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.

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