Introduction

Chapters 4 and 5 I look at what this meant in practice. I describe the rise of economic modelling and show how the philosophical approach seen in Keynes and his predecessors gave way to an approach in which mathematics and statistics were used to build miniature versions of real-world economies, known as models. Chapters 6-9 all deal in one way or another with models. What kind of instruments are they? Do they serve to predict the course of events without any need for us to worry about the specific structure of the model itself, or is the whole point of models that they offer us insight into the mechanisms that we can justifiably assume to be operating in reality? These chapters fall somewhere between the radical position of Milton Friedman (Chapter 6), who argues that the assumptions at the root of models are irrelevant, and positions that in one way or another support the notion that those assumptions are true, as in Chapter 9. In the former case, the value of models lies primarily in their predictive power, in the latter case in their capacity to simulate reality. Chapter 7 looks at the work of Paul Samuelson, showing that models can also facilitate thought experiments. In contrast to modelling exercises that link model and world directly, thought experiments hinge on paradoxes that undermine common tenets of our understanding of the economy. One might say that thought experiments test common sense and therefore indirectly show how the world functions differently from the way we believe it does. Chapter 8 is about material experimentation in economics. It describes a fundamental shift in both thought and action, the consensus among economists having previously been that their particular science did not lend itself to experimentation. We shall see how, since the 1960s, economists have laid aside a number of standard arguments against the feasibility of experimentation, not simply by arguing that it is feasible but by actually going ahead and experimenting. With the exception of Chapter  2, which looks at John Stuart Mill’s essay, each of the chapters addresses one or more examples of economic research, and these in turn dictate the subjects treated. To that extent, this book differs from other introductions to the philosophy and methodology of economics, which take their lead from the philosophy of science. I certainly do not intend to suggest this tradition is irrelevant to attempts to understand economics, but it is not my aim to show how the classic concerns of the philosophy of science arise when we think about economics as a science. Rather, I intend to demonstrate how economists themselves have expressed and attempted to solve the problems they come up against in practice. The book can therefore be read alongside either a more traditional introduction to the philosophy of science or an introduction to economics. Of course, it can also simply be read for its own sake. In the concluding chapter, I return to the character of economics as a science and what it implies for the persona of the economist. A historical approach to the methodology of economics demonstrates that its rules

cannot be expressed as timeless truths. Nor is the persona of the economist as a scientist stable and fixed. Both the rules of the game and the character of its players change as the context and methods of economics change. Although still a participant in public debates, to an important degree the economist has become an instrument maker. Yet despite this, he remains a player. Indeed, his opinion may actually have a greater influence on public policy as a result.