Equilibrium versus Understanding: Towards the Restoration of Economics as Social Theory

By Mark Addleson | Go to book overview

2

NEOCLASSICAL METHODOLOGY

The notion that there is a permanent neutral framework whose ‘structure’ philosophy can display is the notion that the objects to be confronted by the mind, or the rules which constrain inquiry, are common to all discourse, or at least to every discourse on a given topic. Thus epistemology proceeds on the assumption that all contributions to a given discourse are commensurable. Hermeneutics is largely a struggle against this assumption.

(Rorty l980:315-16)


THE ISSUES

I have identified two types of theory distinguished by their radically different epistemological and ontological foundations. My contention is that the theories are dichotomous in that each serves a different purpose, and that a determinate equilibrium theory, which necessarily involves a third-person perspective, is unsuited to the task of explaining human conduct and people’s choices.

This assertion raises the important question of what it is that neoclassical economists wish to do with their theory. Writers who are dissatisfied with orthodox economics usually criticise it for being ‘unrealistic’, but Coddington (1975b:540-1) makes it clear that realism does not constitute adequate grounds for either accepting or rejecting a theory. All theories are unrealistic and none purports accurately to represent reality. How then can we decide whether or not our theories are ‘good’ or ‘bad’? In providing an answer, Coddington explains why it is important to understand what purposes theory is meant to serve.

Before one can effectively set about appraising a theory, it is necessary to be clear about what relationship theories have to their subject matter: what they are theories about or what they are theories of…. [T]his relationship is not, and cannot be, a straight-forward matter of ‘correspondence’ between theory and subject matter….

-34-

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Equilibrium versus Understanding: Towards the Restoration of Economics as Social Theory
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • List of Figures ix
  • Acknowledgements x
  • Part 1 1
  • Introduction 3
  • 1 - Two Languages of Economic Theory 13
  • 2 - Neoclassical Methodology 34
  • 3 - The Practices of Neoclassicists 52
  • 4 - On Subjectivism 68
  • 5 - Interpretative Understanding 79
  • 6 - Austrian Economics and Subjectivism 97
  • 7 - Implications of Interpretative Understanding 116
  • Part 2 133
  • 8 - Models of Industrial Location 135
  • 9 - Location Theory as a Narrative 155
  • 10 - Decisions About Things in the World 170
  • 11 - Plans and Decisions as Understanding 182
  • 12 - Investment Decisions 195
  • 13 - Understanding and Locations 213
  • 14 - Retrospect and Prospect 231
  • Notes 241
  • References 266
  • Index 288
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