Minimal realism — much ado about nothing

8 Jul, 2019 at 17:40 | Posted in Theory of Science & Methodology | 3 Comments

ccTo generalise Mäki’s distinction between realism and realisticness, someone who believes that economic theories must or should include unrealistic assumptions is not necessarily a non-realist in the broader sense of philosophical realism: “A realist economist is permitted, indeed required, to use unrealistic assumptions in order to isolate what are believed to be the most essential features in a complex situation … To count as a minimal realist, an economist is required to believe that economic reality is unconstituted by his or her representations of it and that whatever truth value those representations have is independent of his or her or anybody else’s opinions of it” (Mäki 1994: 248).

Although Lawson would presumably not deny that orthodox economic theorists account as minimal realists in this sense, his concern is that orthodox economic theory is unrealistic in not representing the way things really are in that it does not refer factually and does not latch onto what is essential in the social domain … Lawson’s standpoint is that economic theory should strive for true explanations of social phenomena, hence Lawson is a methodological realist in this respect.

Duncan Hodge

3 Comments

  1. I think one can be a realist and use ideal types in the way that Weber does. That’s a kind of an “unrealistic” assumption because an ideal type doesn’t actually exist. But an ideal type is based on key defining features that do, or have actually existed and can be shown to be actually significant for analysis. Even textbook models of perfect competition could be construed as a kind of “ideal type” to describe markets where you have standardized products, standardized technology, a lot of competition, etc. and you can develop a theory or model to try and understand how competition works or what competition does, or might do under conditions x and y. Under such conditions, I think you would get a pretty uniform rate of profit in the industry. But I think a lot of the problem comes in in that that’s not what a lot of mainstream economists do, and it’s certainly not what Friedman did. If my memory is correct, Harrod (if I’m wrong let me know) made the argument in early debates on growth theory that making a critical unrealistic assumption (perfect substitutability of factors of production) in order to insure a result that itself is unrealistic, is the real sin. That’s what Friedman did as well-or especially perhaps, even more than many mainstream economists. I’m not necessarily arguing for or against the use of ideal types, I just want to point to a very significant methodological point. There’s a difference between being unrealistic in the sense of abstracting from detail to create a big picture model vs. using assumptions that stand in direct contrast to how people actually make decisions or what money actually is in a modern financial economy.

    Comment by Citizen Rat— 10 Jul, 2019 #

  2. I belong to the Groucho Marx school of thought:
    .
    “I’m not crazy about reality, but it’s still the only place to get a decent meal.”
    .
    On the face of it, Maki’s statement makes sense to me – but how exactly it relates to Hodge’s paper I have no idea.
    .
    (Hodge’s paper seems to have a strange and confusing references list – it’s difficult to say which of Maki’s papers he is referencing.)

    Comment by Henry Rech— 9 Jul, 2019 #

  3. “To count as a minimal realist, an economist is required to believe that economic reality is unconstituted by his or her representations of it and that whatever truth value those representations have is independent of his or her or anybody else’s opinions of it.”
    .
    Realistically, I have no idea what that sentence means or was intended to mean by its author.

    Comment by Bruce Wilder— 9 Jul, 2019 #


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