A plea for reorienting philosophical attention from models to applied economics

Published on Real-World Economics Review RWER, issue no 65, by Gustavo Marqués, September 27, 2013.

… Conclusions:

The points of view examined in this paper agree in that actual conventional models that incorporate tractability assumptions provide some relevant information, but they must be supplemented with other types of knowledge, skills and practices if such information is to be successfully used in real world economies. Beyond this coincidence these views differ in the type of extra theoretical resources that are needed. For Cartwright models offer “lessons”, which have to be extracted using pre-existing backward knowledge coming from outside the models themselves. 

Colander is more specific arguing that expert interpreters of current macroeconomic models are crucially needed, emphasizing the importance of having historical knowledge, methodological skills and experience in the analysis of particular situations. The economist-engineers portrayed in Alexandrova’s account, on the other hand, are men of action. Thanks to the cooperation of other experts not necessarily economists, they can make – by trial and error-creative contributions to the design of institutions invested with economic relevance.

A major success of the perspective of Alexandrova, which in my opinion makes it superior to the rest of the views examined in this paper, is that she relates the epistemic relevance of economic models to their practical applications. From this point of view it is the social technology that the models help to generate which gives them credence as tools for achieving relevant knowledge. Indeed, if a discipline provides “resources” (models in this case) that contribute to successful technological devices (institutions, in this case), this is a clear indicator that this discipline brings out relevant and reliable knowledge (and some may feel entitled to apply to it the label of “science”). That is what has happened with physics, biology, and more recently with genetics. Also in the case of economics their practical applications are crucial, and so it is necessary to have a successful associated engineering. The problem is that, unlike what happens with the aforementioned disciplines that undoubtedly have contributed to an enormous amount of successful practical applications, the contribution of economic models to the generation of social technologies is still equivocal and needs to be properly examined. Indeed it is not clear whether there are or are not successful social technologies. But even granting that they can be found in real economies, it remains unclear what exactly the contribution of models with arbitrary tractability assumptions has been in such cases. Philosophy of economics may be extremely helpful on this issue. One major contribution would be to shift philosophical attention from the intricate details of representations (models) to the conditions that have to be fulfilled for building a substantial core of successful applied economics.
(full long text and Bibliography).

Download the whole issue No. 65, 27 September 2013.

See also the Real-World Economics Review Blog.

(see also: Welcome to our new blog: politics for the 99%).

Comments are closed.