Lawrence A. Boland

Knowledge and the Role of Institutions in Economic Theory

For many years there has been a dispute between the proponents of two different methodological views. These can be characterized as antiand proneoclassical. The former maintains that since a neoclassical market economy can be viewed as being merely one particular form of institutional setting, neoclassical economics is merely a special case of institutionalism (for example, Clarence Ayres, John Gambs, and Gunnar Myrdal). The latter declares that since one can explain any institutional setting and its evolution as merely the consequences of the logic of choice (that is, of optimization facing given constraints), our understanding of institutions is merely another example of neoclassical analysis (for example, James Buchanan, Gordon Tullock, and Douglass North).

Methodology for a new microeconomics : the critical foundations

Acknowledgements Preface Introduction: On the Foundations of Comparative Statics Part I: The Economics of Sub-optimal Economies 1. The State of Equilibrium as an Optimum 2. Optimization vs. Equilibrium Part II: Foundations of Equilibrium Methodology 3. Individualism and Differential Calculus 4. Methods of Explaining Disequilibrium States 5. Proofs vs. Conjectures in Analytical Economics Part III: Limits of Equilibrium Methodology 6. Equilibria and Teleological Statics 7. Equilibria vs. Equilibrium Processes 8. Against Macroeconomics as Defeatist Microeconomics Part IV: Avenues for a New Microeconomics of Non-Equilibria 9. Ad Hoc Theorizing about Price Dynamics: A Slippery Slope 10. Ad Hoc Theorizing about Non-clearing Markets: A Rocky Road 11. Learning Methodology and the Equilibrium Process: A Murky Mews Bibliography Names Index Subject Index

Boland on Friedman’s Methodology: A Summation

In this short paper I wish to discuss the methodology of criticizing Friedman’s methodology. Twenty years ago, most methodologists felt that Friedman’s methodology was dead and buried after Samuelson presented his now famous “F-twist” joke. Methodologists tend to talk only to other methodologists (partly because no one else thinks they have anything to say). For methodologists, the issue of Friedman’s methodology was closed. Unfortunately for them, there is a very large proportion of the economics profession which still thinks Friedman’s methodology is alive and well. If Friedman’s methodology were dead, it would not be so widely practiced. When I wrote my 1979 paper on Friedman’s methodology essay, I wrote it with these facts in mind rather than with the self-serving myopia of many methodologists.

Cartwright on “Economics”

Nancy Cartwright claims that “Causality is a hot topic today both in philosophy and economics.” She may be right about philosophers, but not when it comes to economists. Cartwright talks about “economics” but nothing she says about it corresponds to what is taught in economics classes. Today, economics is dominated by model builders—but not all models involve econometrics. While all model builders do respect an endogenous-exogenous distinction between variables, this distinction will not be on the basis of which type of variable “causes” which, but on which variables are “determined” (and hence explained) by the model and those which are not.

Individualist Economics Without Psychology

Neoclassical economics is often thought to need an infusion of social psychology. There are two reasons for this. One is that economics should be able to recognize the social interaction between individual decision-makers; the other is that economics should recognize that the nature of an individual’s utility function is essentially psychological. Both of these criteria involve the methodological requirements of an individualism that is at the foundations of neoclassical economics. In this short chapter I would like to explain why the requirements of methodological individualism do not necessitate an infusion of social psychology.

Methodological criticism vs. ideology and hypocrisy

Milton Friedmans famous methodology essay is one of the most cited in economics literature. There was a time when it was usually cited as a prime example of positivist methodology. But since the publication of my 1979 critique of the critics of his essay, almost everyone now recognizes his essay as a prime example of what I called instrumentalism. Most economists, who when questioned about their views of methodology, will agree with Friedmans instrumentalism but only if Friedmans name is not mentioned. But many of those same economists will claim to disagree with instrumentalism when it is explicitly identified as Friedmans methodology. Unfortunately, such disagreement leads too often to unfair criticism. The question considered is whether this unfair criticism is merely a matter of ideological hypocrisy or more likely a matter of ignorance of methodology.

Situational analysis beyond neoclassical economists

Until quite recently, some economic methodologists (particularly, those who began their careers in the late 1970s) were of the opinion that Karl Popper was misguided about economics. Some others claimed that Popper said little about economics. Yet, many economics students who began their appreciation of Popper after reading his Open Society and Its Enemies have quickly realized how easy that book is to understand because it is a generalization of neoclassical economics in terms of both methodological individualism and situational analysis. While today it might be easy to complain that basing ones understanding of Popper on neoclassical economics leads to a narrow and useless appreciation of Popper, this too is misleading. The problem is not neoclassical economics but neoclassical economists. After all, Popper himself thought the best way to teach economists about his views concerning methodology was to emphasize that his views can easily be understood as a generalization of neoclassical economics.

The accounting-economics interface: where the market fails

The conclusion of this paper is that market prices fail to reflect the information required to provide meaningful accounting measurements that are used in real‐life decision making. This failure is due to the employment of an “ideal” economic world’s assumptions that do not, and cannot, fit the real world of business. The argument in the paper begins with a discussion of the ideal market as envisioned by the Chicago School and outlined in Tisdell (1995). From this ideal market characterization, it is argued that even Adam Smith recognized the existence of external effects resulting from certain social undertakings. In addition to externalities, two other market failures are discussed: the use of efficiency measures while ignoring effectiveness measures; and the emphasis on the short‐term time horizon at the expense of the longer term.

Anatomy of a journal: A reflection on the evolution of Contemporary Accounting Research, 1984–2010

Our study outlines the evolution of a highly rated accounting journal, Contemporary Accounting Research (CAR). We examine two tensions (high quality, global journal versus Canadian authorship and homogeneous versus diverse research) that arose during CAR’s history, using Canadian Academic Accounting Association documents (CAAA) and evidence from the main articles published in CAR’s first 27 volumes. We address three research questions relevant to exploring the identified tensions: Where have CAR’s published authors been concentrated in terms of geographical location? What types of research have been published in CAR over the period? How well has CAR succeeded in meeting its original and later editorial objectives? With respect to published main articles, our findings indicate that being a high quality, global journal has won over promoting Canadian authors and that articles published in CAR tend to be more homogeneous than might be expected from the original objectives and later editorial statements. Our findings should be relevant to those interested in the history of accounting research and to those trying to publish in CAR.

Dealing with popper in economic methodology

In the late 1930s there began a full-court press to convince economists that they needed to do their economic analysis using mathematics. But the proponents were facing a problem: many reluctant converts were countering with the methodological claim that mathematics was nothing but tautologies. Tautologies and “analytical truths,” they said, were a typical fascination of economic cranks and quacks. At about the same time Paul Samuelson and Terence Hutchison advocated a methodological rule to avoid tautologies that would solve their problem. The rule was that every economic theorem or hypothesis must be empirically falsifiable. Samuelson’s 1941 Ph.D. thesis actually began with the methodological rule that economists should seek “operationally meaningful theorems” but subsequently defines this type of theorem as “simply a hypothesis about empirical data which could conceivably be refuted.” He went on to say that a “meaningful theorem may be false.” And above all, his Ph.D. thesis (Samuelson 1965) clearly demonstrated that “meaningful theorems” could be derived from his mathematical analysis of standard economic theory. For Hutchison (1938), the issue was whether economic statements are intendedly scientific and thus he advocated the methodological rule that they must be capable of being