The Methodology of Positive Economics: Reflections on the Milton Friedman Legacy

The Methodology of Positive Economics: Reflections on the Milton Friedman Legacy

Uskali Mäki

Language: English

Pages: 383

ISBN: 2:00236094

Format: PDF / Kindle (mobi) / ePub

Uskali Mäki (ed.)

Milton Friedman's 1953 essay 'The methodology of positive economics' remains the most cited, influential, and controversial piece of methodological writing in twentieth-century economics. Since its appearance, the essay has shaped the image of economics as a scientific discipline, both within and outside of the academy. At the same time, there has been an ongoing controversy over the proper interpretation and normative evaluation of the essay. Perceptions have been sharply divided, with some viewing economics as a scientific success thanks to its adherence to Friedman's principles, others taking it as a failure for the same reason. In this book, a team of world-renowned experts in the methodology of economics cast new light on Friedman's methodological arguments and practices from a variety of perspectives. It provides the 21st century reader with an invaluable assessment of the impact and contemporary significance of Friedman's seminal work.


"These papers are not only an indispensable summary of past scholarship but also a useful guide for future scholars aiming to extend this conversation into the 21st century. Highly recommended." - Choice















Along with rejecting casual empiricism he also rejected reliance on the responses of firms to questions about what they do and why. 1.4 Normative and positive economics F53 claimed that the normative/positive distinction has received inadequate attention, and conjectured that disagreements on economic policy among disinterested people in the West are primarily disagreements about positive issues. In stressing the positive–normative distinction Friedman 5 6 7 Friedman, like many economists

impression of an interplay of data and theory. This is less so for Modigliani.15 15 Modigliani and Ando developed the theory initially like a “ray of light” while on a car trip. Although Modigliani in developing the relative income theory had previously analyzed consumption data, he had then “neglected the problem” until his conversation with Ando (Modigliani 2001, 59). The influence of Friedman’s methodological essay 135 Investment In the two decades after 1953 the two most notable

understanding of ‘how money works,’ but on what his empirical studies have led him to believe to have been the course of monetary history.” In principle, it is obvious that the demand for money, and hence its velocity, depends upon the expected yields of all competing assets. Yet, unlike the Yale school, Friedman disregarded them because he believed that including them did little to improve the theory’s predictions. The monetarists’ case is also bound up with their rejection of the mixture of

heuristically valuable in some kinds of work, particularly in promoting a systematic use of available statistical evidence and theory. From a methodological point of view, however, it is an entirely arbitrary subdivision of the process of deciding on a particular hypothesis that is on a par with many other subdivisions that may be convenient for one purpose or another or that may suit the psychological needs of particular investigators. One consequence of this particular subdivision has been to

on one point: the frame of the economy associated with neoclassical economics – the Invisible Hand – is misleading. The various opponents of the neoclassical frame include partisans from other disciplines and, among economists, Keynesians, institutionalists, etc., with each category covering a considerable diversity of opinion. However, one point on which all Keynesians concur is that an economy may vary in the degree to which it utilizes available resources, and that the unutilized resources

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