Critical Realism - Critical Realism in Economics

Critical Realism in Economics

Heterodox economists like Tony Lawson, Frederic Lee or Geoffrey Hodgson are trying to work the ideas of critical realism into economics, especially the dynamic idea of macro-micro interaction.

According to critical realist economists, the central aim of economic theory is to provide explanations in terms of hidden generative structures. This position combines transcendental realism with a critique of mainstream economics. It argues that mainstream economics (i) relies excessively on deductivist methodology, (ii) embraces an uncritical enthusiasm for formalism, and (iii) believes in strong conditional predictions in economics despite repeated failures.

The world that mainstream economists study is the empirical world. But this world is "out of phase" (Lawson) with the underlying ontology of economic regularities. The mainstream view is thus a limited reality because empirical realists presume that the objects of inquiry are solely "empirical regularities"—that is, objects and events at the level of the experienced.

The critical realist views the domain of real causal mechanisms as the appropriate object of economic science, whereas the positivist view is that the reality is exhausted in empirical, i.e. experienced reality. Tony Lawson argues that economics ought to embrace a "social ontology" to include the underlying causes of economic phenomena.