by From Asad Zaman What is a model? How does it relate to reality? This question has been discussed thoroughly in previous post on Models and Reality , and briefly in previous lectures. Western understanding of models was derailed by a complex set of historical accidents. This is a tangled tale with bewildering twists and turns, some aspects of which are discussed in “Deification of Science and Its Disastrous Consequence“, and some others in Logical Positivism and Islamic Economics . The reason we need to tell this story is because without understanding it, it is impossible to understand why Friedman could say, without being laughed out of court, that “Truly important and significant hypotheses will be found to have “assumptions” that are wildly inaccurate descriptive representations of
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from Asad Zaman
What is a model? How does it relate to reality? This question has been discussed thoroughly in previous post on Models and Reality , and briefly in previous lectures. Western understanding of models was derailed by a complex set of historical accidents. This is a tangled tale with bewildering twists and turns, some aspects of which are discussed in “Deification of Science and Its Disastrous Consequence“, and some others in Logical Positivism and Islamic Economics . The reason we need to tell this story is because without understanding it, it is impossible to understand why Friedman could say, without being laughed out of court, that “Truly important and significant hypotheses will be found to have “assumptions” that are wildly inaccurate descriptive representations of reality, and, in general, the more significant the theory, the more unrealistic the assumptions.” Similarly, how could Lucas and Sargent make assumptions that are certifiably crazy, and receive Nobel Prizes and accolades? To understand why completely crazy understanding of models currently dominates the economics profession, it is necessary to understand some aspects of this story. Nonetheless, it is too long and difficult a task, so we will vastly oversimplify, and pin all the blame on poor stodgy German philosopher Kant — not that he does not deserve a lot of blame, but he also had a lot of accomplices, both before and after. A more nuanced account must be left for a much longer treatment by someone much more knowledgeable about Western philosophy and intellectual history. For students of economics, a brief explanation can be provided by looking at a key turning point, called a “Copernican Revolution” by Kant himself. read more