Table Of ContentFoundations for New Economic Thinking
Foundations for New
Economic Thinking
A Collection of Essays
Sheila C. Dow
Emeritus Professor of Economics, University of Stirling
© Sheila C. Dow 2012
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10 9 8 7 6 5 4 3 2 1
21 20 19 18 17 16 15 14 13 12
To Alistair
Contents
List of Illustrations viii
Preface and Acknowledgements ix
1 W hat Kind of New Theory in Light of the Crisis?
A Focus on Theoretical Approach 1
2 Schools of Thought in Macroeconomics:
The Method Is the Message 15
3 A nimal Spirits and Rationality (jointly authored with
Alexander Dow) 33
4 Beyond Dualism 52
5 U ncertainty about Uncertainty 72
6 T he Appeal of Mainstream Economics 83
7 Mainstream Economic Methodology 105
8 Methodological Pluralism and Pluralism of Method 129
9 T he Non-neutrality of Formalism (jointly authored with
Victoria Chick) 140
10 S tructured Pluralism 162
11 T he Meaning of Open Systems (jointly authored with
Victoria Chick) 178
12 The Issue of Uncertainty in Economics 197
13 Variety of Methodological Approach in Economics 210
14 Afterword 231
Bibliography 236
Index 257
vii
Illustrations
Tables
5.1 A taxonomy of uncertainty 77
8.1 Pluralism in economics 132
11.1 Conditions for open systems 182
11.2 Conditions for closed theoretical systems 183
Figures
11.1 Mainstream economics 193
11.2 Critical realism 193
11.3 Our position 194
viii
Preface and Acknowledgements
Addressing the crisis in the economy and in economics requires a
heightened awareness among economists of how we approach our sub-
ject and the capacity to form judgements about it. Only then can we
seriously address where we have gone wrong and how we might make
improvements. Such awareness would provide the foundation for con-
structive new developments in economics.
The motivation for putting together this volume was an apprecia-
tion of how difficult it is for economists to be aware of what we do
at the level of methodological approach. It is even more difficult to
be aware of the way we frame reality and apply a particular mode of
thought. This is not surprising. To engage in theory development and
policy advice in settled times we need to start from somewhere. But
the current climate calls for new economic thinking, and this requires
that everything be up for discussion. Indeed, even in settled times it is
important to be aware enough of the underpinnings of our economics
to be able to engage with economists who build on different underpin-
nings and to be ready to engage and adapt.
Single papers are not enough to get this across. This volume is
designed, therefore, to gather material on different aspects of methodo-
logical approach and mode of thought in an attempt to get across what
is involved in developing this kind of awareness, addressing some of
the issues it raises. These essays are illustrative of a much wider litera-
ture available to those who want to pursue enquiry at this level. It is an
attempt to explore some foundations for new economic thinking.
Since the papers were written over a long span of time, they have
benefited from input from a very wide range of colleagues. I would
particularly like to single out the early influence of my colleagues at
the University of Stirling, Brian Loasby and Peter Earl, and of Victoria
Chick. I am grateful to Victoria for agreeing to the inclusion of two of
our joint papers, but even more for the encouragement, support and
guidance she has given me over the years. But the greatest debt is owed
to my husband Alistair (Alexander), who first sparked my interest in
methodology, with whom I have had countless discussions about eco-
nomics and its methodology over the years and who has provided par-
ticular support and guidance on this volume (including agreement to
the inclusion of one of our joint papers). Finally, I am grateful to Taiba
ix
