Chuck Grimes quoted: > In August 1972, a case study of the methodology of neoclassical economics by > Lakatos's London School of Economics colleague Spiro Latsis published in The > British Journal for the Philosophy of Science found Milton Friedman's > methodology to be 'pseudo-scientific' in terms of Lakatos's evaluative > philosophy of science, according to which the demarcation between scientific > and pseudo-scientific theories consists of their at least predicting > testable empirical novel facts or not.[10] Latsis claimed that Friedman's > instrumentalist methodology of neoclassical economics had never predicted > any novel facts.[11] > > In its defense in a three-page letter to Latsis in December 1972, Friedman > counter-claimed that the neoclassical monopoly competition model had in fact > shown empirical progress by predicting phenomena not previously observed > that were also subsequently confirmed by empirical evidence.[12] The example > he gave was a prediction of Chamberlain's monopolistic competition model > that "the standard explanation for the Standard Oil monopoly was wrong", > which he said had been theoretically predicted by Aaron Director, his > brother-in-law, and empirically confirmed by Magee. ...
this is curious. Friedman's Chicago school typically follows George Stigler to reject and/or ignore Chamberlain's monopolistic competition. Rather, they assume perfect competition and claim that that model predicts what they see in the real world (which is perfect competition). > Three years later, in 1976, Friedman was awarded the Nobel Prize for > Economics "for his achievements in the fields of consumption analysis, > monetary history and theory and for his demonstration of the complexity of > stabilization policy".[14] Friedman's own predictions of an accelerating > rate of inflation due to attempts to use expansionary monetary policy in > order to attain an unrealistic employment target, as described in his Nobel > lecture[15] are cited by others as an example of a novel phenomenon > successfully predicted by neoclassical economics.[16] This research > ultimately led to a break down of the popular belief in economics in the mid > 20th century that there was a long-run trade-off between unemployment and > inflation...'' For what it's worth, it wasn't Milton Friedman who first predicted accelerating inflation due to unrealistic employment targets (i.e., unemployment rates being kept below the "natural" rate of unemployment for significant periods of time). It was Abba Lerner, a much more sophisticated thinker, who developed this idea (in the late 1940s or early 1950s). Later, when Friedman's followers tested his version of the theory, they did not use an independent measure of the "natural" rate of unemployment. Instead, they defined the "natural" rate as the threshold below which inflation accelerated. This is circular reasoning, since inflation can accelerate for many reasons (not just those in labor markets, e.g., oil-price shocks). -- Jim Devine / If you're going to support the lesser of two evils, you should at least know the nature of that evil. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
