Uskali Mäki

Mark Blaug’s normative methodology of economics is an attempt to articulate certain intuitions about how economic science could be improved by making it more “realistic”. I discuss two such articulations, one in terms of falsificationist principles, the other in terms of an alleged trade-off between relevance and mathematical rigour. My conclusion is that Blaug’s methodology is itself unrealistic, both descriptively and normatively. His (well intended) methodological prescriptions for the improvement of economics are not based on a systematic, consistent, descriptively adequate, and normatively viable account. I suggest that Blaug’s intuitions can be developed into a more realistic account by incorporating the analysis of two further topics: economic modelling and the institutions of academic research

This article shows how the MISS account of models—as isolations and surrogate systems—accommodates and elaborates Sugden’s account of models as credible worlds and Hausman’s account of models as explorations. Theoretical models typically isolate by means of idealization, and they are representatives of some target system, which prompts issues of resemblance between the two to arise. Models as representations are constrained both ontologically (by their targets) and pragmatically (by the purposes and audiences of the modeller), and these relations are coordinated by a model commentary. Surrogate models are often about single mechanisms. They are distinguishable from substitute models, which are examined without any concern about their connections with the target. Models as credible worlds are surrogate models that are believed to provide access to their targets on account of their credibility (of which a few senses are distinguished).

Economics is a culturally and politically powerful and contested discipline, and it has been that way as long as it has existed. For some commentators, economics is the "queen of the social sciences", while others view it as a "dismal science" (and both of these epithets allow for diverse interpretations; see Mäki 2002). Economics is also a discipline that deals with a dynamically complex subject matter and has a tradition of reducing this complexity by using systematic procedures of simplification. Nowadays, these procedures involve for the most part building and using mathematical models (for an overview of the philosophical issues, see Morgan and Knuuttila 2011). In the dominant circles of the discipline, one is not regarded as a serious economist having a professional expert view on any given economic or social issue without having a model about it. Much of the power of the discipline and its characteristic contestations therefore involve models and modelling: the successes and failures of the dismal queen are those of modeling. The issues involved in conomic modeling have been made particularly acute once again by the financial crisis of 2008-2009 and its aftermath: the discipline of economics is among the candidates for the major blame for failure. I will first outline some thoughts about the characteristics disciplinary conventions that guide and constrain modeling in economics. I will then summarize my account of the very ideas of models and modeling. Finally, within the framework of that account, I will highlight some major issues of contestation and sketch the respective notions of potential success and failure in economic modeling with illustrations. These notions are motivated by my subscription to a (flexible and discipline-sensitive) realist philosophy of science (e.g. Mäki 2005).

A few aspects of the issue of realism are addressed in the context of a social science. The paper looks for adjustments needed in our conceptions of scientiflc realism to accommodate some peculiarities of economics. Ontologically speaking, economics appears to be closely linked to commonsense conceptions of the world, thus the problem of theoretical concepts does not emerge in the same form it is often taken to exist in physics. Theory formation is largely a matter of idealization and isolation among observables rather than postulation of unobservables. Given that isolative theories violate the truth in many ways, truth is more of a problem than existence in a realism pertaining to economics. The idea of significant truth -which is able to tolerare varieties of untruths in theories- is suggested to be based on the notion of the way the world works; this is a matter of the causal structure and functioning of the world. None of this is undermined by the acknowledgement that economist’s attittudes and decisions are shapped by rhetorical persuasion

For the last three decades, the discussion on Hilary Putnam’s provocative suggestions around the issue of realism has raged widely. Putnam’s various formulations of, and arguments for, what he called internal realism in contrast to what he called metaphysical realism have been scrutinised from a variety of perspectives. One angle of attack has been missing, though: the view from the social sciences and the ontology of society. This perspective, I believe, will provide further confirmation to the observation that Putnam’s two concepts of realism are all too aggregative in that they conflate elements that had better be kept distinct, at least for many important purposes (e.g. Niiniluoto 1996). The present essay can be read as an argument for a topic-specific examination of realism. This means that it challenges the overall validity of Richard Boyd’s arguments against what he calls “realism about”, that is, against “a certain fragmented conception of scientific realism, one according to which realism is deeply topic specific” (Boyd 1990, p. 175). Boyd takes the ‘x’ in realism about x” to designate two kinds of things: entities postulated in scientific theories (“realism about the ether” and “realism about higher taxa”) and scientific disciplines (“realism about physics” and “realism about biology”) (ibid., pp. 175, 190). He also suggests that “it seems possible cogently to accept realism about the natural sciences while denying it about at least some of the social sciences” (ibid., p. 191). In Boyd’s view, the possibility of realism about social sciences is undermined by their weak instrumental success; it is the instrumental reliability of method that he takes as the basis for a realist account of science. I do not underwrite this connection between realism and instrumental success, thus I am not compelled to reject realism about social sciences on these grounds; and, as we shall see, social sciences have other peculiarities as well (see Mäki 1996). I think we should, at least to some degree, disaggregate and relativize the issue of realism. I do have sympathy with Boyd’s strategic arguments against “realisms about”, but yet I believe realists will be better off by adopting a more concrete and localized approach to the issue (Mäki 2005). Social objects and social sciences deserve a separate treatment. There are two strategies that can be followed in examining a realism about x (type of entity, theory, discipline). One is to first fix the meaning of realism’ and then specify the extension of ‘x’. This is Boyd’s strategy. The other is to fix some part of the extension of ‘x’ and then adjust the meaning of ‘realism’ so as to accommodate whatever peculiarities the x in question may have (and finally to check whether the adjusted meaning of ‘realism’ meets the criteria of a minimal notion of realism; it would be here that we encounter a relatively fixed idea of some minimal realism, or a set of realist intuitions). The latter is my approach here. I begin with the interconnected ideas of “realism about social objects” andrealism about social sciences”. I am not only interested in what comes after ‘about’; I am also interested in what goes before it, namely ‘realism’ itself. Here is one premise of the discussion: the issue of proper forms of realism for dealing with specific problems is an issue to be settled at least partly a posteriori. Here is the problem for which a solution will be sought: what constraints, if any, does what we know about the social sciences and society (as depicted by the social sciences and our commonsense views) impose upon the forms of realism that can justifiably be adopted about them? This paper suggests to offer only some partial insight into this issue. It seeks to do so indirectly by discussing Putnam’s characterizations of internal and metaphysical realism. The focus will be on two aspects of Putnam’s realisms: [1] the role and kinds of independence and dependence (in relation to the human mind and related things); and [2] the possibility of error. It is shown that the nature of social objects has implications concerning the appropriate constraints on [1] and [2], and thereby on the kinds of realism that are available to social scientists.

Much of biological and economic theorizing takes place by modeling, the indirect study of real-world phenomena by the construction and examination of models. Books and articles about biological and economic theory are often books and articles about models, many of which are highly idealized and chosen for their explanatory power and analytical convenience rather than for their fit with known data sets. Philosophers of science have recognized these facts and have developed literatures about the nature of models, modeling, idealization, as well as testing of models and explanation by models, for both biology and economics. The impetus for this special issue came from our recognition that there is remarkably little overlap between the “modeling in biology” and “modeling in economics” literatures, despite many of the same themes appearing in these literatures.

Milton Friedman's 1953 essay 'The methodology of positive economics' remains the most cited, influential, and controversial piece of methodological writing in twentieth-century economics. Since its appearance, the essay has shaped the image of economics as a scientific discipline, both within and outside of the academy. At the same time, there has been an ongoing controversy over the proper interpretation and normative evaluation of the essay. Perceptions have been sharply divided, with some viewing economics as a scientific success thanks to its adherence to Friedman's principles, others taking it as a failure for the same reason. In this book, a team of world-renowned experts in the methodology of economics cast new light on Friedman's methodological arguments and practices from a variety of perspectives. It provides the 21st century reader with an invaluable assessment of the impact and contemporary significance of Friedman's seminal work.

My philosophical intuitions are those of a scientific realist. In addition to being realist in its philosophical outlook, my philosophy of economics also aspires to be realistic in the sense of being descriptively adequate, or at least normatively non-utopian, about economics as a scientific discipline. The special challenge my philosophy of economics must meet is to provide a scientific realist account that is realistic of a discipline that deals with a complex subject matter and operates with highly unrealistic models. Unrealisticness in economic models must not constitute an obstacle to realism about those models. What follows is a selective and somewhat abstract summary of my thinking about economics, outlined from two perspectives: first historical and autobiographical, then systematic and comparative. The first angle helps understand motives and trajectories of ideas against their backgrounds in intellectual history. My story turns out to have both unique and generalizable aspects. The second approach outlines some of the key concepts and arguments as well as their interrelations in my philosophy of economics, with occasional comparisons to other views. More space will be devoted to this second perspective than to the first.

No realist project in and about economics is close to completion. There are many open issues that remain to be addressed and resolved. Simon Deichsel (2011) has written a healthy challenge that should offer some useful inspiration to anyone interested in assessing and perhaps contributing to the realist projects. He argues against realism and in support of some sort of anti-realism. My response first deals with some conceptual issues regarding the very ideas of realism and anti-realism. I will then discuss the role of pragmatics in relation to truth. Finally, I will address the issue of justifying realism — Deichsel’s title, after all, suggests his challenge is directed against what he calls the pragmatic justification of realism. My remarks are both brief and selective.

If models can be true, where is their truth located? Giere (Explaining science, University of Chicago Press, Chicago, 1998) has suggested an account of theoretical models on which models themselves are not truth-valued. The paper suggests modifying Giere’s account without going all the way to purely pragmatic conceptions of truth—while giving pragmatics a prominent role in modeling and truth-acquisition. The strategy of the paper is to ask: if I want to relocate truth inside models, how do I get it, what else do I need to accept and reject? In particular, what ideas about model and truth do I need? The case used as an illustration is the world’s first economic model, that of von Thünen (1826/1842) on agricultural land use in the highly idealized Isolated State.

Many participants in the debate over the current state and recent developments of economics make claims that are unrefined, simplistic, often exaggerated. This is understandable: the stakes are high, the issues trigger emotional responses, and few participants are motivated or equipped to seek more nuanced analyses. To assert, or to deny, that economics as a scientific discipline or a particular part of it (such as a model) is about reality – or refers to reality, represents it, is true about it, or is truthlike about it – is to make a very complex and highly ambiguous claim. 1 The disputants often make claims that have parallels in the philosophical controversy between scientific realists and their opponents, or at any rate those claims can be partly analyzed in terms of some of the arguments presented in this philosophical controversy. The question addressed here is whether realism about economics is a viable position. The argument proceeds by way of refuting a number of arguments against realism about economics. I suggest a genuine controversy over the factuality of any particular strand or piece of economics requires realism as a general interpretation of economics – or at any rate requires debunking the anti-realist arguments discussed below. “The issue of realism” as most economists would recognize it, is not exactly the issue of realism as philosophers recognize it. “The issue of realism” in economics is about realisticness as a property of theories , while (part of) the issue of realism in philosophy is about realism as a theory of theories . But some parts of the issue of realisticness (such as those related to reference and truth) in economics can be translated into aspects of the issue of realism as a theory of theories. Thus there is also an issue of realism (with no quotation marks) in economics. It is this issue of realism that has to be settled as a prerequisite for critical assessments of important forms of realisticness of economic theories.

The paper seeks to offer [1] an explication of a concept of economics imperialism, focusing on its epistemic aspects; and [2] criteria for its normative assessment. In regard to [1], the defining notion is that of explanatory unification across disciplinary boundaries. As to [2], three kinds of constraints are proposed. An ontological constraint requires an increased degree of ontological unification in contrast to mere derivational unification. An axiological constraint derives from variation in the perceived relative significance of the facts explained. An epistemological constraint requires strong fallibilism acknowledging a particularly severe epistemic uncertainty and proscribing against over-confident arrogance.

USKALI MÄKI (Helsinki, 1951) is a philosopher of science and a social scientist, and one of the forerunners of the strong wave of research on the philosophy and methodology of economics that has been expanding during the last three decades. His research interests and academic contributions cover many topics in the philosophy of economics, such as realism and realisticness, idealisation, scientific modelling, causation, explanation, rhetoric, the sociology and economics of economics, and the foundations of new institutional and Austrian economics. He is a coeditor of The handbook of economic methodology (1998); Economics and methodology: crossing boundaries (1998); Rationality, institutions and economic methodology (1993). And the editor of two compilations of essays that have become highly influential to the shaping of the field: The economic world view: studies in the ontology of economics (2001), and Fact and fiction in economics: realism, models, and social construction (2002).

This article shows how the MISS account of models—as isolations and surrogate systems—accommodates and elaborates Sugden’s account of models as credible worlds and Hausman’s account of models as explorations. Theoretical models typically isolate by means of idealization, and they are representatives of some target system, which prompts issues of resemblance between the two to arise. Models as representations are constrained both ontologically (by their targets) and pragmatically (by the purposes and audiences of the modeller), and these relations are coordinated by a model commentary. Surrogate models are often about single mechanisms. They are distinguishable from substitute models, which are examined without any concern about their connections with the target. Models as credible worlds are surrogate models that are believed to provide access to their targets on account of their credibility (of which a few senses are distinguished).

A few aspects of the issue of realism are addressed in the context of a social science. The paper looks for adjustments needed in our conceptions of scientiflc realism to accommodate some peculiarities of economics. Ontologically speaking, economics appears to be closely linked to commonsense conceptions of the world, thus the problem of theoretical concepts does not emerge in the same form it is often taken to exist in physics. Theory formation is largely a matter of idealization and isolation among observables rather than postulation of unobservables. Given that isolative theories violate the truth in many ways, truth is more of a problem than existence in a realism pertaining to economics. The idea of significant truth -which is able to tolerare varieties of untruths in theories- is suggested to be based on the notion of the way the world works; this is a matter of the causal structure and functioning of the world. None of this is undermined by the acknowledgement that economist’s attittudes and decisions are shapped by rhetorical persuasion.

This article identifies and analyses issues related to defining and evaluating the so-called scientific imperialism. It discusses John Dupré's account, suggesting that it is overly conservative and does not offer a definition of scientific imperialism in not presenting it as a phenomenon of interdisciplinarity. It then discusses the recent account by Steve Clarke and Adrian Walsh, taking issue with ideas such as illegitimate occupation, counterfactual progress, and culturally significant values. A more comprehensive and refined framework of my own is then summarized. It suggests types and aspects of scientific imperialism as a dynamic interdisciplinary relationship, distinguishing between imperialism of scope, style and standing, for example. It also suggests normative constraints on scientific imperialism. This enables us to distinguish, in principle, recommendable from non-recommendable kinds of it, while recognizing the difficulties involved in trying to do this in practice

Modeling involves the use of false idealizations, yet there is typically a belief or hope that modeling somehow manages to deliver true information about the world. The paper discusses one possible way of reconciling truth and falsehood in modeling. The key trick is to relocate truth claims by reinterpreting an apparently false idealizing assumption in order to make clear what possibly true assertion is intended when using it. These include interpretations in terms of negligibility, applicability, tractability, early-step, and more. Elaborations are suggested about their precise formulations, mutual relationships, and truth-aptness.

Compared to the massive literature from other disciplinary perspectives on interdisciplinarity, philosophy of science is only slowly beginning to pay systematic attention to this powerful trend in contemporary science. The paper provides some metaphilosophical reflections on the emerging “Philosophy of Interdisciplinarity”. What? I propose a conception of PhID that has the qualities of being broad and neutral as well as stemming from within the agenda of philosophy of science. It will investigate features of science that reveal themselves when scientific disciplines are viewed in comparison or in contact with one another. PhID will therefore generate two kinds of information: comparative and contactual. Comparative information is about the similarities and differences between disciplines, while contactual information is about what happens and why when disciplines get in contact with each other. Virtually all issues and resources within the philosophy of science can be mobilized to bear on the project, including philosophical accounts of models, explanations, justification, evidence, progress, values, demarcation, incommensurability, and so on. Given that scientific disciplines are institutional entities, resources available in social epistemology and social ontology will also have to be invoked. Why? Establishing PhID is presently an obvious step to take for several reasons, including the following two. First, ID is an increasingly powerful characteristic of contemporary science and its management, and so it would be inappropriate for an empirically informed philosophy of science to ignore it. Second, contemporary philosophy of science happens to be particularly well equipped for addressing issues of ID thanks to the recent massive work in the more specialized fields of philosophies of special disciplines. How? Given the breadth and heterogeneity of its domain and tasks, the practice of PhID must be heavily collective. It must mobilize multiple competences and it must keep elaborating a systematic agenda. While a lot of new conceptual work is needed, the approach is bound to be emphatically empirical, with a cumulative and mutually complementary series of case studies to be conducted. Among the methods to be employed, good old textual analysis of scientific publications will be supplemented with interviews, ‘experimental’ techniques, participant observation as well as various interventionist approaches. The published work in PhID will often be authored jointly by philosophers and other scholars in science studies as well as practitioners in various scientific disciplines.

Geographical economics (also known as the ‘new economic geography’) is an approach developed within economics dealing with space and geography, issues previously neglected by the mainstream of the discipline. Some practitioners in neighbouring fields traditionally concerned with spatial issues (descriptively) characterized it as—and (normatively) blamed it for—intellectual imperialism. We provide a nuanced analysis of the alleged imperialism of geographical economics and investigate whether the form of imperialism it allegedly instantiates is to be resisted and on what grounds. From both descriptive and normative perspectives, our conclusion is: yes and no.

In what follows, I will give examples of the sorts of step that can be taken towards spelling out the intuition that, after all, good models might be true. Along the way, I provide an outline of my account of models as ontologically and pragmatically constrained representations. And I emphasize the importance of examining models as functionally composed systems in which different components play different roles and only some components serve as relevant truth bearers. This disputes the standard approach that proceeds by simply counting true and false elements in models in their entirety and concludes that models are false since they contain so many false elements. I call my alternative the functional decomposition approach.

Introducing the ontology of theory choice Economists choose theories and they choose ways of pursuing theories, and they leave others unchosen. Why do economists choose the way they do? How should economists choose? What are the objectives and what are the constraints? What should they be? The questions are both descriptive and prescriptive. There are two broad classes of “criteria of choice” that have been somewhat systematically considered in the recent literature on economic methodology: (1) Empirical criteria. There are several possible ways of incorporating empirical criteria in one's theory of science. The respective methodology of theory assessment may be static or dynamic, it may be deductivist or inductivist, it may include various ideas of what constitutes empirical evidence, and so on. What they all share is the general idea that scientific theories are, or are to be, checked against empirical evidence according to some rules, and that this determines the choice of theory. (2) Social criteria. Again, there are several options. The social criteria may be related to the social interests of scientists or larger social collectives, they may be based on the persuasiveness and tradition-boundedness of theories, they may involve social or moral norms, they may be derived from various costs and benefits of holding a theory in a given research community, and so on. If they involve empirical data, it is the social aspects of the data that matter. What all these views share is that scientific theories are taken to have social attributes (functions, consequences) that play or should play a major role in theory choice.

So you're an economist? You study everything that can be gauged by the measure rod of money? You view human interaction in terms of supply and demand in the market? You depict human action as seeking self-interest in a calculative manner? Is this indeed your view of the world? If you are an economist and somebody has attempted, or might attempt, to embarrass you with such questions, you should read this book. If you are a non-economist inclined to raise such questions, you too should study the essays collected in this volume. If you are a philosopher interest in the peculiar characteristics of the 'dismal science', this is a book to read. The book examines aspects of the economic world view from a variety of perspectives by raising shamelessly deep questions. This is a book in the ontology of economics.

The tone of this paper is largely critical. Therefore, I would like to begin by praising Donald McCloskey and Arjo Klamer for their exciting and provocative initiative in the metatheory of economics. They have done us a great favor by opening our eyes to some hidden aspects in the intellectual practices of economists. They have shown that economics is rhetoric; it is persuasion, discourse, conversation, and negotiation, to use their favorite phrases. They have provided plausible arguments and illuminating examples to convince us of the literary character of economic reasoning, notwithstanding the formal languages used by economists and the positivist pretensions typical of the self-image of the discipline. However, McCloskey and Klamer have been less successful in trying to convince us of what economics is not. In particular, it concerns me that they have opened up a gap between rhetoric and realism. They seem to think that because economics has a rhetorical character, it cannot be understood in realist terms. I will argue that this view is mistaken: rhetoric and realism do not exclude each other, but rather they are capable of being combined in a coherent methodology of economics. It is a valuable contribution to import the insights of the newly rehabilitated rhetoric to the metatheory of economics; but it is unnecessary to marry them with enthusiasm about the fashionable anti-realism of Richard Rorty and others. While this is my overall thesis, it is clear that only initial steps towards its substantiation can be taken in this paper. I intend to proceed as follows. I will first make an attempt to locate the problem at hand in the history of the metatheory of economics. Then I will point out those elements in rhetorical metatheory as practiced and defended by Klamer and McCloskey that apparently have anti-realist or non-realist assumptions or implications, either directly or via considerations of scientific rationality. Next I will formulate a few concepts of realism, the differences between which have been ignored in the methodology of economics to this day. Then I will make preliminary attempts to inquire into the mutual compatibility of the rhetorical insights provided by McCloskey and Klamer and realism in this context. I will show that, in principle, there should be no insurmountable obstacles to combining the two; in some of its senses, realism will even turn out to be presupposed by the rhetorical approach. I do not primarily intend to argue for realism as such in this paper. Instead, I will argue for the compatibility of realism and rhetoric. The argument is based on Klamer's and McCloskey's own commitments; in this sense, the argument is immanent to their rhetorical approach. As a final point, I will argue that one should not be indifferent about realism: it does make a difference in economics and in the methodology of economics whether rhetoric is accepted with or without realism.

In order to examine the fit between realism and science, one needs to address two issues: the unit of science question (realism about which parts of science?) and the contents of realism question (which realism about science?). Answering these questions is a matter of conceptual and empirical inquiry by way local case studies. Instead of the more ordinary abstract and global scientific realism, what we get is a doubly local scientific realism based on a bottom-up strategy. Representative formulations of the former kind are in terms of the truth and reality of the posits of current science, in terms of warranted belief, in terms of mind-independent unobservable entities. Using illustrations mainly from the social sciences, doubly local scientific realism denies the global applicability of such formulations and seeks to make adjustments in their elements in response to information about local units of science: It is sufficient for a realist to give the existence of an entity (and the truth of a theory) a chance, while in some areas we may be in s position to make justified claims about actual existence (and truth). Logical inquiry-independent existence is sufficient for the social and human sciences, while mind-independence will be fine for many other domains. It should not be insisted that the theoretical posits of realist science be strict unobservables in all areas: most theoretical posits of the social sciences are idealized commonsensibles, such as elements in folk psychology. Unsurprisingly, this sort of local strategy will create space for realism that is able to accommodate larger areas of science without sacrificing traditional realist intuitions.