Edited by Marcel Boumans and Matthias Klaes
Chapter 6: Some contentious issues in theory and policy in memory of Mark Blaug
Mark Blaug’s book The Methodology of Economics was one of the most important books on the nature of economic reasoning written in the twentieth century. One of its major themes is that if a theory is to be applicable to the world in which we live, it must make statements – predictions – that are at least potentially refutable. In the process, Mark presented cogent critiques of the formalism and methodological permissiveness that increasingly dominate modern economics, two developments that he argued are closely related. In the book’s second edition (1992) he reviewed many of the debates that were set off by the first edition, refuting, for example, the arguments that falsification of a theory is impossible; that we can have meaningful explanations of economic events without any testable predictions being implied; that the bad practices of some economists imply that it is useless to have good norms; and that because induction is logically impossible there can be no creative leap to new theories based on close observation – a process that he called ‘adduction’. I would make this book compulsory reading for every economics graduate student and undergraduate major. In this chapter, following in Mark’s footsteps, I discuss a number of issues that arise from my survey of some key aspects of modern economics, many of which were also addressed by Mark. Some relate to methodology, some to theory and some to policy. In this necessarily brief survey, I cannot give an exhaustive discussion of any of these issues.
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