Essays In Positive Economics

Essays In Positive Economics-39
At the same time there are many mainstream economists who reject Friedman’s methodology on its face when confronted with it directly but are compelled, as a result of their training and the need to accumulate publications in mainstream economic journals, to abide by its rules which are imbedded in the culture of the discipline. The fundamental paradigm of economics that emerged from this methodology not only failed to anticipative the Crash of 2008 and its devastating effects, it has proved incapable of producing a consensus within the discipline as to the nature and cause of the economic stagnation we find ourselves in the midst of today.In attempting to understand why this is so it is instructive to examine the nature of Friedman’s arguments within the context in which he formulated them, especially his argument that the truth of a theory’s assumptions is irrelevant so long as the inaccuracy of a theory’s predictions are cataloged and we argue those assumptions are true.

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The place to begin is with the history of the law of falling bodies that Friedman alludes to, and then ignores.

The Law of Falling Bodies Our understanding of this ‘law’ did not just suddenly appear out of nowhere.

As a result, after Newton, any other interpretation of Galileo’s law would be viewed as pure nonsense by any educated person other than those who wished to cling desperately to the cosmology implicit in the Ptolemaic view of the universe and who were unwilling or unable, for whatever reason, to accept a heliocentric view of reality.

It is essential to understand, however, that the Newtonian understanding of this law was of a space-time continuum as embodied in Einstein’s theory of relativity.

This understanding differed from Galileo’s in that Galileo had that there is an inverse-square relationship between the force of gravity and the distance between the centers of gravity of the earth and a falling body.

These two assumptions, taken together, imply that the rate of acceleration must increase as a falling body and earth approach each other. 398, 83)] Thus to make Galileo’s law of falling bodies that the rate of acceleration increases as the falling body and earth approach each other in accordance with Newton’s theory of gravity and second law of motion.18-9)] Now it seemed quite clear to me back in 1967, and it still seems quite clear to me today, that it is the purview of engineering, not science, to catalog the circumstances under which a theory works and does not work and to estimates the errors in the predictions of theories along with the cost involved in using one approach or another.The purview of science, as I saw it then and still see it today, is to the subject matter of a scientific discipline.Today we find ourselves in the midst of a world-wide economic, political, and social catastrophe that has followed in the wake of the worst financial crisis since the 1930s. only by experience and exposure in the ‘right’ scientific atmosphere” we must look to the wise men and women of the discipline who have been exposed to “the ‘right’ scientific atmosphere” to find where “the thin line is drawn which distinguishes the ‘crackpot’ from the scientist.” [Friedman (pp.This crisis, in turn, was the direct result of the financial deregulation policies implemented over the past forty years at the behest of mainstream economists—policies that mainstream economists justified on the basis of an economic theory that speculative bubbles cannot exist in spite of the innumerable economic, political, and social catastrophes that have followed in the wake of speculative bubbles throughout the course of history.[5] And yet, mainstream economists are at a loss in trying to come to a consensus as to what went wrong. is something that cannot be taught [and] can be learned . 22-3, 25)] This may seem to make sense to an engineer who wishes to learn the current state of the art of bridge building, or to an ideologue who wishes to provide a logical foundation for his or her most cherished delusions irrespective of the circular reasoning and false assumptions upon which that logic is based, but this is not science!At this point it should at least be apparent that Friedman’s assertion that the law of falling bodies “is accepted because it works” is not nearly as clear cut as Friedman tries to make it seem.Friedman, himself, expounded on but a few of the innumerable situations in which this law, , does not work, and, in fact, there are relatively few practical applications for Friedman’s statement of this law other than as a basis on which high-school physics students can construct lab experiments.It is intuitively obvious that a logical argument only has substantive meaning if its premises are true even to those who lack a formal understanding of logic.As a result, few scientists would be willing to follow Friedman’s methodology and attempt to catalog when the blue-eyed theory of infallibility ‘works’ and when it doesn’t.The fact is that Galileo accepted his understanding of this law, not simply because it works, but because his understanding of this law is the physical universe.Newton’s cosmology made it possible to understand and explain astronomical observations with a degree of accuracy that was heretofore impossible.

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