Every scientific method has its metaphysics. Logical positivists used to report the death of metaphysics, but, as Mark Twain remarked on reading his own obituary in the newspaper one morning, the reports were exaggerated…. That itself is no fault (although positivists would presumably think it one).
(Hollis and Nell 1975:21)
The ‘methodology’ chapters of introductory textbooks offer a superficial impression that the heart of positivism beats as vigorously as ever in neoclassical economics, but this impression is belied by a closer examination of what mainstream economists actually do.
For the purpose of examining their methodologies, it is useful to adopt the classification proposed by Coddington (1975b:544) and to divide the practitioners into two categories: those ‘using theories as an instrument of applied investigation; and [those]…developing, refining, and extending them as a theoretical exercise or contribution to analysis.’ I will refer to these two groups as ‘applied’ and ‘theoretical’ economists respectively although the categories are not rigid, and the contributions of some—Friedman and Samuelson come to mind—put them firmly in both groups. My main interest is in the second group, which could also be divided into theoretical economists whose interest lies in ‘pure theory’—conceptualising economic problems and relationships—and those who aim to apply the concepts and to establish empirical relationships. The former includes the individuals most closely associated with the development of general equilibrium (GE) theory and, after an initial overview of the scientific practices of neoclassical economists, this chapter identifies the hermeneutical questions posed by a group of general equilibrium theorists and examines the methodological implications of these questions.
There are various assessments of the methodologies of applied neoclassical economists (see, inter alia, Boland 1982a; Caldwell 1982;