In this book Lawrence Boland critically explores the agenda of the neoclassical research program, especially some of the unstated assumptions of the “hidden agenda” which are seldom subjected to scrutiny. This approach is "imminent criticism", working within the assumptions of the system to explore their consistency and the capacity of the system to succeed on its own terms. "External" or "transcendent" criticism takes issue with the assumptions, working outside the system.
There is little discussion of methodology among economists and some detective work is required to locate the methodological ideas that are at work. Boland was determined to identify the actual practice in the profession, as distinct from the incantations that are offered in the early part of textbooks.
He suggests that the hidden agenda of the field consists of two related but autonomous problems; first, the Problem of Induction; second, the Explanatory Problem of Individualism. These are explored in chapters 1 and 2. Their influence on research programs in neoclassical economics is pursued in chapters 3 to 6. Their influence on the practice of methodology in the field is presented in chapters 7 to 9. Alternative approaches are examined in chapters 10 to 12.
The problem of induction leads to contentionalism
As to the Problem of Induction, this has mostly been shifted to the Problem of Conventionalism: "the problem of finding generally accepted criteria upon which to base any contingent, deductive proof of any claim to empirical 'knowledge'". In practice, the generally accepted criteria have evolved into a form of normal science where the puzzles are concerned either with econometric models or mathematical models. In the first instance, the requirements of science are met by using data, with some talk about falsification, confirmation and the like. In the second instance the criteria run along the lines of simplicity, economy, elegance and other considerations of mathematics.
Moving on to the other leg of the agenda, the Explanatory Problem of Individualism, otherwise known as Methodological Individualism (MI), this is the view that only individuals can be the decision-makers in any explanation of social events. Boland explains that the usual form that MI takes in the neoclassical research program is psychologism, "the methodological prescription that psychological states are the only exogenous [unexplained] variables permitted beyond natural givens (weather, contents of the universe, etc)".
The bottom line of the argument here is that psychologism is retained because it is a part of the Conventionalist program to deal with the problem of induction. Boland turns to Popper as a corrective to inductivism. His views came to economists in the unhelpful form of "falsificationism" and various forms of his ideas are attributed to both Friedman and Samuelson, who are probably the most influential "methodologists" in the profession. However any celebrations about the Popperian triumph would be premature, because Conventionalism and Instrumentalism reign supreme in economics and Popper rejected both.
Boland usefully notes a couple of soft spots in Popper’s work, namely the over-emphasis on the demarcation problem and some work on degrees of corroboration, described as a source of intellectual fog. He then turns to explore what it would mean for an inclusion of Popper's methodology in the hidden agenda of neoclassical economics. The problem of induction would be eliminated and with it the excessive concern with choosing between competing theories. Instead there would be more exploration of alternative solutions to theoretical problems.
Individualism without psychologism
Moving along to the second item on the hidden agenda, methodological individualism, the move here is from psychologism to consider the theories (and especially the plans and the strategies) that are held by decision-makers. For example it makes a difference whether an economic actor is using a maximising strategy, a minimum risk strategy or a satisficing strategy.
“We wish to show here that by dropping Inductivism and Conventionalism and instead relying on Popper's views of knowledge and learning, the way is open to the development of real-time explanations in neoclassical theory".
He suggests four agenda items for a “Popper-Hayek” program of individualistic explanation of dynamic processes. 1, Anti-justificationism. 2, Anti-psychologism. 3, Rational decision-making, according to the “logic of the situation”. 4, Situational dynamics - behavior can change as a result of learning as well as from changes in the situation.
He notes that Hayek's point about the importance of learning has been taken but has been blunted by persisting elements of inductivism, as though we just need more information of a different kind (concerning the psychology of actors) rather than a different explanatory model.
This book is packed with arguments that require close attention and defy adequate summary. If these arguments are robust) then the book is a “white dwarf” that will exert enduring influence when it is more widely read and understood. This process will be assisted by a wider familiarity with Popper’s thoughts on metaphysical research programs which coincidentally emerged in the same year as the first edition of this book (1982, in Quantum Theory and the Schism in Physics).
The book is at present being revised for a new edition and it will be interesting to see how it is changed and improved after 20 years of work in the field, including some interesting experiences at the hands of journal editors and conference organizers. No comment on Boland’s work would be complete without a tribute to his friend and teacher, Joske Agassi, who introduced him to the “Socratic Popper”.