A theorem on the methodology of positive economics

• Main Author: Eduardo Pol
• Format: Article
• Language: English
• Published: Taylor & Francis Group 2015-12-01
• Series: Cogent Economics & Finance
• Subjects: Friedman’s methodology; science fiction; fictional assumptions; riddle of surreal models; rational expectations; www constraint
• Online Access: http://dx.doi.org/10.1080/23322039.2015.1054142

It has long been recognized that the Milton Friedman’s 1953 essay on economic methodology (or F53, for short) displays open-ended unclarities. For example, the notion of “unrealistic assumption” plays a role of absolutely fundamental importance in his methodological framework, but the term itself was never unambiguously defined in any of the Friedman’s contributions to the economics discipline. As a result, F53 is appealing and liberating because the choice of premises in economic theorizing is not subject to any constraints concerning the degree of realisticness (or unrealisticness) of the assumptions. The question: “Does the methodology of positive economics prevent the overlapping between economics and science fiction?” comes very naturally, indeed. In this paper, we show the following theorem: the Friedman’s methodology of positive economics does not exclude science fiction. This theorem is a positive statement, and consequently, it does not involve value judgements. However, it throws a wrench on the formulation of economic policy based on surreal models.