The Microfoundations Delusion

The Microfoundations Delusion

Metaphor and Dogma in the History of Macroeconomics

J. E. King

In this challenging book, John King makes a sustained and comprehensive attack on the dogma that macroeconomic theory must have ‘rigorous microfoundations’. He draws on both the philosophy of science and the history of economic thought to demonstrate the dangers of foundational metaphors and the defects of micro-reduction as a methodological principle. Strong criticism of the microfoundations dogma is documented in great detail, from some mainstream and many heterodox economists and also from economic methodologists, social theorists and evolutionary biologists. The author argues for the relative autonomy of macroeconomics as a distinct ‘special science’, cooperating with but most definitely not reducible to microeconomics.

Chapter 10: The economic methodologists and microfoundations

J. E. King

Subjects: economics and finance, history of economic thought, post-keynesian economics

Extract

10.1 INTRODUCTION As we saw in Chapters 5–6, in their discussion of microfoundations mainstream economists have rarely referred either to the philosophy of science or to its application to the methodology of their own subject. Almost all would pay lip-service to methodological individualism, but they would do so without any serious consideration of its implications, or its problems. This lack of engagement with methodological questions has become more obvious in recent decades, and it has a clear parallel in the increasing neglect of the history of economic thought. Earlier generations of mainstream economists were generally much better informed, with Milton Friedman (1912–2006) and Paul Samuelson (1915–2009), for example, publishing important papers on methodological issues (Friedman 1953; Samuelson 1963). Despite the neglect, often verging on contempt, of the bulk of the profession, economic methodology has flourished as a branch or sub-discipline of economics, with its own professional society, the International Network on Economic Method, and several specialist journals. Most, though not all, of its practitioners are trained in economics and continue to practice as economists, so that they have a thorough knowledge of the literature, including that on the relationship between macroeconomics and microeconomics. Their opinions (or absence of opinions) on the microfoundations dogma are thus of considerable interest. The substantial modern literature on economic methodology is well surveyed by John Pheby (1987) and by Marcel Boumans and John Davis (2010). It began in 1934 with Lionel Robbins’s Nature and Significance of Economic Science, which took a...

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