprehensible omission from their list of references is Agassi (J) who has been writing precisely along those lines in his published doctoral thesis in the 1950s and any number of papers since that time. The thesis is important and it is worth spelling it out, but it is most unfortunate that the leading exponent of the thesis did not get a mention in this paper. The same thesis can be found in the Metaphysical Epilogue to Popper’s Quantum Theory and the Schism in Physics, the third volume of The Postscript to The Logic of Scientific Discovery, published in 1982. They refer to the Postscript and recall Popper’s argument (which actually dates from the 1950s and was published in Conjectures and Refutations in 1963) that untestable theories can still be rationally (critically) discussed in terms of their internal consistency and whether or not they solve the problem that they address.
“In place of the rhetoric of strict falsificationism, we maintain that the clash of different research programmes competing for supremacy in the same area defines the framework for scientific testing”. (113) They support the thesis with episodes from the history of science: Galileo vs Aristotle on atomism, heliostaticism vs geostaticism and general relativity vs non-relativity views of gravitation. The thesis is important, if not original, the need is for the same kind of work to be done in economics and other social sciences. My paper “Austrian Economics as a Popperian Metaphysical Research Program”, was a step in that direction, it was delivered in draft at the Popper Conference in Vienna in 2002 but it was rejected for publication in the proceedings,
John McCall’s paper is a defence of induction, using bald pronouncements and appeals to various authorities without sustained arguments or applications. He is a professor of economics and so might be expected to use examples from economics, in contrast with the contributors who are philosophers rather than economists. The only approach to an example is the case of several thousand successive coin flips. The lack of arguments and depth suggests that the paper may have been written on the flight from the US to Ireland, or perhaps after the author landed and was still jet-lagged.
The paper by K Vella Velupilai is highly critical, with some subtle hints that the author has a visceral dislike for Popper in person and also his ideas. This results in the use of some feeble reeds to thrash Popper, such as Putnam’s (1974) contribution to the Schilpp volume on Popper which indicts Popper for neglecting practice and the repetition of a “poignant call” by Edward Said in a BBC Reith lecture for intellectuals to reverse the trend towards specialisation. Some would say that falsifiability is all about the test of practice, and others would claim that the range of Popper’s work is a standing rejoinder to over-specialisation. The substance of the paper is project to develop an algorithm to generate theories, in defiance of the Popperian (and von Misesian) dictum that this cannot be done. The algorithm will be worthy of discussion when it is working and generating true theories.
In conclusion, it is difficult to find anything here that a working economist needs to know, apart from a catchup on some aspects of Popper’s work along the lines of numerous essays that I have written over the years, mostly for non-specialist audiences.
In the middle of writing these notes another book turned up from Amazon, Wade Hands Reflection Without Rules (2001). This is handy (sorry) because it plays into the questions posed above. What have working economists gained from this academic growth area? What progress has been made since, say, 1980 when Blaug’s landmark work in the field was published? And the question posed by Lawson - whether the current orientation to social explanation in modern economics warrants the label Popperian?”
Taking the questions in order. I can only speak as an amateur economist but I get the impression that workers in the field have gained next to nothing from the philosophy and methodology literature. (That raises more questions – what do working scientists in any field need to know about philosophy and scientific method? And what would you put in an introductory course?) That is because the work has been mostly driven by the interests and the theories of the philosophers and very little attention has been paid to the problems and the theories that economists work on every day. Some exceptions that test (and refute) the rule are Lawrence Boland and his student Stanley Wong, but then they were working in a different philosophical tradition that was out of step with the mainstream.
Moving on to the progress in the field in recent decades, Wade Hands reached the conclusion that the work done under the auspices of the Received View of Scientific Method did not really progress at all. That is to say, nothing much was achieved from the rise of the logical positivists in the 1930s, through the transition to logical empiricism after World War 2, through the philosophy of science wars of the 1960s and 1970s and the efflorescence of philosophy and methods in economics during the ‘80s and ‘90s. However, in the way that evolution proceeds by trial and error, generating all manner of species to colonise an ecological niche, most of them falling by the wayside until one or more of them survive, Hands has located a survivor in this niche, which he calls the “new economic methodology”.
My take on this is that he has found Popperism and called it “new”. In other words it was there all the time, as people like Lawrence Boland and others tried to explain, but Hands and his colleagues were too stuck in the Received View to get it.
So the answer to Lawson’s question is that there was practically no real Popperism in all the mass of literature that purported to be talking about his ideas. If this is even half true then it is a very interesting phenomenon and worthy of further investigation by the sociology of knowledge and the historians as well.