Does it take a theory to beat a theory?

4 Dec, 2021 at 15:55 | Posted in Economics | 4 Comments

If the substantive theories and methods you use, given their ontological presuppositions, are appropriate to the nature of those aspects of social reality you are addressing, then fine. The only methodological ‘dictum’ I support is tailor methods to the nature of the phenomena you are addressing. Certainly, I would offer no ontological critique. Specifically, if the five sets of properties you list do characterise the phenomena you address, and your methods do not carry ontological presuppositions that are so different as to be contradictory (for example that require of the phenomena that you are addressing that they take the form of isolated atoms [causal factors that have the same independent, invariable effect no matter what the context or anything else that is going on]) then fine. It remains the case though that almost all methods of mathematical modelling employed in modern economics (not matter how simple of complex, linear or non-linear, stochastic or dynamic, simulative, predictionist or otherwise) do carry such presuppositions. Where/if bits of reality so conform to a system of isolated atoms then limited use of such methods might be fine. Of course, you suggest, indeed, that this is your approach. The mainstream of modern economics (and let us face it the only coherent account of the modern mainstream is a reliance, indeed dogmatic insistence on, methods of mathematical modelling) determines its methods a prior independently of the natures of the material that are to be addressed. That’s different. And it’s no wonder that the project results in little insight …

I believe you have often explicitly written that “it takes a theory to beat a theory”, and you see that as a challenge to people like Lars and myself to engage in substantive economics. I do not think it is. Yes, it takes a theory to beat a theory, but the theories being contrasted must be comparable. The continuing problems of modern economics do not reduce to this particular mathematical model or that particular model but the whole modelling emphasis. The commonality of all such modelling is the widespread commitment to deductivist forms of reasoning/explanation that, to be relevant, presupposes a social reality composed largely of closed systems of isolated atoms. This is the ontological theory of the modern mainstream whether recognised or not. It is this theory to which we must apply your dictum ‘it takes a theory to beat a theory’. And that, or so I claim and argue, is precisely what critical realism (CR) does. Thereafter very many (often competing) theories of substantive phenomena can be constructed all of which draw on CR (just as many substantive economic modelling exercises abound). If CR is correct then almost all modelling exercises will be irrelevant (so CR is efficacious), whereas those underpinned by CR will be merely more of less correct or false. It is not up to Lars and myself to produce these accounts (even though I have produced some). I would claim that figures as diverse as Marx, Keynes, Veblen, and Hayek have all in their own ways both criticised deductivism (as vulgar economics, pseudo-science, neoclassical economics and scientism, respectively) and its ontology, and produced (very different) substantive accounts consistent (I argue) with CR.

This of course feeds into the reason that Lars, and also myself, are almost always negative in referring to the mainstream. From the perspective we adopt, it is simply a huge error to adopt unthinkingly – and especially to insist that we all do so — methods that carry ontological presuppositions that rarely if ever hold in the social realm. So, a largely critical orientation to the mainstream (as here understood) is surely warranted. But I myself can be and am very positive towards anything more relevant.

Tony Lawson / RWER Blog