Reading The Methodological Essay In Twentieth Century Economics: Map Of Multiple Perspectives

Reading the methodological essay in twentieth century economics: Map of multiple perspectives Uskali Mäki To appear in The Methodology of Positive Economics: Milton Friedman’s Essay After Half a Century, edited by Uskali Mäki. Cambridge University Press. Even outrageously unrealistic assumptions are just fine insofar as the theory or model involving them performs well in predicting phenomena of interest. Most economists and many non-economists will attribute this principle to Milton Friedman. Many will consider the principle itself outrageous, while others praise Friedman for having formulated it so persuasively. Friedman’s “The methodology of positive economics” was published in 1953 as the opening chapter of his Essays in Positive Economics. There is no doubt that this short essay of 40 pages became the most cited, the most influential, and the most controversial piece of methodological writing in 20th century economics. The power and diversity of its impact and reception is evident. The essay (henceforth ‘F53’) has helped shape many economists’ conceptions of how to do good economics and how to defend certain ways of doing economics. It has also provoked many others to speak out their disagreement on the claims of the essay, to argue that the view of science suggested by F53 is deeply flawed, even dangerous for the cognitive aspirations and social responsibilities of economics. These disagreements have not diminished in the course of the years between now and the publication of F53. Whenever someone makes reference to “Friedman’s methodological view” (perhaps using other expressions such as “Friedman’s as-if methodology” or “Friedman’s instrumentalism”), the context typically reveals that the expression is used either approvingly or disapprovingly, and often uncompromisingly so. 1 The legacy of F53 has led a double life. In the last half a century, F53 has prompted numerous scholarly commentaries and criticisms in an attempt to understand and (mostly) to resist its message. But the influence of F53 evidently reaches far beyond such explicit commentaries. In fact its effective impact may have flown along its own separate ways, uninfluenced by the various criticisms that have been levelled against the essay. There has been a popular legacy of F53, based on a vague understanding of its key ideas, sustained and transmitted without any detailed analysis or reflection of the text of the essay, often without citation or reference. The popular legacy manifests itself in introductory chapters of economics textbooks in which students are being explained why the assumptions of economic models do not need to be realistic, and in oral communication at seminars and conference sessions as reference is being made to “as-if methodology” or the importance of predictive implications in testing models. Parallel to this popular legacy, and surely motivated by it, there has been a tradition of more or less systematic “F53 studies” aiming at detailed critical scrutiny of the claims and arguments of the essay. This has constituted what may be called the reflective legacy of F53. Numerous studies have been published in journals and books, critically analyzing and interpreting and explaining F53 from a variety of angles, focusing on its different aspects, and drawing conclusions that rival or complement one another. The present volume adds many important and novel insights and analyses to this body of reflective literature. It is hoped that they will have consequences for the contents of the popular legacy. In both of these incarnations of its legacy, the popular and the reflective, F53 has been highly influential. It has shaped the perceptions of the economist-of-the-s