Crisis and Methodology: Some Heterodox Misunderstandings

Abstract

Whether justified by the concrete circumstances or not, an economic crisis is, by simple association, taken as an implicit refutation of the invisible hand vision and the underlying theory. The fundamental heterodox critique locates the source of apparent theoretical difficulties at the level of methodology. Although acceptable in principle, this belief involves some actual misunderstandings with regard to the respective roles of deterministic laws and deductive reasoning. In order to clarify these, the present paper revisits some key episodes in the history of economic methodology.

Keywords: financial crisis, intellectual crisis, power of ideas, material consistency, logical consistency, determinism, deductive method, failure of reason, common sense, domain of economics, Cournot’s Unfitness Proposition

JEL Classification: B10, B20, B41