For the last word on neoclassical methodology, read Keita!

Jay Hanson (mailto:j@QMAIL.COM)
Sun, 6 Dec 1998 17:43:35 -1000 

Message-ID:  <00f801be2193$c6bf7da0$76e8fea9@jay98>
Date:         Sun, 6 Dec 1998 17:43:35 -1000
From: Jay Hanson <mailto:j@QMAIL.COM>
Subject:      For the last word on neoclassical methodology, read Keita!
To: mailto:DEVEL-L@AMERICAN.EDU


" 'When you dig deep down,' Charles Schultz once observed to me, 'economists
are scared to death of being sociologists.  The one great thing we have
going for us is the premise that individuals act rationally in trying to
satisfy their preferences.' "
 p. 41, EVERYTHING FOR SALE, Robert Kuttner; Knopf, 1997
http://www.amazon.com/exec/obidos/ASIN/0394583922


For the last word on neoclassical methodology, read Keita:


 "The bulk of this text was taken up with examining the claims of
neoclassical economic theory to scientific status. Given contemporary views
on the nature of scientific theory, I examined neoclassical economic theory
in terms of both its historical and contemporary phases. I demonstrated that
the cardinal theory of utility that formed the foundation for early
neoclassical theory foundered on account of its inability to measure utility
in any acceptable scientific way. Its substitute, the ordinal theory of
utility, was shown to be equally unacceptable. The scientific pretensions of
ordinal utility theory and its correlate, revealed preference theory, were
shown compromised by the normative structure of the foundational postulate
of rationality. The unscientific nature of ordinal utility theory was
further shown to be reinforced by the insulating role played by the ceteris
paribus proviso.


"This general critique was extended not only to the neoclassical theory of
individual agent choice but also to general equilibrium theory and positive
neoclassical welfare economic theory. Given the general dissatisfaction with
neoclassical theory, a number of alternative theories have been proposed,
but the problem with the latter is that, with few exceptions, they are
founded on the premise that an objective science of economics is still
possible despite its present failings. I pointed out the shortcomings of
those theories and argued that on account of the nature of human decision
making, no analysis of it could be scientific in the way in which the
natural sciences are scientific. Mental states that must be invoked to
explain behavior are just not subject to empirical analysis. The attempts by
theorists to establish explanatory theories by appeal to heuristic concepts
such as rationality were shown to be unsuccessful. The point is that
'rationality' plays a normative role similar to that of 'goodness' in
ethical theory.


"The sociologist can indeed record the behavior of individuals in terms of
cultural norms of 'goodness,' 'badness,' 'deviancy,' and so on, but he or
she must recognize that theories of behavior founded on such concepts are
necessarily normative. Similarly, the neoclassical theorist who embraces a
particular notion of rationality and grounds his or her theories on such a
notion is certainly formulating a normative theory. My analysis showed that
the neoclassical theorist of economic behavior is confronted with the
dilemma of restricting his or her analysis to a case-by-case taxonomy of
individual agent choice, given the inaccessibility to mental states, or
grounding his or her explanatory theories on the normative heuristic of
rational choice. Neither alternative yields scientific results." [ pp.
150-151, SCIENCE, RATIONALITY, AND NEOCLASSICAL ECONOMICS, L.D. Keita;
Delaware, 1992. http://www.amazon.com/exec/obidos/ASIN/0874134102 ]


Jay
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