Ideology and Science in Economic Theory

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Abstract

This paper argues, using a development of Kuhn’s notion of paradigm, that all economic theories are to some extent ideological.  This does not mean, however, that economic theories are necessarily purely ideological.  An economic theory might be both ideological and scientific.  To investigate whether an economic theory is scientific we need a criterion for the scientificity of a theory.  The paper first considers one approach to this problem due to Kant, but this is rejected as incorrect and called ‘the Kantian fallacy’.  Another approach is then put forward: ‘the empirical confirmation principle’, and reasons are given for accepting this as correct.  Using this principle, it is then argued that that neoclassical economics is purely ideological, but that Keynes’ theory is scientific as well as being ideological.

Posted for comments on 12 Dec 2019, 10:05 am.

Comments (3)

  • Arne Heise says:

    Donald Gillies paper sends an extremely sympathetic message to Keynesian economists: Keynesian economics is scientific while neoclassical economics is not – it is pure ideology. Most Keynesian economists would, probably, subscribe to that message – yet, most neoclassical economists would probably not. And, I am afraid, they would be right – the story is simply not convincing.

    It all starts with an ommission: how is the term, or rather, concept ‘ideology’ defined? According to Karl Mannheim, there are two different definitions: an ideology can be a vision of a desired societal delopment in order to guide political actions. In this definition, ideology gets a positive connotation. The second definition refers to a biased or plainly wrong interpretation of reality in order to serve particular interests – this would be ‘ideology’ with a negative connotation. Which one does Gillies assume in his article?

    One may suppose that he refers to the first, positively connotated definition when he states that all theoretical schools/paradigms are to some extend ideological. This is so as every theoretical school/paradigm is based on a pre-analytical vision (the ontological Dimension in Lakatos’ terms). Although this pre-analytical vision ought to be chosen on the understanding that it is the best approximation of the object of investigation (in our case: the capitalist economy), it may, nevertheless, contain imputations in line with the scientist’s world vision (which seems to be clearly the case with Marxists). However, when Donald Gillies conflates (confounds?) economics schools/paradigms with political orientations, it appears that he refers to the second, negative connotation.

    Moreover, his ideas to discriminate between theoretical schools/paradigms by way of empirical confirmation appears to ignore important parts of the philosophy of science literature (is that why he elaborates on Kant in an otherwise quite unnecessary way?): due to the induction problem, theories cannot be confirmed but merely falsified. Accepting the famous Duhem-Quine critique theoretical schools/paradigms can never be falsified entirety but only single causal statements can be refuted.

    Last, but not least, I am (very much to my grief) not aware of any empirical refutation of neoclassical economics (of course, many theoretical deductions (ex ante predictions) from neoclassical economics proved wrong and caused ‘repair work’ – the number of labour market theories trying to explain involuntary unemployment could be a case in point) as much as I would not be convinced (if I would be an opponent of Keynesian economics) by the empirical evidence provided in the article to ‘confirm’ Keynesian economics.

    • Donald Gillies says:

      From Donald Gillies;

      Many thanks to Arne Heise for taking the trouble to read and comment on my paper. Here are my answers to the criticisms he makes.

      First of all he thinks that I should begin by defining the term ‘ideology’. However, many philosophers have the view that it is wrong to begin philosophical discussions with the attempt to define the terms used. Popper, for example, objects that this leads to an infinite regress or vicious circle. Wittgenstein thinks that one should study the meaning of a term by examining how it is used in the ‘language games’ in which it occurs. Both Popper and Wittgenstein condemn the search for definitions as ‘essentialism’. My own approach follows these critics of the search for definitions. The alternative approach is to explain the meaning of a term by giving examples of its use. This I do by considering in turn the three principal paradigms in economics (from left to right: Marxism, Keynesianism and Neo-Classical Economics) and describing the political ideology associated with each paradigm. This listing of examples seems to me a better approach than that of trying to give a definition.

      Arne Heise thinks that I elaborate on Kant in a quite unnecessary way. This I find surprising since Kant is usually held to be such a great philosopher that it is always quite appropriate to consider his views on any philosophical question. Perhaps Arne Heise thinks that Kant is now too out-dated to be relevant to contemporary issues in philosophy of science. But this is not true. There is at present a flourishing school of philosophers of science who are admirers of Kant and try to apply his philosophy to contemporary science. The 2015 Fernando Gil International Prize in Philosophy of Science was awarded to one of the leading members of this school, the American philosopher: Michael Friedman, for his book: Kant’s Construction of Nature. A Reading of the Metaphysical Foundations of Natural Science. My quotation from Kant comes from Kant’s book: The Metaphysical Foundations of Natural Science, which is mentioned in Friedman’s title.

      Arne Heise thinks that my ideas appear “to ignore important parts of the philosophy of science literature” citing as examples “the induction problem” and “the Duhem-Quine critique”. In fact I have written extensively on these problems. For example, in my book: Philosophy of Science in the Twentieth Century. Four Central Themes, I argue at length that falsifiability is not an adequate criterion for demarcating between science and metaphysics and should be replaced by confirmability. Obviously I could not repeat all this argument in a short paper on philosophy of economics, but perhaps I should have given a reference to this longer treatment of the question, and will do so in any revision of the paper.

      Arne Heise says, quite correctly in my view: “Accepting the famous Duhem-Quine critique theoretical schools/paradigms can never be falsified.” However, in the next sentence he writes: “I am (very much to my grief) not aware of any empirical refutation of neoclassical economics”. But if, as he himself has just pointed out, because of the Duhem-Quine thesis no paradigm can be empirically refuted, how could it be a cause of grief that neoclassical economics has not been refuted? There is something close to a contradiction here. My own criticism of Neo-Classical economics is not that is has been falsified, but that it has not been confirmed empirically.

      Arne Heise writes: “I would not be convinced (if I would be an opponent of Keynesian economics) by the empirical evidence provided in the article to ‘confirm’ Keynesian economics.” However, it does not seem to me enough to say that, under those hypothetical circumstances, he would not be convinced. He needs to give reasons why he would not be convinced. After all I present the empirical evidence in detail. It consists partly of correct explanations of already collected empirical data, and partly of empirical verifications, by further data, of often quite surprising predictions. This is just the sort of evidence, which is taken as having confirmed standard theories in the natural sciences such as Newton’s theory. Why should it not be regarded as confirming Keynesian theory?

      As this is an open peer discussion forum, I would like to conclude by asking Arne Heise a couple of questions. The first concerns his attitude to one of the issues considered in my paper, namely whether high-level economic theories can be scientific. He seems to regard Kant’s views as irrelevant to this question. He argues quite correctly in my opinion that such theories cannot in the light of the Duhem-Quine thesis be falsified. He further seems to express doubts about whether economic theories can be confirmed empirically. In the light of these opinions, it seems to me difficult for him to claim that high-level economic theories can be scientific at all. Does he really think that it is not possible for a high-level economic theory to be scientific? That is my first question.

      My second question is more specific. He speaks of: “the ontological Dimension in Lakatos’ terms”. I was a PhD student of Lakatos and knew him well for many years. However, I don’t remember him ever using the expression ‘the ontological Dimension’. I searched the indices of Lakatos’ philosophical papers and of his book, but the term ‘ontological Dimension’ does not appear either under ‘ontological’ or under ‘Dimension’. I have naturally become curious, and so would be very grateful if Arne Heise could let me know where Lakatos uses the expression ‘the ontological Dimension’. Many thanks.

      • Arne Heise says:

        Just a few comments:
        I do not doubt that many philosophers start philosophical discussions without clearly defining the object of their discussion. Yet, I would argue that that is not the approach taken in economics in I wouldn’t know what the point is to call something ‘ideological’ if I don’t know what is meant by this discription.

        Donald Gillies believes to have caught me in ‘something close to a contradiction’ because I am in grief over the non-falsification of neoclassical economics. This sentiment – as I believe every sentiment is – is an emotional, not a rational statement – can emotions be ‘something close to a contradiction’? I don’t think so. Yet, even accepting that entire paradigms can not empirically be falsified, so can – as I mentioned – single causal relations. Some of them may be crucial to the paradigm, other rather marginal. If crucial relations have been empirically falsified and no ex post theoretical repair work has been able to reconcile the deductive speculation with empirical findings, still the entire paradigm might not be falsified, yet would definitely be in a crisis. Actually, it was this that I had in mind when I uttered my grievance of the non-falsification of neo-classical economics even in this restricted sense.

        To come to the two Questions:

        1) Do I really believe that high-level economic theory can be scientific? Yes, I do. If the methodological standards that a scientific community has set itself are met, theories/theoretical schools/paradigms can be regarded as scientific. Economics has set itself very high methodological standards which exclude a radical ‘anything goes’ – still the scientifically created knowledge is merely ‘conjectural knowledge’ (Vermutungswissen) and, due to the methodological restrictions, most likely there will be competeing ‘conjectural knowledge’ (or pluralism).

        2) Where does the ‘ontologial dimension’ in Lakatos comes from. Lakatos does (probably) not use the term ‘ontological dimension’ but, at least that is my understanding, his (positive and negative) heuristic of a scientific research programme (see Lakatos, I.; Criticism and the Methodology of Scientific Research Programmes, in: Proceedings of the Aristotelian Society, New Series, Vol. 69 (1968 – 1969), p 176ff.) can be called ‘ontological dimension’ of a srp.

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