Essay in positive economics milton friedman


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Please, subscribe or login to access full text content. To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us. All Rights Reserved. OSO version 0. University Press Scholarship Online. Sign in. His theory of gravity assumes that there is an inverse-square relationship between the force of gravity and the distance between the centers of gravity of the earth and a falling body.

Friedman's Methodology of Positive Economics: A Soft Reading

These two assumptions, taken together, imply that the rate of acceleration must increase as a falling body and earth approach each other. The fact is that Galileo accepted his understanding of this law, not simply because it works, but because his understanding of this law is implied by the assumptions embodied in the cosmology within which Galileo attempted to understand and explain the physical universe. If it could have been shown that any of the assumptions on which the derivation of the Newtonian understanding of this law depend were demonstrably false, the Newtonian understanding of this law would most certainly not have been accepted, at least not by physicists.

Thus, when we examine the history of the law of falling bodies that Friedman alludes to and then ignores we find that all of the major advances in the physical sciences that have come about since the time of Galileo were accomplished as a result of 1 Galileo rejecting the unrealistic assumptions of Aristotle, 2 Newton rejecting the unrealistic assumptions of Galileo, and 3 Einstein rejecting the unrealistic assumptions of Newton, and, yet, Friedman argues:.

There is not even a hint of acknowledgement in this passage of the fact that a scientific theory is, in fact, the embodiment of its assumptions.

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There can be no theory without assumptions since it is the assumptions embodied in a theory that provide, by way of reason and logic , the implications by which the subject matter of a scientific discipline can be understood and explained. These same assumptions provide, again, by way of reason and logic , the predictions that can be compared with empirical evidence to test the validity of a theory.

Essays in Positive Economics - Milton Friedman - Google книги

It is the form of a logical argument that makes it valid, irrespective of the truth of its premises. The argument a all men with blue eyes are infallible, b I have blue eyes, therefore, c I am infallible is logically valid even though, in light of reason , this is not the kind of argument my wife would find convincing.

And even if I were infallible this argument would still have no substantive meaning, in spite of its logical validity and my blue eyes, because it is based on the demonstrably false premise that all men with blue eyes are infallible. It is intuitively obvious that a logical argument only has substantive meaning if its premises are true even to those who lack a formal understanding of logic. And, yet, this is the kind of reasoning in which mainstream economist indulge when they ignore the realism of their assumptions.

In spite of the simple fact that scientific understandings and explanations arise through logic and reason from the implications of the assumptions i. Aside from the fact that this argument makes absolutely no sense at all as a foundation for scientific inquiry, it begs the question: Why should mainstream economists be taken seriously if their theories and, hence, their arguments are based on false assumptions?

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This question is particularly relevant with regard to the policy recommendations of mainstream economist when the realism of the assumptions on which the arguments that justify their recommendations are blithely ignored. Today we find ourselves in the midst of a world-wide economic, political, and social catastrophe that has followed in the wake of the worst financial crisis since the s. This crisis, in turn, was the direct result of the financial deregulation policies implemented over the past forty years at the behest of mainstream economists—policies that mainstream economists justified on the basis of an economic theory that assumes speculative bubbles cannot exist in spite of the innumerable economic, political, and social catastrophes that have followed in the wake of speculative bubbles throughout the course of history.

This may seem to make sense to an engineer who wishes to learn the current state of the art of bridge building, or to an ideologue who wishes to provide a logical foundation for his or her most cherished delusions irrespective of the circular reasoning and false assumptions upon which that logic is based, but this is not science! It is the clear, bright line that exists between those who accept arguments based on circular reasoning and false assumptions as meaningful and those who do not.

To make matters worse, the vast majority of economists seem to assume that since so many others accept this kind of nonsense it must, somehow, make sense, and relatively few speak out against it. Nor do they seem to realize the extent to which this kind of pseudo-scientific reasoning permeates the discipline of economics or to understand the harm that it does. Is it any wonder that the assumptions on which this paradigm is based has provided the foundation for mainstream economist to delude themselves into believing in a world in which markets are efficient; expectations are rational; there is no need to regulate international capital flows; speculative bubbles are a figment of the imagination; the economic system automatically adjusts to achieve full employment; fraud is not a problem given the efficacy of market discipline; factors of production receive the value of their marginal products; monopolies, monopsonies, and oligopolies are irrelevant as is an increasing concentration of income and a rising debt relative to income; increasing the propensity to save increases economic growth to the benefit of all; trade deficits are inconsequential; and in which financial institutions are fully capable of regulating themselves for the good of all humanity due to the enlightened self interest of bankers?

The end result of these policies has been a dramatic increase in our current account deficit along with an equally dramatic increase in the concentration of income at the top of the income distribution. Since "real" data is always full of noise and multiple influences, there is a tendency to retreat to more formal, mathematical analyses. But it needs to be something more than just "disguised mathematics" -- it needs to be truly useful. Truly important and signficant hypotheses will almost always have assumptions that are wildly inaccurate descriptions of reality.

A hypothesis is important if it explains much of the observed behavior by abstracting the crucial elements from a mass of complex circumstances of the phenomenon to be explained and permits valid predictions on the basis of them alone. Thus it isn't important whether classical economic theory really describes how managers make decisions, only that the hypotheses predict the decision made.


  1. FRIEDMAN'S METHODOLOGY OF POSITIVE ECONOMICS: A SOFT READING;
  2. Stanford Libraries.
  3. lord of the flies society essay.
  4. Essays in Positive Economics - Milton Friedman, MARILYN FRIEDMAN - Google книги.
  5. apa citing thesis dissertation!

A hypothesis can't be tested by its assumptions. What is important is specifying the conditions under which the hypothesis works.

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