Problem: how did so many hard-working, bright and ambitious people manage to work on the philosophy and methodology of economics without producing much that is helpful for working economists and policy-makers? This became a growth area during the 1980s with more than a dozen books in the decade, two new journals and a round of conferences and the like.
This situation is summed up by Wade Hands in his retrospective survey of the field in Reflection Without Rules: Economic Methodology and Contemporary Science Theory, 2001. He concluded that the Received View of positivism/logical empiricism/Popperian falsificationism had failed and there has to be a “New Economic Methodology”. He specified a number of criteria for this NEM and interestingly Popperian CR meets all of them, but Hands only started to realise that late in the book when he decided that Popperian CR (as opposed to falsificationism) was a “Recent Development”.
Tentative Solution: Popper reached the economists first by way of Terrence Hutchison in 1938 and later in the 1980s by way of Lakatos and his followers, notably Mark Blaug and Spiro Latsis. So hardly anyone read Popper in the original and if they did, they read to criticise from the perspective of positivism/empiricism, or Paradigm theory, or Lakatos and his criticism of falsificationism and the “static” or “rule governed” or “unhistorical” nature of Popperism.
Hands reported that Hutchison (1938) was, for economists, “the first systematic introduction to the philosophical ideas of Karl Popper and the Logical Positivists…He drew a demarcational line in the sand; on one side was a relatively homogeneous set of activities that had earned the right to be designated “Science” and on the other side was basically everything else: metaphysics, religion, ideology, ethics, poetics, praxeology, and all the other intellectual activities, that, however interesting and passion-inspiring they might be, remain epistemically trifling”…Hutchison’s criterion for demarcating the scientific and empirically meaningful from the non-scientific and meaningless resides in the empirical testability (potentially falsifiability) of the proposition in question.” (Hands, 2001, 49-50)
That was the point of Carnap’s influential paper on testability and meaning which gave the impression that Popper’s criterion had been taken on board because it was concerned with meaning and not scientific investigation (Number One in the list of Standard Errors). While that view was widespread it was easy for Hands to think of Popper as a part of the Received View.
“I have included Karl Popper’s falsification as part of the Received View, even though, as noted above, most equate the Received View exclusively with logical empiricism” (88).
This aggregation of Popper with the positivists and logical empiricists is incomprehensible in the light of the fact that Popper never signed up to the two core elements of their program – the quest for a criterion meaning and their approach to the problem of induction.
Hands went on to say that it was surprising to philosophers when Popper’s views were taken up by economists. (Anticipating the punchline of the joke, it was not Popper’s ideas that were taken up, but a distorted and misleading representation of them).
“…there was very little inkling mid-century that Popper would end up being the dominant philosophical name in post World War II economic methodology. The fact that Popper did eventually attain such status among economists is particularly curious given that he never achieved a similar standing among his cohort group within the philosophy of natural science”.
The weird thing about Hutchison’s 1938 book is that there is not a single mention of Popper in the text, just a few rather enigmatic footnotes, including one which is a quote in German from Logik der Forschung.
“Popper” assumed a profile in the 1980s but mostly because Blaug, the prime mover in the field, was captivated by Lakatos, both in person and in his writing, and he thought that Lakatos was a Popperian, or at least 80% Popper. Someone pointed out, possibly Blaug, that the economists came to Popper AFTER their first and formative encounters with Kuhn and Lakatos (and of course the logical empiricists), so they were always looking at him from the wrong end of the telescope.
It is important to think in democraphic terms: some of us met Popper’s books in the 1960s but this generation is aproaching retirement or beyond. If you move on to the seventies when Lakatos was making his mark, the students of that decade are now in their fifties and the essential background to Popper’s work, the failure of positivism in the 1930s, is beyond their ken. It is all about Kuhn, Lakatos, Feyarabend, US pragmatists, remnants of positivism and logical empiricism, and of course POMO coming from left field.