An Interesting Debate… Or Quarrel…?

Almost a year after having published my Critique, I had an interesting conversation with a leading critic of mainstream economics. Admittedly, I respect him for his outstanding efforts in studying neoclassical economics and for the rigor with which he exerts his critique. I showed him my last draft on the realism of new classical macroeconomics in order to get some critical remarks from him… And the quarrel started.

Actually, I ruined his arguments. I try to explain it. In his most important publication he exerts a systematic critique on the inconsistency of neoclassical and mainstream economics. When got to rational expectations, at the head of the given chapter, he used some sentences in which he seems to have written about the realism of neoclassical economics. It was my starting point, since I have never believed that neoclassical models should directly be confronted with reality, and it was exactly his view. For him, neoclassical mainstream is lacking in any descriptive relevance, since this theory fails when compared directly to reality. I have never debated his arguments… Neither this one on a direct comparison, nor others, for example on some logical inconsistencies found in the neoclassical macro-theory. So, I tried my best to preserve his line of reasoning, while arguing for the fact that abstract models should never be compared directly to reality. Actually, it is the essence of my view on new classical macroeconomics, too. So, all in all, I ruined his argumentation, because I used his thoughts he outlined against neoclassical mainstrem theory in a context which I made fundamentally supportive as to mainstream economics. I made my best to argue for new classicals while using his reproving ideas.

So, a couple of days ago we started talking about the relevance of mainstream economics. It became obvious soon that we can hardly agree with one another… What is more, he was deeply offended by my efforts to use his arguments in defending new classical macroeconomics. So, our conversation came to a halt. I am sorry about it and I am somehow disappointed… I thought him to be much more open-minded, however, he refused to listen to my arguments and started to repeat his well-known thoughts about the irrelevance. It was not a conversation, rather two parallel monologues. In the end, he asked me not to use or cite his works any more. I think it is the worst kind of scientific debates.

To be honest, I could learn a lot from this quarrel. I think he is right, I ruined his work. The root of the problem is that he did not consider the philosophical or methodological implications of his work. His phrasing has a radically different meaning in the philosophy of economics. When I approached his thoughts with a methodological background, I found some hidden meaning he may not be aware of or he never intented saying or writing. All this quarrel was about two sentences… When I read these sentences, the meaning is clear… And when I told him what they meant for me, he disagreed with me. But anyway, he was right. There are occasions when the views are so far that the partners cannot find a common ground for a conversation that makes sense.

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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 the stakes are its irrelevance, 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 there can be found serious, though almost neglected arguments for a view according to which the long history of mainstream economics can be described as a sequence of methodological breaks. I will argue for, first, a sharp demarcation of new classical macroeconomics from the Friedmanian instrumentalism and, second, the realism of new classicals. Efforts will be made to identify the epistemological principles underlying Lucas’ models and the palpable signs of this demarcation will also be highlighted. We will concentrate on the techniques through which new classicals could put their models into an indirect relationship with socio-economic reality. We will point out 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.

The very first draft of the paper for “Studies in History and Philosophy of Science Part A” can be read here. Any comments are warmly welcome.

Contact information

If you prefer traditional letters sent by post, you can contect me at 
the following department address:
Peter Galbács, Ph.D.
Budapest Business School
College of International Management and Business
Institute of Economics and Methodology
H-1165 Budapest, #22 Diósy Str. Building D
Budapest, Hungary

In simpler cases, you can choose my e-mail address:
Galbacs.Peter@uni-bge.hu

“Parallel Lives” (Plutarch)

My package from Cambridge University Press arrived just now. The book “The History of Macroeconomics from Keynes to Lucas and Beyond” seems to be very exciting, though I could only skim through its contents. What is evident that this work is the result of a unique method and a unique approach. For example, when detailing some methodological questions with regards to Lucas’ models (it was a striking subchapter for me, because now I am working on a paper as to this problem), Prof. De Vroey also used some manuscripts (both handwritten and typed) of Lucas. I am sure this work will broaden our overall understanding on the history of contemporary macroeconomics. Review soon!