Academic journal article Economic Inquiry

Friedman's Methodology of Positive Economics: A Soft Reading

Academic journal article Economic Inquiry

Friedman's Methodology of Positive Economics: A Soft Reading

Article excerpt

...There are many ways to read a text and the ones most accessible to a modern are often inappropriate when applied to the past.... Trying to transmit such lessons to students I offer them a maxim: when reading the work of an important thinker, look first for the apparent absurdities in the text and ask yourself how a sensible person could have written them. When you find an answer,... when those passages make sense, then you may find that more central passages, ones you previously thought you understood, have changed their meaning. (Kuhn |1977, xii~)

From time to time it is probably necessary to detach oneself from the technicalities of the argument and to ask quite naively what it is all about. (Hayek |1937, 54~)

Milton Friedman's |1953~ essay, "The Methodology of Positive Economics" is perhaps the most influential of Friedman's numerous papers.(1) Many theory textbooks cite it as the justification for what economic theorists do. Boland |1979, 503~ states that "Friedman's essay is considered authoritative by almost every textbook writer who wishes to discuss the methodology of economics."(2) Hammond |1990~ calls it "the methodological Bible" of most economists, Donald McCloskey |1989, 226~ asserts that: "sentences from Milton's pen still provide the philosophical stage directions for the field."

At the same time most specialists in economic methodology are highly critical of it. Thus they complain about Friedman's "failure to define precisely such key terms as language, prediction, explanation ..." (Renshaw |1988, 2~), about vague use of terms like "facts" and "evidence" (Coddington |1972, 9~), as well as about "ambiguities and difficulties" (Wible |1982, 352~), or refer to it as "plagued with obscurity" and as lacking coherence (Maki |1990, 1~), and as containing "stultifying features" (Rosenberg |1972, 15~). Even Nagel |1963, 218~, who is generally sympathetic to Friedman's essay, deplores "an ambiguity that perhaps reflects an unresolved tension in his views on the status of economic theory." But these criticisms by specialists do not seem to have affected the working economist's evaluation of Friedman's essay. This seems paradoxical. One would expect a profession to adopt the judgment of those of its members who are specialists on the particular issue.

I will argue that this seeming paradox results from methodologists and working economists appraising Friedman's essay by different criteria. Methodologists look for coherence and philosophical sophistication, and evaluate Friedman's essay by the exacting standards of contemporary philosophy of science. Not surprisingly they find it confusing and lacking in technical competence. As Hirsch and de Marchi |1988, 1~ point out, ideas from the philosophy of science allow "the methodologist to show that from a philosophical point of view every eminent economist who has been foolish enough to say anything about economic methodology is terribly inconsistent if not downright silly .... Eminent economists are used as mere grist for the mill of philosophical analysis to illustrate philosophical positions."

By contrast, working economists look for heuristics that orient them in the fruitful direction and also make them feel that their work is scientific. When seeking fruitful heuristics, coherence and philosophical sophistication are not necessarily the dominant considerations. Crude, intuitive notions may be perfectly adequate to point an economist in the right direction.

Hence one's evaluation of Friedman's essay depends in good part on whether one interprets it as an attempt to teach economists the latest and most sophisticated ideas in the philosophy of science, or as an attempt to provide practicing economists with some useful ground rules, specifically with a way of healing the unfortunate split between theoretical and empirical economics that prevailed when Friedman wrote his essay.

Since most of the writings on Friedman's essay have been by methodologists, their interpretation and evaluation of Friedman's essay are already well represented in the literature; those of the practicing economist are not. …

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