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The Principles of Economics: Some Lies My Teachers Told Me.

Many economists, including some of the profession's luminaries, have dabbled in methodology, either to explicate their own views of appropriate method or simply from curiosity. Lawrence Boland, however, has chosen to make methodology the central object of his research. This book is a compendium of his findings, some new and some previously presented elsewhere. The author intends the book's unifying theme to be ". . . an examination of the ways one can try to criticize neoclassical theory." The "lies" of the subtitle are a set of propositions, perpetrated variously by critics or defenders of neoclassicism, which Boland regards as erroneous: that the assumption of maximization is a tautology, that models of imperfect competition can be constructed by relaxing the assumption of price-taking behavior, and so on.

In this book Boland strikes some chords to which one can easily resonate: he believes we've learned little since Alfred Marshall's time, that it would be nice if we could wind economic theory back to the 1930s and start over, and that ". . . there is a lot of silly philosophy underlying ordinary neoclassical economics. . . ." The book also contains some interesting discussions, most notably that of Marshall's concept of time in economics. For the prospective reader, however, the question must be whether there is enough of interest to justify spending the time it takes to read the book. This reviewer did not find the interest/cost ratio favorable. For every intriguing aside there is a passage like this: ". . . individualism is distinguished from holism and psychologism is distinguished from institutionalism . . . in addition to psychologistic individualism and institutional individualism . . . there are two versions of holism: psychologistic holism and institutional holism." Besides this unfortunate prose style, there is the more important question of what, exactly, Boland's investigations are supposed to accomplish.

The most obvious reason to study economists' methods, rather than the subject matter of economics, is to improve the practice of economics; another reason might be that the variations and development of research methods are, in their own right, an interesting part of intellectual history. Boland professes neither of these goals and, indeed, contributes to neither; his avowed purpose is simply to understand neoclassical economics. I might then read this book to understand Boland's understanding of neoclassical economics; the reader of this review will gain insight into my understanding of Boland's understanding, and so on. We are in danger of being caught in an infinite regress, and infinite regress is one of the few things Boland seems absolutely methodologically opposed to. What he is methodologically for is less clear.

Boland's view seems to be that the first requirement of any system of thought is that it be internally consistent. The subjects this recommends for discussion come across as an obsession with a lot of picayune esoterica. For example, Boland makes a lengthy argument that neoclassical economics cannot admit the possibility of a Giffen good because such goods are inconsistent with the well-known stability conditions for market-determined prices; if the demand curve slopes upward, there may be no determinate market price. In that event, prices are not explained by the market interactions of autonomous individuals; since that explanation is the central theme of neoclassical thought, the whole edifice falls if it fails. Therefore, some way consistent with neoclassical thought must be found to place theoretical restrictions on consumer behavior which rule out the possibility of Giffen goods.

It is difficult to know what to make of this. On the one hand, Boland's tone would lead us to conclude that he is arguing on a priori grounds against the existence of Giffen goods and feels that this is a legitimate method of argument. If this is the case, then Boland has a very strange view of our joint enterprise: its purpose is not to discover truths about the economy but to maintain the internal consistency of economists' core beliefs with all their silly philosophy, and perhaps with their age-old ideological baggage. If that is Boland's point, then I must strongly disagree. Science advances by expanding theory to incorporate and resolve paradoxes, by taking an open-minded and flexible attitude, while Boland's attitude locks us into a straitjacket.

On the other hand, Boland is at some pains to disavow the notion that his critiques of others' criticisms are a defense of neoclassicism. Thus the anti-Giffen argument may be merely an observation about neoclassical thought, and Boland may intend it to point out a serious weakness in neoclassicism. If so, then he is something less than clear in expounding his purposes. In either event, this book is likely to be of interest only to hard-core students of methodology.
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Author:McRae, Larry T.
Publication:Southern Economic Journal
Article Type:Book Review
Date:Oct 1, 1993
Words:763
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