methodological pluralism within Economics
David Ricardo was a pivotal economist whose work impacted the transition from classical political economics to neo classical economics. In the 1860s and 70s governments began to measure things in the economy, collecting systematic economic statistics and growth data according to Ricardo’s approach. This is when we began to see change in economic techniques. Previously economics had no study of its own, but once the new empirical economical approach came to be then mathematicians, engineers and scientists started moving towards economic thought.
This is when scientism happened. The way scientists go about thing is universally accepted with virtually no criticism of the methods. This is how the ideas from maths and physics were imported to economics through models. However methods were applied inappropriately. The economy was now being thought of as a machine. The laws of thermodynamics within physics were applied to economic processes. Such processes are known as the utility function and equilibrium. Neoclassical economics was using the same mathematical formulation as classical mechanics and was therefore fundamentally flawed because: utility cannot really be observed or measured as every individual has their own and it is unstable; an equilibrium theory cannot be used to study irreversible processes. The general economic equilibrium is logically entirely disconnected from its interpretation (Debreu 1959) it was intended as purely logical and not in a scientific sense.
This is why Veblen argued that we adopted the wrong science, we should have adopted biological thinking rather that mechanical thinking. He asked the question, ‘why is economics not an evolutionary science?’ (Veblen 1898). Veblen said ‘when a modern scientist asks the question why? He insists on answer in terms of cause and effect’ (Veblen 1898,p 377).
This is when scientism happened. The way scientists go about thing is universally accepted with virtually no criticism of the methods. This is how the ideas from maths and physics were imported to economics through models. However methods were applied inappropriately. The economy was now being thought of as a machine. The laws of thermodynamics within physics were applied to economic processes. Such processes are known as the utility function and equilibrium. Neoclassical economics was using the same mathematical formulation as classical mechanics and was therefore fundamentally flawed because: utility cannot really be observed or measured as every individual has their own and it is unstable; an equilibrium theory cannot be used to study irreversible processes. The general economic equilibrium is logically entirely disconnected from its interpretation (Debreu 1959) it was intended as purely logical and not in a scientific sense.
This is why Veblen argued that we adopted the wrong science, we should have adopted biological thinking rather that mechanical thinking. He asked the question, ‘why is economics not an evolutionary science?’ (Veblen 1898). Veblen said ‘when a modern scientist asks the question why? He insists on answer in terms of cause and effect’ (Veblen 1898,p 377).