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Symposium on
Reorienting Economics (Part V)
Dialogue on the reform of economics with Tony Lawson’s Reorienting
Economics as focal point
Critical Realism
in Economics – a different view
Bjørn-Ivar Davidsen (Ostfold University College, Norway)
© Copyright: Bjørn-Ivar Davidsen 2005
Introduction
Among the new
perspectives introduced to the discipline of economics the last few decades,
critical realism, for various reasons, stands out as one of the most
challenging. Two seminal books by Tony Lawson, Economics & Reality
and Reorienting Economics, have played a pivotal role in the
developments so far, setting the agenda for the unfolding of a critical
realist project within economics. In perspective, it turns out that Lawson
and his close followers downplay endeavours aimed at developing critical
realist-inspired analyses of substantive economic phenomena and issues.
Rather, they choose to delimitate the scope of the project to philosophical underlabouring for various scientific practices within
the discipline. The overall goal of these endeavours seems to be to reorient
the whole discipline of economics towards increased attention to ontological
questions in general, and especially to the ontological theories embodied in
the critical realist position.
It is my
purpose here to question this strategy of developing a critical realist
project within economics. I will argue that the attempts made to establish
dialogues with various existing mainstream and heterodox positions by way of
critical endeavours and invitations to ontological unification and
co-development have been less than successful so far and that the prospects
of any future success are equally dim. One of the main reasons why is due to
the fact that critical realists tend to endow the ontological theories
central to their project with undue status and credibility. The properties of
critical realist ontological theories do not render them apt as arbiters in
critical endeavours or as some sort of unifying or common ontological basis
for various heterodox schools of thought. In fact, I will argue that critical
realist ontological theories are primarily, and perhaps only, suited for the
one purpose that critical realists within economics seems to eschew – for
establishing a basis for the development of critical realist-inspired
analyses of substantive economic questions and issues.
In order to
contribute to a process of looking in this direction I will offer some
suggestions as to how tenable critical realist-informed economic theorising
and substantive analyses may be developed from the philosophical stances and
the general ontological theories of critical realism. In this critical
realist-inspired approach to economics, ontological theorising is embedded
in, or made part of, the overall scientific endeavours. According to this
view then, critical realism can, and should, define itself as one among a
range of other approaches to economic enquiries in a true pluralist fashion
rather than as some common philosophical underpinning of already existing
schools of thought. At the end of the day assessments of such a critical realist
approach to economics would be due to its adherents’ ability to shed light on
old as well as new problems and issues pertaining to the realm of economics.
Situating critical realism and the role
of ontology
Critical
realism is a fairly new project within the discipline of economics. As with
any newcomer to a well-established academic tradition it has taken the
proponents of the project some time to find its place and role. We do now,
however, see a pattern emerging. To most external observers, whether sympathetic
or hostile to the project, critical realism was at first noted for its
far-reaching critique of mainstream economics. The purpose of these critical
endeavours seemed to be aimed at discarding most of what goes for mainstream
economics as part of a strategy advocating critical realist approaches to
economic analyses. With time, however, it has become increasingly clear that
Lawson and his close followers rather aspire at generating dialogues with
various schools of thought within the discipline – mainstream as well as
heterodox.
The critical
realist attempt at establishing a dialogue with mainstream economics is
mainly based on critical assessments of the latter. At a general level the
critique is due to a charge arguing a mismatch between the mathematical-deductive
methods allegedly adhered to by mainstream economists and the properties of
social reality as seen by critical realists. According to critical realism
social reality is an open and evolving system comprised of intentional
individual agents and emerging, layered social structures. The social
structures of society are argued to enable and restrict individual actions,
while at the same time being reproduced and potentially transformed by such
agency. Mainstream economics is considered unable to capture this reality due
to its adherence to a deductive mode of explanation in which event
regularities of the form ‘whenever event x then event y’ are claimed to play
a crucial role. Moreover, reinforcing these allegations, it is stated that
mainstream economics is confined to analyses of issues pertaining to ‘closed
systems’, defined as systems in which event regularities occur or obtain.1
The implication of the critical realist critique then, amounts to urging
mainstream economists to re-tailor their analytical tools to fit the basic
features of social reality, as viewed by adherents of critical realism.
As opposed to
the mainstream position within economics, critical realists do find that they
have a lot in common with several schools of thought within the heterodox
tradition. Initially, adherents of the critical realist programme approached
heterodox economics through studies of the works of a number of outstanding
representatives of such positions, like Commons, Hayek, Kaldor,
Keynes, Marshall and Marx. It has been argued that these, and other, highly
respected contributors to various heterodox traditions actually incorporated
important aspects of critical realist thinking in their work, albeit spelled
out in a different vocabulary. 2 These insights have recently been
further developed, and the critical realist dialogue with heterodox economics
now turns on the argument that, as a number of schools of thought within this
tradition allegedly share basic ontological understandings with the critical realist
position, they would benefit from redefining themselves under a common
critical realist ontological banner. Critical realism would then be
considered a position providing a common ontological basis for schools of
thought whose identity would flow not from different ontologies
but rather from the aspects of a common ontology upon which they choose to
focus. The heterodox positions in question would, in other words, be rendered
distinct according to a division of labour within a collective framework predicated
upon critical realist ontology.3
A strategy for
future development along these lines would contribute, it is argued, to
increased awareness of commonalities as well as distinguishing features
accruing to positions within the heterodox tradition. More specifically, a
unification and ‘linked co-development’ based upon an acceptance of, or
subscription to, critical realist ontology would allegedly provide:
philosophical resources that can help heterodox economists to make
explicit, clarify and systematise their insights into the nature of
socio-economic being and its implications for appropriate methodology for
economics. (Lewis 2004: 2)
Possible virtues of such critical realist underlabouring
are illustrated when Lawson (2003a) intervenes philosophically in a number of
heterodox positions with critical realist ontology as a reference point. In
the analyses overlaps with critical realist ontology are indicated and
deficiencies and weaknesses of embedded ontological presuppositions noted,
according to the critical realist perspective.
As critical realists apparently have had a lot to say about the academic
practices of others, it is no wonder that they have been asked how they
themselves would go about analysing substantive economic issues or developing
economic theories. Lawson (1999) reports of such queries and provides at the
same time an answer:
Probably the ‘request’ I come across most frequently in the context of
discussing critical realism is for examples of ‘critical realist substantive
theory’ meaning the critical realist account of some highly concrete
phenomena. In my view there can be no such thing. (Lawson 1999: 14; italics
in original)
The arguments Lawson offers for this stance towards critical realist economic
theorising and critical realist analyses of substantive economic issues are
once again ontological. Lawson draws attention to the fact that critical
realist ontology depicts social reality as ‘open, structured, dynamic, and in
part holistic’. Consequently, critical realist ontology, so the argument
goes, can sustain a range of theories and explanations. Theories and
explanations supported by this ontology may even stand out as competing
scientific accounts of the same phenomenon, and they may have to be
considered explanations more or less in continuous change and transition.
Accordingly, it is stated that ‘at no stage can a substantive theory be said
to qualify as the critical realist one.’ (Lawson 2003: 178, italics in
original)
Now, these arguments may seem somewhat bewildering. First of all, I do
question if critical realists are notoriously requested to come up with the
critical economic realist theory or the critical realist account of
any economic phenomena. We are all well aware of the fact that critical
realism is a budding project within the discipline of economics. Accordingly,
no one expects critical realists to come up at this stage with the
critical realist account of any issue, theoretical or practical. If such a
thing were ever to occur it would, of course, take a considerable amount of
time to be worked out. Moreover, most of us would, on grounds that Lawson
rightly points out, not expect the critical realist account of
anything to be possible or even something to be strived for – just as we do
not ask for the post Keynesian, the institutionalist
etc. account or theory of concrete economic issues or phenomena.
What in my
view, however, is a fair question to ask, and what is in fact the question I
myself have heard raised by many taking interest in the perspectives brought
to fore by critical realism, is for examples of critical realist
studies of substantial economic issues and phenomena. What is asked for are,
in other words, illustrating analyses indicating what difference it would
make if economic theorising and analyses of concrete economic phenomena
started out from, or at least explicitly incorporated, serious ontological
reflection pertaining to the issues and questions at hand. Critical realists
do, however, seem to refrain from going into such matters. The arguments
brought up against the possibilities of providing the critical realist
account or theory of substantive economic phenomena tend to be considered a
good reason for not attempting to provide any critical realist account
of them.4
The
aspirations of the current critical realist project within economics then
tend to be directed towards establishing a pluralistic discourse at the level
of economic theory and methodology based upon a critical realist monist
understanding of social reality. A barrier is more or less erected between
philosophical deliberations on the one hand and theoretical and empirical
work on the other, with critical realists thriving on the philosophical side
of the fence. The activities undertaken, or aimed at, are often referred to as
‘philosophical underlabouring’ for scientific
practice within the field of economics.
A critical
realist project within economics thus conceived, however, has so far
experienced limited success. As several commentators have argued, the
critique levelled against mainstream economics is ineffective due to
distorted descriptions and characterisations of the latter.5
Leaving these important problems of inaccurate and distorted descriptions of
the practices of mainstream economics aside for now, I would like to draw
attention to the ontological aspects of the critical realist critique. The
critique states, it will be remembered, that there is a mismatch between the
mathematical-deductive methods of mainstream economics and the properties of
social ontology as claimed by critical realists. What would be required then,
for such a critique to actually be paid attention to by mainstream
economists?
For one thing,
mainstream economists would have to be concerned about questions ontological.
They would, in other words, have to be seriously concerned with the question
whether their models and theories actually capture some systematic
ontological account of social reality. Being somewhat reluctant to
characterising all of mainstream economics in sweeping and general terms, I
find it quite safe to submit that mainstream economists tend to favour
different criteria for evaluating their theories and models. In the
mainstream scheme of things criteria pertaining to formal consistency,
elegance, simplicity, tractability, and more generally ‘what works’, seem to
be held in high esteem. If some sort of methodological position were to be
ascribed to at least much of current mainstream economics, I do find
‘pragmatism’ in some broad sense the best candidate. In any case, critical
realist appeals to criteria of evaluation pertaining to questions of ontology
seems to be a far cry from what occupies the minds of most mainstream
economists.
And even if
we, at least for the sake of the argument, envisage mainstream economists in
near future persuaded to consider how questions of ontology might impinge
upon their work, we all know that there are several theories out there
offering competing accounts of basic questions pertaining to ‘existence’ and
‘being’. Are there, then, any reasons why the ontological theories of
critical realism would occupy some sort of privileged position in this race?
This is a most important question which needs to be convincingly answered in
the affirmative if the critical realist critique of mainstream economics is
to encompass any prospects of success in the future.
Turning to the
critical realist solicitations with heterodox positions the question of
identity needs to be addressed. Will the identity of the respective heterodox
schools of thought, some of them well established since ages, be preserved if
they were to join up with other positions in a linked co-development based
upon critical realist ontology? If the prospects for identity retainment are considered dim, how would this fact affect
adherents of the respective programmes and positions? In my view, possible
dissenting and opposing attitudes stemming from such considerations should
not be underestimated. Evidence so far seems to corroborate such scepticism.
With the exception of the post Keynesian school of thought, most positions
approached by the critical realist solicitation seem to respond with
different degrees of reluctance and polite distancing.6
Relevant as
fear of, and opposition to, possible identity debasements may be, reluctant
responses to the critical realist invites may also be due to considerations
of a different and perhaps more fundamental character. It might be the case
that critical realists tend to overrate the scope of ontological overlaps
amongst heterodox positions within economics and between such positions and
the critical realist view of social reality. And to the extent that the
suggested unification and co-development were to require adjustments of
implicit or explicit ontological presuppositions pertaining to different heterodox
positions in order to bring them in line with critical realist ontology, the
questions arises as to how such an implied privileged position for the latter
is, or can be, justified. In my view, this is an essential question that
needs to be addressed also when considering the future prospects of the
critical realist invitation to the heterodox schools of thought.
To take stock,
it seems that proponents of the critical realist position within economics
aim at establishing critical realism as a philosophical project engaging
itself in critical and constructive dialogues with various schools of thought
within the discipline. Questions of ontology play a pivotal role in the
endeavours. The critique launched against the practices of mainstream
economists is predicated upon critical realist social ontology. Mainstream
economists are deplored for an adherence to modes of explanation that
allegedly cannot capture social reality as spelled out in the critical
realist account of the social realm. Moreover, in dialogues with heterodox
positions within economics, arguing the case for moves towards unification
and co-development, critical realist ontology is set forth as the gathering
point for such activities. And when critical realists explain why they tend
to downplay, or abstain from, substantive economic theorising and analyses of
concrete economic issues, the arguments are couched in terms of properties
pertaining to social reality as seen by critical realists. A heavy burden is
consequently laid on the shoulders of critical realist ontology. The
prospects of any future success of the chosen strategy of situating critical
realism within economics is crucially dependent upon the status or
credibility that can be ascribed to the critical realist ontological account
of social reality.
Assessing critical realist ontological
theories
The argument
set forth in the critical realist account of social reality makes the claim
that society must be understood as made up by intentional actors as well as
social structures with emergent powers which enable and facilitate, but also
restrict and direct, individual action. Social structures are conceived as
pre-existing individual actions, and are thus irreducible to them. However,
by employing social structures in planning and performing individual action,
the agents contribute to reproducing and transforming these structures. The
account offered then, represents an elaboration of the agency-structure
problem in which the links between actions and structures are carefully argued.
In this critical realist account social reality is, moreover, claimed to be
an open system in a broad sense of this term
In what sense,
one might ask, will such an account pertaining to the level of ontology
differ from scientific theories of social reality or some delimited aspects
of it? The distinction is mainly due to differences in the degree of
specificity. An ontological account of social reality is kept at a rather
abstract level, while in social science we are more specific about the
elements of our analyses and relations between them. The point at which an
account of social reality ceases to be ontological and turns scientific may
be difficult to pin down in exact terms. It should be quite clear, however,
from the context when matters ontological and matters scientific
respectively, are addressed.
At a
sufficiently general level there is in principle no difference between
ontological accounts of social reality and scientific accounts pertaining to
aspects of this reality. They are all theories about the social world
in the sense of being hunches, conjectures or hypotheses about social
phenomena, albeit at different levels of specificity. The critical realist
account of social reality as sketched above should accordingly be considered
an ontological theory of the social realm. And as with any theory, the
credibility or authority accruing to it will depend upon epistemological
considerations; that is, upon what arguments are provided in support of it.
It should be noted here that when drawing attention to questions
epistemological in assessing ontological as well as scientific theories, I do
refer to epistemology in a broad sense meaning all arguments – empirical,
rational or otherwise – that is, or could be, offered in order to
substantiate a theory.
Roy Bhaskar, the philosopher to whom the critical realist
project within economics owes much by way of inspiration and initial
conception, warns against what he terms ‘the epistemic fallacy’. According to
Bhaskar western philosophy has for centuries been
under the spell of this fallacy implying that questions of being (ontology)
have been reduced to questions of knowing (epistemology).7
However, Bhaskar’s urge to avoid this fallacy
should not be understood as implying that questions of ontology can be entirely
separated from questions of epistemology. As soon as we move on from basic
ontological stances, like the critical realist stance pertaining to a reality
that exists independently of our investigations of it, to make more
substantive claims about this reality, we enter into the world of theories.
In Bhaskar’s terminology the independently existing
reality belongs to the ‘intransitive’ dimension of knowledge production while
theories, including ontological theories and other knowledge material, belong
to the ‘transitive’ dimension. Knowledge is, in other words, considered a
social product liable to critique, change and transition. The ontological
account of social reality pertaining to critical realism in economics then is
a theory in the transitive realm of knowledge production whose credibility or
authority is not automatically assured in any way. It has to be argued and
defended, and the defence should be made subject to critical assessments.8
Taking his
clues from Bhaskar, Lawson sets out to derive and
substantiate a social ontology by way of transcendental deduction (or
inference), a method that complies well with the retroductive
form of argument held high in regard by critical realists.9 In Bhaskar (1989a) this method is employed to derive what is
termed a ‘transformational model of social activity’. Lawson, then, spells
out this argument in some more detail, while at the same time adjusting and
adapting it more specifically to major concerns of the economics discipline.10
In general, a
transcendental argument implies inferring from some generalised features of
experience (the premises) to conditions for these features to be the case
(the conclusion). The status or credibility of a transcendental argument
depends, therefore, in part upon the premises from which the argument
proceeds. To what extent are the premises employed really generalised and
uncontested observations? Moreover, the status of a transcendental argument
will rest on the deductions made from the premises to their underlying conditions.
If it is claimed that these conditions are necessary for the features
of experience to be possible, deductions made can leave no room for doubt.
The full epistemological burden of the argument will rest upon the initial
premises and the subsequent deductive inferences made. If the claim made,
however, is relaxed from necessary conditions to plausible explanations
that will render the premises intelligible, the epistemological burden of the
argument will be somewhat different. In such cases, the transcendental
deductions will only aim at rendering acceptable and likely explanations of
the initial observations. There may, in other words, be other possible
explanations. Additional support for the conclusion offered may then be
sought in sources outside the transcendental argument itself, such as
specific empirical examples, illustrations and so on that bear on the
questions at hand. Invoking additional backing of this kind, however, makes
us leave the realm of ‘pure’ philosophising and enter the realm of combined
philosophical and scientific enterprise.
While
transcendental arguments, under ideal conditions, might be relied upon to
produce conclusions of high credibility, the prospects for such attainment
when applied to social material are rather unpromising. Within the social
sphere it is hard to find uncontested generalised observations of relevant
features. And even if sufficiently interesting and uncontested generalised
features were to be obtained, deductions made from them are quite unlikely to
support claims to necessary underlying conditions for the premises to
be the case. Due to the complexity of social reality one will, more often
than not, have to settle for the more modest claim of plausible explanations
in deductions or inferences of this kind. In general then, transcendental
arguments within the social realm can hardly be relied upon to provide
decisive arguments for the existence of any phenomena of interest, and hence
for supplying a ‘pure’ philosophical or rationalistic support of any social
ontology.
Advocates of
the critical realist project within economics do seem to be well acquainted
with these problems accruing to transcendental deductions and elaborations.
In Reorienting Economics, for example, Lawson states quite explicitly
that:
Any results
achieved by way of transcendental reasoning are clearly conditional. They are
contingent upon the human practices selected as premises and our conceptions
of them, as well as upon the adequacy of the transcendental arguments
employed. (Lawson 2003a: 34)
As a
consequence, Lawson concedes that the critical realist ontological theory
introduced to the discipline of economics is contingent and fallible, liable
to change and even replacement. Equally cautious statements are to be found
throughout Lawson’s impressively prolific publications, and they are echoed
in the contributions of other members of the inner circle of the critical
realist project.
Turning to the
critical realist practices, however, a somewhat different picture emerges.
First of all, Lawson do not refrain from claiming conclusions to the effect
of ‘necessary’ conditions for the premises invoked when elaborating his
transcendental deductions. (e.g. Lawson 2003a: 36, 37, 39) Moreover, the
ambitious strategy of situating critical realism as a philosophical underlabourer for a wide range of scientific practices
within the discipline of economics, if anything, indicates confidence in the
ontological theory of critical realism beyond any reasonable amount of doubt.
The only way to reconcile the cautious pronouncements made regarding
transcendental arguments and the observed practice of critical realists must
be to understand their position as one of considering the critical realist
ontological theory of the social realm to be fallible but nevertheless by far
the best account of social reality available to us at the present. More
specifically, they seem to be convinced that this theory outperforms
competing candidates by a margin large enough to submit it as a cornerstone
in a project of philosophical underlabouring for
the whole discipline of economics.11
Assessments
made by commentators upon the critical realist project within economics,
however, do not bolster this favourable evaluation. In the literature
pertaining to and commenting upon the development of the critical realist
project in economics, there are examples of outright repudiations, or else
severe critical appraisals, of the ontological theory invoked.12
And even among commentators sympathetic to the project, a cautious line is
advocated on grounds epistemological. Dow (2004) finds it timely, on reasons
paralleling those set forth above, to remind critical realists that
‘different ontologies are possible’, and to suggest
that apart from a common conception of an open-system ontology heterodox
positions within economics entertain ‘different conceptions of reality’. (Dow
2004: 308, 310). And when Vromen (2004) considers
the transcendental arguments offered in defence of critical realist ontology,
he finds Lawson’s exposition of it ‘far from transparent’, starting from
generalised observations that ‘appear to be somewhat arbitrary’ followed by
deductions that ‘are rarely if ever carried out (or presented) in any
detail.’ (Vromen 2004: 19). A more penetrating
study is reported in Guala (2002). Based upon a
reconstruction of the transcendental inference offered by Lawson (1997:
30-31) in support of claims made for the existence of social structures, Guala convincingly argues that the claims made are not,
and probably cannot be, supported by the suggested method of ‘pure’
philosophical, or transcendental, reasoning.
From all this
we should not draw the conclusion that there is necessarily something wrong
or defective accruing to the ontological theory of critical realism. What is
at stake here is the question of what status or credibility we can reasonably
ascribe to this theory, and the implications of such evaluations for the
future development of a critical realist project within economics. In my
view, the ontological theory of critical realism seems intuitively sensible
and of potential interest for scientific work within the realm of economics.
I do also accept that the transcendental arguments offered in favour of it,
in spite of their deficiencies, lend some support to the theory, a support
that is further strengthened by invoked practical examples and illustrations.
However, and crucially, advocates of the critical realist project within
economics have so far failed to produce anything like a decisive or broadly
accepted set of arguments in support of their cherished theory. The critical
realist theory of social ontology remains in the sphere of hunches, guesses
and hypotheses. In my assessment, Vromen (2004) has
made the most adequate characterisation of the critical realist ontological
theory when he considers it a ‘conjectural revisionary
ontology’; conjectural in the sense that it represents ‘a first guess about
how social reality in fact is constituted’ and revisionary
in the sense that ‘it is different from the ontological views that mainstream
economists entertain’. (Vromen 2004: 20).
To sum up
then, the transcendental arguments offered in support of the ontological
theory at the heart of the critical realist project within economics do not
provide this theory with an epistemological credibility beyond any reasonable
amount of doubt. The critical realist account of social reality can only be
ascribed status as a ‘conjectural revisionary
ontology’. As a consequence, the current endeavours to situate critical
realism as a project of philosophical underlabouring
for scientific practices within the discipline of economics stand out as ill
advised. Such endeavours are not likely to be successful due to the fact that
they are based upon an unfounded trust in the universality of the critical
realist account of basic features of social reality. Critical realist
critique of the practices of mainstream economists is not likely to have any
effect if mainstream economists cannot be persuaded by the arguments
supporting critical realist ontology. Moreover, invites to a heterodox
unified co-development are also in the future likely to be met with
reluctance and polite rejections for basically the same reasons. Such a dim
assessment of the current strategy of situating critical realism within
economics does not, however, imply anything like a general debasement of
critical realist projects within the discipline. What is called for is a
strategy of developing a project in which the epistemological status of
critical realist social ontology is taken seriously into account.
Towards a
critical realist-inspired economics
The
epistemological status of critical realist ontological theory implies that it
cannot be ascribed any privileged position in scientific work within the
discipline of economics. The critical realist theory of social reality may,
however, be considered a constructive and helpful first step in processes of
economic theorising and analyses. If critical realism is to make any
difference to economics then, it will have to be by demonstrating positive
virtues of introducing explicit ontological reflection to scientific work
directed towards analyses of substantive economic questions and issues.
Against this
background it is my purpose here, pace Lawson, to make some initial steps towards
elaborating a critical realist approach to economics in which systematic
ontological reflection will be an indispensable and integrated part of the
scientific process. Before turning to this question in some more detail, let
me render clear the philosophical stances underpinning this position. Two
basic philosophical stances are made. First of all philosophical realism is
adhered to in the sense that the world, social and natural, is assumed to
exist independently of our investigations of it. Secondly, an
anti-foundational stance on epistemology is endorsed. Knowledge of the world
is in principle regarded possible, but we do not have direct access to it by
way of observation or by any other means. An epistemological relativism is
consequently adopted. These philosophical stances separate the position
argued here from various forms of positivism on the one hand and social
constructivist idealism on the other.
By adopting
the philosophical stance that the world exists independently of our
investigations of it, no substantial claims are made about this reality. The
critical realist ontological theory of the social realm, however, moves on
from this general philosophical stance elaborating an account of social
reality in which social structures are claimed to have real existence as
emergent properties irreducible to individuals or individual actions. Social
reality is, in other words, claimed to consist not only in intentional actors
but also in social structures enabling, facilitating as well as restricting
and directing individual agency, while being reproduced and possibly
transformed by the latter. The critical realist-inspired approach to
economics argued here proceeds on the view that this theory, even if fallible
and due to possible change or even replacement, at the outset is considered
the best account of social reality currently available as a point of
departure for theory developments and more concrete empirical work.
The main
tenets of the critical realist social ontology thus perceived come with some
helpful guidelines for scientific activities aimed at illuminating
substantive economic issues. For economic theories and more practical work to
be in accordance with the basic properties of the socio-economic world they
should incorporate relevant interactions between economic agents and enabling
and restricting social structures. Processes by which social structures are
reproduced and transformed by individual action should also be paid due
attention to, highlighting the geographically and historically specificity of
social structures and their emergent powers. Accommodating economic
theorising and economic analyses to these guidelines would contribute to
establishing critical realist approaches to economics as a position
distinguished from much of current work within the field. The noted
guidelines are, however, kept at a rather general level and further
concretisation may be called for.
Drawing to
some extent upon Cruickshank (2003) I will suggest that the development of
‘domain-specific’ ontological theories may meet such requirements for further
specification in a critical realist scheme of scientific activity.
Domain-specific ontological theories may be established by invoking the
method of immanent critique and knowledge-transformation. The general idea of
this method is the conception that nothing is created out of nothing.
Knowledge-like material like hypotheses and theories, for example, has some
form of origin. Most of the time they are developed by processes in which
pre-existing material of the same category is transformed and elaborated
upon.
In order to
develop domain-specific ontological theories within the realm of economics
existing theories and explanations pertaining to substantive economic issues
and phenomena may be subjected to immanent critiques probing into the
question whether the theories at hand offer adequate and consistent accounts
of the reality they purport to explain. To the extent that they do not, ideas
and hunches as to how to provide a more satisfactory account will readily
ensue. The next step in the process then is to actually work out an
alternative account overcoming and transcending identified deficiencies and
shortcomings.13 In a critical realist approach to economics, these
undertakings will naturally be guided by the precepts flowing from the
general critical realist account of social reality.
Starting out
with different economic theories and explanations of issues like consumer
choice, employment, inflation and so on, the suggested method can be invoked
in order to develop critical realist domain-specific ontological theories
pertaining to the issue at hand. The resulting ontological theories will be
‘domain-specific’ in the sense that they relate to a particular research area
within economics rather than to the entire socio-economic world, and they
will be ‘critical realist’ in the sense that they are elaborated according to
critical realist accounts of social reality. Domain-specific ontological
theories developed in this way will furnish more specific guidelines for
activities directed towards conducting critical realist analyses of
substantial economics issues and phenomena. They will supply precepts for
more specific critical realist-informed economic theorising and for empirical
work within the domain in question.
A critical
realist approach to economics developed along these lines comes with some
notable merits. Being elaborated in accordance with the general critical
realist theory of social reality, the resulting analyses will incorporate an
awareness of the interplay between economic agents and social structures,
including processes of reproduction and transformation of such structures.
Moreover, by being based upon domain-specific ontological theories developed
from immanent critiques of pre-existing economic theories and explanations
pertaining to relevant economic issues and phenomena, emerging critical
realist-inspired economic theories and analyses will be kept in close contact
with prevailing discourses within the respective research areas. In the process
of elaborating a critical realist analysis of this kind, perceived
shortcomings of existing theories and explanations will be rendered clear and
the reasons for submitting an alternative thoroughly argued. The suggested
process would consequently contribute to promoting understanding and
communication between different positions or schools of thought within the
field of economics in a true pluralist fashion.
It should be
noted, moreover, that even if general and domain-specific ontological
theories were envisaged as providing guidelines for the development of
economic theories and analyses, and thus influence the direction and focus of
scientific work within this critical realist scheme, they would not determine
work at the scientific level. Rather, the proposed ontological theories may
ground alternative economic theories or analyses. Systematic ontological
reflection thus would not render scientific activities directed towards
developing more concrete theories or models superfluous. It would, however,
provide a more secure and relevant foundation for this kind of activity.
To sum up, and
to clarify some additional points, the process of developing a critical
realist approach to economics suggested above should be seen as a gradual and
integrated one. The process starts out with general ontological theorising
inquiring into basic questions of being and existence within the social realm
as explicated by Bhaskar’s ‘transactional model of
social activity’, further elaborated upon and adjusted by Lawson and others.
This general account of social reality is accepted as a point of departure in
the process. It is important to note, and remember, however, that this
account is only considered a contingent and fallible theory of social
reality. The next step in the suggested critical realist-inspired approach is
aimed at increasing the level of specificity of precepts flowing from the
ontological reflection undertaken. By invoking the method of immanent
critique of pre-existing theories and explanations combined with endeavours
to offer an alternative to overcome noted deficiencies and shortcomings,
domain-specific ontological theories may be developed in the light of
precepts flowing from the general social ontological theory of critical
realism. Domain-specific ontological theories then, if successfully
elaborated at a required level of specificity, would yield more detailed
precepts for the development of critical realist-inspired economic theories
and empirical analyses pertaining to concrete or substantive economic issues
and topics.
The critical
realist approach to economics suggested here obviously takes a clear stance
on the assumptions-debate which has haunted the discipline of economics at
least since Friedman’s influential methodology-article dating back to the
1950s. (Friedman 1953) The suggested framework indicates clearly that invoked
assumptions are considered of crucial importance in critical realist
approaches to economics, and systematic ontological reflection is set forth
as the preferred way of introducing and elaborating upon fundamental
presumptions in economic theorising and applied analyses. General and
domain-specific ontological theories invoked in the process of developing
critical realist-inspired economic analyses are not, however, introduced as
dogmatic or metaphysical assertions about being or existence. Rather, they
are carefully argued contingent and fallible theories liable to change and
even replacement in the face of decisive critical assessments or the
procurement of better alternatives. If scientific analyses stemming from, or
based upon, the ontological theories invoked do not stand up to systematic
epistemological scrutiny, this fact may reflect back upon any element in the
suggested scheme. The problem may lie at the level of scientific activity,
but it may just as well be located at the level of ontology. Insufficiently
epistemological support pertaining to critical realist analysis of some
substantial economic issue may thus induce changes and revisions in the
domain-specific ontological theories of the scheme in question. Changes or
adjustments in the general ontological theory may moreover be initiated by
considerations made at the level of domain-specific ontological theories, or
as the result of other information. The suggested critical realist approach
to economics then would be one in which ontological, or more generally
philosophical, and scientific endeavours are considered mutually interrelated
activities.
Concluding remarks
The main
claims of critical realism are ontological. Questions of situating and
developing a critical realist position within economics, therefore, turn
crucially on the epistemological status of the ontological claims made.
According to the arguments set forth above I do not find the ontological
claims of critical realism sufficiently substantiated to warrant the current
endeavours aimed at situating critical realism as a project of philosophical underlabouring for various positions or schools of
thought within the discipline of economics. These endeavours have been less
than successful so far, and the prospects of any future improvement in this
state of affairs are at best quite uncertain.
Taking on
board the fact that the critical realist account of social reality is a
contingent and fallible theory, however, does not entail anything like a
general dismissal of critical realist projects in economics. But it does
indicate something different from the current endeavours of grand scale
philosophical underlabouring. Above I have argued a
critical realist approach to substantive economic theorising and empirical
analyses developed from the general social ontological theory of critical
realism. By invoking domain-specific ontological theories developed from
immanent critiques of pre-existing theories and explanations pertaining to
particular research topics, precepts will flow for the elaboration of
critical realist-inspired economic theories and analyses pertaining to the
issues at hand. The distinguishing character of this critical realist
approach then, is its recourse to explicit integration of systematic
ontological reflection and more traditional scientific endeavours.
The criteria
of success for a critical realist project thus conceived would shift from the
current dependency upon general acceptance of critical realist ontological
theories to evaluations of its proponent’s abilities to shed light on
substantive economic issues. Moreover, the nature of the dialogue with
well-established positions or schools of thought within the discipline would
change dramatically. The current uncompromising critique of mainstream
economics and the ontological solicitations with various heterodox positions
would be substituted for critical realist endeavours to come up with improved
accounts of and solutions to new and old economic problems and issues. To the
extent that the suggested line of development were attended to, the envisaged
critical realist project would situate itself as yet another position of
economics alongside already existing schools of thought with the purpose of
advancing its own line of inquiry, while respecting and communicating with
competing and complementary positions in accordance with true pluralist
virtues.
Notes
1. Statements to these effects are
prolific throughout the critical realist literature; for example Lawson
(1994a: 259-262, 1997: 17-20, 2003a: 4-8); Fleetwood (2003: 28-31) and Lewis
(2003: 183-86).
2. Representative studies of this
kind are to be found in Fleetwood (1995, 1996); Lawson, C. (1994, 1996);
Lawson, T. (1989, 1994b, 1994c, 1996, 2003b); Peacock (1993) and Pratten (1993, 1998)
3. This strategy is quite explicitly
stated for example in Lawson (2003a: xxiii, xxiv, 165-168) and Lewis (2004:
1, 2, 13-18)
4. Some moves towards critical
realist approaches to empirical studies in economics are initiated in a
number of contributions in Downward (ed) (2003). It remains to be seen if
these initiatives will amount to anything like a ‘reorienting of (critical
realism) in economics’, paraphrasing Nielsen (2004).
5. The problem of distorted
characterisation stems mainly from the invoked definition of ‘deductivism’, in which event regularities are claimed an
essential element. This is not the way the term ‘deductivism’
is generally understood in the literature of philosophy, and it is certainly
not the way deductive arguments are treated within mainstream economics. In
the analytical scheme typically endorsed be mainstream economists, axioms and
basic postulates may, of course, refer to underlying causal mechanisms,
rendering observable phenomena explained by several, potentially reinforcing
or countervailing, forces and mechanisms. Problems pertaining to the critical
realist characterisations of mainstream economics are commented upon in Hands
(1999, 2001); Walters and Young (2001, 2003); Reiss (2004); Hodgson (2004)
and Davidsen (2005).
6. The positive reception of
critical realism among post Keynesians is noted in a number of contributions
to the Journal of Post Keynesian Economics, Fall 1999. See also Dunn (2004).
7. See for example Bhaskar (1978: 16, 36-42), (1989b:13, 38-39)
8. Dow (2004: 308) seems to indicate
that there is ‘a grey area between ontology and epistemology’. According to
my arguments here, I am somewhat reluctant to accept this point made by Dow.
9. A retroductive
argument is one in which we move ‘from a conception of some phenomenon of
interest to a conception of some totally different type of thing, mechanism,
structure or condition that, at least in part, is responsible for the given
phenomenon.’ (Lawson 1997: 24).
10. Lawson’s transcendental
argumentation to this effect is spelled out quite explicitly for example in
Lawson (1997: 30-32) and (2003a: 35-40)
11. Bhaskar,
being keenly aware of the possible weaknesses pertaining to transcendental
arguments, invokes the method of immanent critique of competing positions in
order to strengthen the arguments for his own favoured account of social as
well as natural reality. In the case of natural reality, Bhaskar’s
deductive argument are supported by an immanent critique of empirical
realism, and in the case of social reality he invokes immanent critiques of
voluntarism, collectivism and the ‘dialectic’ approach of Berger and Luckman in order to substantiate the propositions
embedded in Bhaskar’s ‘transformational model of
social activity.’ Against this background, it is surprising that critical
realists within economics only occasionally, and then rather sketchy, explore
this method for strengthening their ontological arguments.
12. Se for example Hausman (1998), Parsons (1999), Boylan
and O’Gorman (1995, 1999)
13. Bhaskar
employs this method in his endeavours to work out and substantiate
ontological theories of both the natural and the social realm. See note 11
above.
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author contact: bjorn.i.davidsen@hiof.no
___________________________
SUGGESTED CITATION:
Bjørn Davidsen, “Critical Realism in Economics – a different view”, post-autistic economics review, issue no. 33, 14 September
2005, pp. 36-50, http://www.paecon.net/PAEReview/issue33/Davidsen33.htm
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