by Axiomatics — the economics fetish Mainstream — neoclassical — economics has become increasingly irrelevant to the understanding of the real world. The main reason for this irrelevance is the failure of economists to match their deductive-axiomatic methods with their subject. The idea that a good scientific theory must be derived from a formal axiomatic system has little if any foundation in the methodology or history of science. Nevertheless, it has become almost an article of faith in modern economics. I am not aware, but would be interested to know, whether, and if so how widely, this misunderstanding has been propagated in other (purportedly) empirical disciplines. The requirement of the axiomatic method in economics betrays a kind of snobbishness and (I use this word advisedly, see below) pedantry, resulting, it seems, from a misunderstanding of good scientific practice … This doesn’t mean that trying to achieve a reduction of a higher-level discipline to another, deeper discipline is not a worthy objective, but it certainly does mean that one cannot just dismiss, out of hand, a discipline simply because all of its propositions are not deducible from some set of fundamental propositions.
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Lars Pålsson Syll considers the following as important: Theory of Science & Methodology
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Axiomatics — the economics fetish
Mainstream — neoclassical — economics has become increasingly irrelevant to the understanding of the real world. The main reason for this irrelevance is the failure of economists to match their deductive-axiomatic methods with their subject.
The idea that a good scientific theory must be derived from a formal axiomatic system has little if any foundation in the methodology or history of science. Nevertheless, it has become almost an article of faith in modern economics. I am not aware, but would be interested to know, whether, and if so how widely, this misunderstanding has been propagated in other (purportedly) empirical disciplines. The requirement of the axiomatic method in economics betrays a kind of snobbishness and (I use this word advisedly, see below) pedantry, resulting, it seems, from a misunderstanding of good scientific practice …
This doesn’t mean that trying to achieve a reduction of a higher-level discipline to another, deeper discipline is not a worthy objective, but it certainly does mean that one cannot just dismiss, out of hand, a discipline simply because all of its propositions are not deducible from some set of fundamental propositions. Insisting on reduction as a prerequisite for scientific legitimacy is not a scientific attitude; it is merely a form of obscurantism …
The fetish for axiomitization in economics can largely be traced to Gerard Debreu’s great work, The Theory of Value: An Axiomatic Analysis of Economic Equilibrium … The subsequent work was then brilliantly summarized and extended in another great work, General Competitive Analysis by Arrow and Frank Hahn. Unfortunately, those two books, paragons of the axiomatic method, set a bad example for the future development of economic theory, which embarked on a needless and counterproductive quest for increasing logical rigor instead of empirical relevance …
I think that it is important to understand that there is simply no scientific justification for the highly formalistic manner in which much modern economics is now carried out. Of course, other far more authoritative critics than I, like Mark Blaug and Richard Lipsey have complained about the insistence of modern macroeconomics on microfounded, axiomatized models regardless of whether those models generate better predictions than competing models. Their complaints have regrettably been ignored for the most part. I simply want to point out that a recent, and in many ways admirable, introduction to modern macroeconomics failed to provide a coherent justification for insisting on axiomatized models. It really wasn’t the author’s fault; a coherent justification doesn’t exist.
It is — sad to say — a fact that within mainstream economics internal validity is everything and external validity nothing. Why anyone should be interested in that kind of theories and models — as long as mainstream economists do not come up with any export licenses for their theories and models to the real world in which we live — is beyond my imagination. Sure, the simplicity that axiomatics and analytical arguments bring to economics is attractive to many economists. But …
Simplicity, however, has its perils. It is one thing to choose as one’s first object of theoretical study the type of arguments open to analysis in the simplest terms. But it is quite another to treat this type of argument as a paradigm and to demand that arguments in other fields should conform to its standards regardless, or build up from a study of the simplest forms of argument alone a set of categories intended for application to arguments of all sorts: one must at any rate begin by inquiring carefully how far the artificial simplicity of one’s chosen modal results in these logical categories also being artificially simple. The sorts of risks one runs otherwise are obvious enough. Distinctions which all happen to cut along the same line for the simplest arguments may need to be handled quite separately in the general case; if we forget this, and our new found logical categories yield paradoxical results when applied to more complex arguments, we may be tempted to put these rules down to defects in the arguments instead of in our categories; and we may end up by thinking that, for some regrettable reason hidden deep in the nature of things, only our original, peculiarly simple arguments are capable of attaining to the ideal of validity.
