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Neoclassical economic methodology

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Title:
Neoclassical economic methodology a form of moderate foundationalism
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Follenweider, Sarah
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English
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ix, 96 leaves : ; 29 cm

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Master's ( Master of Arts)
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University of Colorado Denver
Degree Divisions:
Department of Economics, CU Denver
Degree Disciplines:
Economics

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Neoclassical school of economics ( lcsh )
Neoclassical school of economics ( fast )
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bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

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Bibliography:
Includes bibliographical references (leaves 94-96).
General Note:
Submitted in partial fulfillment of the requirements for the degree, Master of Arts, Economics.
General Note:
Department of Economics
Statement of Responsibility:
by Sarah Follenweider.

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Auraria Library
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ocm37846943
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Full Text
NEOCLASSICAL ECONOMIC METHODOLOGY:
A FORM OF MODERATE FOUNDATIONALISM
by
Sarah Follenweider
B.A., University of Colorado at Denver, 1991
A thesis submitted to the
University of Colorado at Denver
in partial fulfillment
of the requirements for the degree of
Master of Arts
Economics
1997
i


This thesis for the Master of Arts
degree by
Sarah Follenweider
has been approved
by
Dr. Steven Medema

Date


Follenweider, Sarah (M.A., Economics)
Neoclassical Economic Methodology: A Form of Moderate Foundationalism
Thesis directed by Professor Suzanne Helbum
ABSTRACT
The goal of this thesis is to understand the methodology of
neoclassical economic theory. The method of Descartes, a form of
orthodox foundationalism, provides the historical background to do
this. From orthodox foundationalism emerges moderate
foundationalism which is identified as the methodology of
neoclassical economic theory via Milton Friedman. In addition, one
chapter is dedicated to the consequences of embracing either the
orthodox or moderate platform concluding that neoclassical economic
theory is subject to the criticisms of this chapter given its adherence to
moderate foundationalism.
This abstract accurately represents the conten
recommend its publication.
Sign
m


DEDICATION
I dedicate this thesis to my husband Tobin.


ACKNOWLEDGEMENT
My thanks to the Department of Economics for their support and to my thesis advisor
Suzanne Helbum for her undying patience.


CONTENTS
INTRODUCTION...........................................................1
CHAPTER
1. THE CARTESIAN METHOD..........................................3
Introduction...............................................3
The Cartesian Method of Doubt..............................4
The Dream Argument......................................7
The Evil Demon Argument....................................8
Cogito Ergo Sum (I Think Therefore I am)................10
The Cogito (The Self).....................................11
Clarity and Distinctness: The Truth Criterion.............12
Innate Ideas..............................................15
Mathematics............................................16
Cartesian Dualism and The Existence
of the Physical World.....................................17
The Existence of the Physical World.......................19
Deduction in the Cartesian System.........................20
The Nature of Ideas and the Relationship
Between Cause and Effect...............................21
v


Ideas, Objects of Ideas, and Objective and
Formal Reality...........................................21
Cause and Effect.........................................22
Intuition and Deduction..................................23
Simple to the Complex....................................24
Criticisms of the Cartesian Method..........................26
Criticism of Dualism and Belief
in a Causal Principle....................................26
Simon Foucher........................................27
Malenbranche.........................................28
John Locke......................................... 29
Conclusion Chapter One......................................31
2. ORTHODOX AND MODERATE FOUNDATIONALISM,
AND IDEAS THAT EMERGE.........................................32
Introduction................................................32
Orthodox and Moderate Foundationalism.......................33
Orthodox Foundationalism.............................33
Moderate Foundationalism.............................34
vi


Characteristics of Orthodox and Moderate
Foundationalism.............................................37
The Infinite Regress Problem.........................37
Reductionism.........................................39
Atomism..............................................43
The Fallacy of Composition...........................44
Dualism..............................................45
Absolutism...........................................46
The Need For Categorization..........................47
Conclusion Chapter Two......................................49
3. MILTON FRIEDMAN...............................................50
Introduction................................................50
Friedmans Methodology......................................50
Positive Economics...................................52
Theory as Language...................................53
Theory as Substantive Hypothesis.....................55
Simplicity...........................................57
vn


Prediction, the Definitive Test of a Hypothesis:
Testing the Hypothesis by the Assumptions ....
59
Friedmans Methodology:
as Foundationalist.............................................64
As if Theorizing: A Causal Relationship.................64
The Appeal to Known Laws: Absolutes.....................66
Dualism: The Normative/ Positive Distinction............67
Friedman as a Moderate Foundationalist.........................69
Conclusion Chapter Three.......................................72
4. NEOCLASSICAL ECONOMIC METHOD......................................73
Introduction................................................. 73
Neoclassical Economics.........................................73
The Appeal to Known Parameters or Laws..................74
Simplicity..............................................76
As-If Theorizing: the indirect approach
to validating models....................................77
The Use of Maximization: Utility and Profit -
Examples of As-If theorizing............................79
Prediction..............................................83
viii


Dualism.............................................86
Self Interest and Rationality.....................87
Experientially Grounded Knowledge:
Econometrics and Observation........................89
Conclusion Chapter Four...................................90
CONCLUSION.............................................................97
Works Cited............................................................94
IX


INTRODUCTION
Many recent critics of mainstream neoclassical economics refer to its
methodology as Cartesian and criticize the methodology for its dualism, reductionism,
atomism, and absolutism all consequences of the Cartesian method, a form of
foundationalism (Dow, 1995 and Bramhal, 1989). The goal of this thesis is to
question this assessment and to more accurately classify the methodology of
neoclassical economics. It is the contention of this paper that the neoclassical
research methodology is a form of moderate foundationalism rather than Cartesian
orthodox foundationalism. In order to make this argument it is first necessary to trace
the roots of moderate foundationalism. These roots at least go back to Rene
Descartes whose methodology has been characterized as a form of orthodox
foundationalism.
Chapter one contains a detailed analysis of the Cartesian argument in so far as
it is related to the inquiry at hand. Cartesian thought has had far reaching effects and
in no way does this chapter cover it all. It simply illustrates and highlights those
thoughts which are pertinent to a meaningful discussion of moderate foundationalism,
which is mostly a watered down version of the Cartesian orthodox platform.
Chapter two introduces moderate foundationalism starting with a discussion of
the objections made to orthodox foundationalism by thinkers such as Simon Foucher
and John Locke. From these criticisms moderate, or fallibist foundationalism,
developed. The defining characteristics of both moderate and orthodox
foundationalism are discussed and are compared in order to identify the similarities
and the differences. Looking at the implications of each paradigm provides an
excellent vantage point to do this. These implications are discussed at the end of
chapter two. Many of them, such as dualism, absolutism, reductionism, atomism,
etc., are invoked by critics of neoclassical methodology. Looking at these
implications from the perspectives of moderate and orthodox foundationalism
introduces a new understanding into their origin in foundationalism. Though the two
forms of foundationalism differ, chapter two concludes that any methodology
embracing either form of foundationalism has the same implications.
Chapter three discusses Milton Friedmans important 1953 paper, Essays on
Positivist Methodology. It is argued that by understanding the methodology
advocated in this essay one comes to understand more clearly the methodology of
neoclassical economic theory. This chapter shows that Friedmans position is
moderately foundational because he uses deduction and advocates empirical testing.


Chapter four documents the acceptance of Friedmans methodology by recent
neoclassical economists. The same analytic framework is employed in chapters three
and four to demonstrate that neoclassical methodology embraces the same arguments
and notions as does Friedman. Given the conclusion from chapter three that
Friedman advocates moderate foundationalism, this demonstrates that the neoclassical
paradigm is also a form of moderate foundationalism.
The concluding chapter summarizes the main points brought up in the body
of the paper, the most important one being that neoclassical methodology embraces
moderate foundationalism rather than strict Cartesian orthodox foundationalism. This
does not, however, protect neoclassical economics from the claims of its critics that
the method is inappropriately dualistic, atomistic, and absolutist. Neoclassical
methodology is subject to the implications of moderate foundationalism discussed in
chapter two. In fact these characteristics of the neoclassical research method become
clearer when neoclassical method is properly identified as moderately foundational.
2


CHAPTER ONE
THE CARTESIAN METHOD
Introduction
Cartesian thought has had far reaching influence in countless fields and modes
of thought. This chapter discusses parts of Cartesian thought in order to form the
historical and philosophical context to analyze the research methods employed by
neoclassical economics. A quote from Descartes is a good introduction to the
analysis.
Some years ago I was struck by the large number of falsehoods that I
had accepted as true in my childhood, and by the highly doubtful
nature of the whole edifice that I had subsequently based on them. I
realized that it was necessary, once in the course of my life, to
demolish everything completely and start again right from the
foundations if I wanted to establish anything at all in the sciences that
was stable and likely to last...But to accomplish this, it will not be
necessary for me to show that all my opinions are false, which is
something I could perhaps never manage. Reason now leads me to
think that I should hold back my assent from opinions which are not
completely certain and indubitable just as carefully as I do from those
which are patently false. So, for the purpose of rejecting all my
opinions, it will be enough if I find in each of them at least some
reason for doubt. And to do this I will not need to run through them
individually, which would be an endless task. Once the foundations of
a building are undermined, anything built on them collapses of its own
accord; so I will go straight for the basic principles on which all my
former beliefs rest. (Meditation I [1]).
In the above Descartes states that he must "demolish everything" completely
and start again if he wants to establish anything at all in the sciences. This is the goal
3


of the Meditations, to find certainty. This certainty, or truth, he is sure, will enable
him to rebuild the foundations of science, which formerly had been epistemically
unjustified, and consequently provide for science a system which would ensure the
acquisition of "truth", which would be guaranteed through the proper use of method.
In order to ensure certainty, Descartes maintains that a certain method must be
followed. This, for Descartes, involves using various arguments which he believes
support the use of such a method. He postulates what he views as counter-examples,
which he argues could possibly disprove his method, and rebukes them. This is a
common theme throughout the Meditations. Namely, Descartes tries to foresee any
critiques and addresses them in an attempt to secure his method as the appropriate one
to ensure certainty.
This chapter presents a detailed explanation of the Cartesian method, in which
Descartes argues for a specific method which he believes will allow anyone who
engages in it to achieve certainty. His goal is to build a secure foundation from which
the pursuit of knowledge and truth can take place.
The Cartesian Method of Doubt
The Cartesian method of doubt forms the beginning of the Meditations for
Descartes. It is also the opening move in Descartes method wherein his goal is to
ultimately attain truth. In order to attain truth Descartes begins by rejecting anything
handed to him as "truth" (the edifice of knowledge which until now he had accepted
freely) and questioning everything. After this questioning process if anything remains
it is a possible candidate for truth. Namely, he wants to rebute the skeptical position
of philosophers like Montaigne,1 who maintain that nothing is certain, and claim that
indeed some things are certain.
Descartes desires to reestablish foundations based on truth and as such his
method of attaining these purities is to doubt absolutely everything, a final position
for most skeptics. The notion of doubting everything is based on his belief that
nothing is free from question and initial doubt. This, for Descartes, does not mean
that one takes a final position of doubting everything, the position adopted by the
skepticals. Rather, he maintains that all propositions should be examined and nothing
1 "In the late sixteenth century, there occurred a revival of philosophical skepticism
lead by the French essayist Montaigne (1533-1592)" (Dicker 1993, 6).
4


should be taken as certain without question. If any statement is indubitable that is,
after doubting and questioning it, it is impossible to disbelieve it is rendered certain.
Doubting for Descartes is not the same as disbelief. There are only two
possibilities of the truth of a statement, (i.e. the statement is either true or false),2 but
there are three different postures regarding the belief of a statement: (1) one can
believe the statement accept it as true; (2) one can disbelieve the statement reject it
as false; (3) one can withhold belief in the statement neither believe nor disbelieve
it. Dicker sites an example of this, pointing to a theist, an atheist, and an agnostic. A
theist is someone who believes God exists. An atheist is someone who disbelieves
God exists. An agnostic is someone who withholds belief in the existence of God,
i.e., neither believes nor disbelieves it (Dicker 1993, 13-14). Withholding, then, is a
neutral, noncommittal attitude, by which one avoids committing oneself to the truth of
either a statement or its denial (Dicker 1993, 15). By adopting a position of doubting,
Descartes adheres to a policy which he believes will never allow him to accept any
statement which is uncertain. This method is a protectorate from the contamination
of falsity and consequently is an inquiry appropriate for leading to truth, the goal of
Cartesian doubt.3
Descartes maintains that he can not examine every belief individually so he
proposes to examine the basic principles his beliefs rest upon, for if these principles
are uncertain so then are the beliefs built on them. These basic principles for
Descartes form the foundation for other beliefs. If the foundation is found uncertain
then so are the subsequent inferences built upon it4.
By questioning basic principles on which beliefs are based, Descartes points to
beliefs which are held confidently such as beliefs about physical surroundings. In
doing this he maintains that he is questioning very basic beliefs. He questions beliefs
such as: Is there a book on my desk? Am I sitting by the fire in my dressing gown?
(Meditation I [4]) What are such beliefs based on? The answer to Descartes is
" This binary distinction is an example of the dualism present in Cartesian thinking
which will be discussed later.
Descartes believes that his method of doubt, if applied methodically, will lead
anyone who rightfully engages in it to truth. Thus, when Descartes writes in the first
person in the Meditations he is specifically referring to any individual not just
himself.
4 This hierarchical structure is prominent in Cartesian thought where ideas exist in
layers in a linear arrangement. It is consistent with reductionism which will be
discussed in the following chapter.
5


obvious: they are based on sense perceptions on what one sees now, hears, feels, and
so on (Dicker 1993, 16). Descartes states in his first Meditation:
Whatever I have up till now accepted as most true I have acquired
either from the senses or through the senses {Meditation I [3]).
He is not referring to esoteric things, but truly to everyday beliefs held
unhesitatingly. Here Descartes is using a skeptical technique by questioning the
reliability of perceptions. For Descartes it is one thing to accept something as certain
and another to say it really is certain. For instance one may think there is a book on
ones desk but can one be completely certain? Descartes does not think beliefs that
are attained through sense perceptions can be accepted as certain because the senses
have at times been deceptive:
Sometimes towers which had looked round from a distance appeared
square from close up; enormous statues standing on their pediments
did not seem large when observed from the ground. In these and
countless other such cases, I found that the judgments of the external
senses were mistaken {Meditation I [7]).
The occasional deceptiveness of the senses5, then, gives one rationale for why
one should not accept sense perceptions uncritically. This is paramount for Descartes,
as he maintains that because the senses are subject to error it is not only ineffective,
but inaccurate, to base anything on them, particularly any notions derived at
attempting to explain or understand reality. He expresses his reluctance to trust the
senses in the following:
But from time to time I have found that the senses deceive, and it is
prudent never to trust completely those that have deceived us even
once {Meditation I [3]).
5 "American philosopher, Mandelbaum, 1964, pointed out that if our senses
deceive us at times then it is theoretically possible that they deceive us always and
consequently if we believe they sometimes deceive us we must in turn believe that
they sometimes do not. The premise the statement that they do sometimes deceive
us could not itself be known to be true if the conclusion of the argument, that we
can never know they are deceiving us, were itself taken as true. The argument is self-
refuting" (Dicker 1993, 26 paraphrasing Mandelbaum 1964, 132).
6


Though Descartes does acknowledge that perceptions occurring under poor conditions
are more susceptible to doubt (recall his tower example) than perceptions occurring
under better conditions, he still believes one should doubt those perceptions occurring
under ideal conditions. He maintains that just because objects are misperceived
when the conditions are poor, it does not follow that the senses are reliable when
conditions are good. Thus for Descartes absolutely all perceptions arrived at through
the senses are to be doubted.
The method of doubt is a crucial component in the Cartesian method as it is
within the method of doubt that Descartes begins his quest for certainty, the goal of
the Meditations.
After doubting sense perceptions, particularly under bad conditions, Descartes
furthers his argument of doubt by postulating that no sense perceptions are reliable,
even those under ideal conditions as one may be dreaming.
The Dream Argument
Descartes illustrates the reason why sense perceptions are not reliable by
introducing his famous dream argument: even in the best of conditions sense
perceptions can be inaccurate; after all one may be dreaming.
As I think about this more carefully I see plainly that there are never
any sure signs by means of which being awake can be distinguished
from being asleep (Meditation I [5]).
Not even the best perceptions yield any certainty that one is actually perceiving
reality, not only because the senses are deceptive at times, but also because one is
never truly able to ascertain whether one is awake or dreaming. Descartes takes this
one step further by postulating that one may be dreaming and consequently even sense
perceptions which seem accurate may be mistaken because one is never sure if one is
awake or dreaming. The dream argument not only states that perceptions under poor
conditions are not trustworthy, but also maintains that those under ideal conditions are
suspect too.6
6 It is important to note here that there are things which Descartes does believe are
immune to misinterpretation whether awake or asleep, namely mathematics.
7


The Evil Demon Argument
Descartes furthers his line of argument so as to assure himself that he has
doubted everything by maintaining that one may be dreaming. This step in the
method of doubt allows Descartes to question perceptions of the physical world itself.
After the dream argument, however, Descartes doubts the existence of the physical
world not just the perceptions of it.
In order to secure his argument, Descartes goes beyond his previous skeptical
position, where he invokes the dream argument, and questions the very existence of a
physical world. Recall that his goal in the Meditations is to find certainty, which he
believes he can find by using a skeptical position of doubting everything.7 If
anything can survive doubt, being indubitable in the sense that one cannot help but to
believe it after careful questioning, then it is considered certain:
And yet firmly rooted in my mind is the long standing opinion that
there is an omnipotent God who made me the kind of creature I am.
How do I know he has not brought it about that there is no earth, no
sky, no extended thing, no shape, no size, no place, while at the same
time ensuring that all these things appear to me to exist just as they do
now? What is more, since I sometimes believe that others go astray in
cases where they think they have the most perfect knowledge, may I
not similarly go wrong every time I add two and three or count the
sides of a square, or even in some simpler matter, if that is imaginable
(.Meditation I [9])?
Here Descartes is saying that the images in dreams need not correspond to
something real. Also, for the first time he questions whether or not the physical world
even exists. God, who is omnipotent, could be deceiving him into thinking "the earth,
the sky, and extended things" exist. If God is deceiving him then God is an "evil
demon". Descartes could be hallucinating the sense perceptions he seems to be
experiencing.
7 Recall that by doubting everything, Descartes does not mean this to be a final
position, but rather a position where everything is to questioned.
8


Descartes goes beyond the arguments of Pyrrho, Montaigne, and other
skeptics, who had suggested that the senses can deceive us about the nature of
the physical world but never they [the senses] can deceive us about its very
existence (Dicker 1993, 21).
Descartes has taken the most skeptical position he can think of, going beyond
his predecessors, to question if there even exists a physical world to interpret or sense
by postulating the existence of an evil demon. He also begins to employ the notion of
God, in this sense an evil one, though he does not attempt to prove the existence of an
omnipotent, benevolent God until Mediation V, where he uses the ontological
argument. He does, however, continue in Mediation V to argue that everything is
subject to doubt and the only way to certainty is to doubt everything, so that if
anything passes this test it is certain:
Anything which admits the slightest doubt I will set aside just as if I
had found it to be wholly false; and I will proceed in this way until I
recognize something certain, or, if nothing else, until I at least
recognize for certain that there is no certainty (Meditation II [1]).
Method in Cartesian thought is paramount as it is through the proper use of
method that Descartes maintains that certainty can be found and thus foundations can
be built to ensure accuracy. The Cartesian method of doubt, the dream argument, and
the evil demon hypothesis all form together for Descartes a cohesive criticism of all
existing phenomena. Recall from the opening quote that Descartes wants to
"...demolish everything completely and start again right from the
foundations."{Meditations I [1]) It is through the employment of these three tools of
analysis which Descartes believes he demolishes everything. The Cartesian system
begins to take form after Descartes employs his method of doubt, where he begins to
question all previous held beliefs, the dream argument, where he argues that sense
perceptions are not reliable, and the evil demon hypothesis, where he questions the
very existence of the physical world itself. After this process Descartes is left
believing nothing and maintaining nothing as certain. (This is the final position of
most skeptics.) It is at this point where Descartes begins to formulate his famous "I
think therefore I am," which is to be the first certainty in the Cartesian system.
9


Cosito Erso Sum" ("I Think Therefore I am")
Recall earlier that Descartes maintained that any Proposition that survives the
doubting process is a principle which can be deemed as true. This is the goal of the
Meditations. After doubting everything, or at least the fundamental basic principle
upon which all beliefs are built, Descartes believes that something has maintained
believability under all conditions- namely the cogito, the self. The certainty of the
existence of the self is crucial in the Cartesian argument as it is from such certainties
that characteristics of truth can be identified and thus used to locate other certainties.
In Meditation II Descartes reminds himself of what it means to doubt. He not
only has doubted everything that his senses perceive body, shape, movement,
extension (i.e. the physical world) but he has also postulated that an evil demon,
God, could be fooling him into believing what he does. It is here that he begins to
form his famous "cogito ergo sum", "I think therefore I am". It follows then that
Descartes asks himself:
...I have convinced myself that there is absolutely nothing in the world,
no sky, no earth, no minds, no bodies. Does it follow that I too do not
exist {Meditation 7/ [3])?
Descartes answer to this is no; if I convinced myself of something (or thought
anything at all), then I certainly exist.
I noticed that while I was thus trying to think everything false, it was
necessary that I, who was thinking this, was something. And
observing that this truth I am thinking, therefore I exist, was so firm
and sure that all the most extravagant suppositions of the skeptics were
incapable of shaking it. I decided that I could accept it without scruple
as the first principle of the philosophy I was seeking (Discourse on
Method part 4 [l]).8
Cottingham argues that "the correct English translation of cogito/je pense, when
these words occur in Descartes' discussion of the certainty of his existence, should
employ the so-called continuous present 'I am thinking' rather than the simple
present 'think'. (Cottingham 1986, 36).
10


This is the first certainty for Descartes that of his existence. By evoking the
evil demon argument, he postulates that in order for him to be tricked by an evil
demon, he must exist because being tricked necessarily means that someone must
exist to be tricked namely himself. Descartes feels secure in concluding that if he
has convinced himself of anything, or even thought anything at all, then certainly he
must exist.
An important underlying belief in Descartes method is that, through careful
examination and doubt, one will discover, or find, "truth". What is certain is the
residual from the doubting process. The search for truth, the goal of the Meditations,
is paramount in the Cartesian method as truth provides the foundation for other
principles and therefore allows deduction to occur. The use of deduction is necessary
in order to do scientific work.
The belief in foundations and that they are themselves true is identified as
foundationalism (Pojman 1993). This will be discussed in the next chapter. Here it is
enough to say that Descartes is a foundationalist searching for foundations of "truth"
upon which to build certain conclusions about the world through deduction. These
foundations are also referred to as axioms, and hence Descartes system is axiomatic.
Descartes existence, his first certainty, is proof to him that there are in fact some
things which are immune to the doubting process. That is they remain after doubting
them. Descartes method of doubt lead him to something certain namely self. I
think therefore I am is the first certainty in the Cartesian process. It is also the
beginning of the definition of one of the two types of substances in the world for
Descartes.
The Cosito (The Self)
The rest of Meditation II introduces and clarifies the notion of self. This step
in the Cartesian process is important as it is in this step that Descartes makes his
distinction between a purely thinking substance and a purely physical substance.9
The thinking substance, res cogitans, is unextended, has no shape or physical
presence, and is thinking while the unthinking substance, res extensa, is extended, has
shape and physical presence, and is thoughtless. (Res extensa will be discussed later.)
The notion of self, the cogito is the first certainty for Descartes. It is also
crucial in the Cartesian system as Descartes identifies the self with one of the only
9 The word substance is used in most translations of Descartes' writings.
11


two substances in existence. From the cogito comes the most reliable form of
substance in terms of locating certainty. It is also from it that ones begins analysis or
method to insure the acquisition of other such certainties.
Descartes believes that those perceptions which emanate from within the res
extensa, namely sense perceptions, are not reliable. But those perceptions which
emanate from within the res cogitans, are reliable, such as the cogito, or the self. The
existence of self for Descartes is an example of certainty. All certainty must emanate
from the res cogitans as only from it can truth be found through the process of
doubting. The existence of the cogito, the self, is the first proposition of certainty.
Such propositions of truth must possess particular characteristics which render it
certain. If these characteristics can be identified then a criterion for identifying
propositions of truth can be established.
Clarity and Distinctness: The Truth Criterion
From the argument for the existence of the cogito Descartes maintains he can
establish a criterion for determining other truth propositions. In order to identify the
necessary characteristics, at the beginning of Meditation II Descartes summarizes the
knowledge that he has attained previously in the Meditations:
I am a thing that thinks: that is, a thing that doubts, affirms, denies,
understands a few things, is ignorant of many things, is willing, is
unwilling, and also which imagines and has sensory perceptions; for as
I have noted before, even though the objects of my sensory experience
and imagination may have no existence outside of me, nonetheless the
modes of thinking which I refer to as cases of sensory perception and
imagination, insofar as they are merely modes of thinking, do exist
within me of that I am certain.
In this brief list I have gone through everything that I truly know, or at
least everything that I have so far discovered that I know (Meditation 777 [ 1 -
2]).
From this the cogito, or the self, is still the only thing to which Descartes can
claim certainty. It therefore takes on extreme importance to him as it is an example of
certainty and consequently the type of "truth" Descartes has been searching for
throughout all of his analysis.
12


Having affirmed himself as a thinking being that exists Descartes then asks
himself, can I learn anything more from this (Meditation 111 [2])?
Now I will cast around more carefully to see whether there may be
other things within me which I have not yet noticed. I am certain that I
am a thinking thing. Do I therefore also know what is required from
my being certain about anything {Meditation III [3])?
Descartes is expressing here that he has at least one instance of absolute
certain, indubitable knowledge and questions if the characteristic(s) of this instance
are understood then other such knowledge, possessing the same characteristics, may
be identified. He then seeks to understand the characteristics which this piece of
unshakable knowledge, the cogito, possess. He answers:
In this first item of knowledge there is simply a clear and distinct
perception of what I am certain {Meditation 111 [2]).
The characteristics of this first item of knowledge that render it so certain,
Descartes declares, is simply that this knowledge is a "clear and distinct" perception.
He reasons from this that perhaps whatever he perceives as clear and distinct is true.
He continues:
This would not be enough to make me certain of the truth of the nature
of the matter if it ever turns out that something which I perceive so
with such clarity and distinctness was false. So I now seem to be able
lay it down as a general rule that whatever I perceive very clearly and
distinctly is true {Meditations 111 [2]).
From this Descartes extracts his criterion for truth that whatever he perceives
clearly and distinctly is true. He derives this, once again from the cogito, the first
item of knowledge known to him as certain. For Descartes it is not possible to
perceive the cogito false. It is certain and indubitable so it must follow that other
things perceived clearly and distinctly are true as well.10
10 Dicker notes that we may interpret Descartes as saying that what assures him
that he is a thinking thing is that he very clearly and distinctly perceives the cogito as
a tight package of certainties composed of (1) I am thinking, (2) that thinking entails
existence, and (3) that I exist (Dicker 1993, 84). Dicker is saying that Descartes
identifies "I think therefore I am" as one idea but in fact it is three. Therefore his
13


Because he maintains that the cogito is true he concludes that all clear and
distinct perceptions are. This interpretation is summarized by Dicker (1993, 85) as
follows:
(1) If my clear and distinct perceptions could be false, then the cogito
would not be certain.
(2) The cogito is certain.
therefore: My clear and distinct perceptions cannot be false; that is,
whatever I perceive clearly and distinctly is true.
Those perceptions which are clear and distinct self evident are axioms in
Descartes system which is a foundationalist system of deduction. (This will be
discussed in the next chapter.)
What it is Descartes means by a clear and distinct perception is not clear. He
does write, however, in his Principles of Philosophy, what it is he means by clear and
distinct, however it is not very helpful.
I call a perception clear when it is present and accessible to the
attentive mind just as we say that we see something clearly when it is
present to the eyes gaze and stimulates it with a sufficient degree of
strength and accessibility. I call a perception distinct if, as well as
being clear, it is so sharply separated from all other perceptions that it
contains within itself only what is clear (Principles of Philosophy [5]).
This definition is not helpful as it still leaves many questions unanswered,
particularly about how it is that certain propositions are identified as clear and distinct
principles while others are not. Descartes answer to this is the notion of innate ideas,
which will be discussed in the next section.
The truth criterion is essential in the Cartesian system. It is the litmus test that
allows for certain propositions to be "true" or basic a priori truths, while others are
not. It is from the notion of clear and distinct principles the truth criterion that a
discussion of innate ideas and mathematics can occur, as, for Descartes, these are
examples of propositions which are clear and distinct. These propositions
necessarily emanate from within the res cogitans, the thinking, unextended substance,
as recall from Meditation I, the senses cannot be trusted and therefore clear and
distinct propositions cannot come from the res extensa.
notion of clarity and distinctness is somewhat tenuous as he does not attempt to prove
each of the three independently, but rather accepts them as true (Dicker 1993, 85).
14


Innate Ideas
For Descartes certain things are known a priori, that is known prior to having
experienced or sensed them, and these propositions are innate. Innate propositions
emanate from within the res cogitans and for Descartes provide the answer to the
dilemma about how it is certain propositions are clear and distinct while others are
not. It is understandable that Descartes would maintain such a viewpoint, as clarity
and distinctness themselves are characteristics which one could argue rely on ideas
such as a priori and innateness. Descartes writes in a letter to Mersenne:
...Now there is no one of the laws which is beyond our powers of
apprehension if we apply the mind in the study of it: and all of them
are inborn in our minds (A Letter to Mersenne).
The idea of "innateness" covers a substantial number of situations in
Descartes method. In short Buchdahl (1969, 117-118) has distinguished four cases
of what an innate idea means to Descartes:
(a) If it is occasioned, in the way in which all ideas as such (including
those involved in sensation) are quite distinct from the physical
occasioning situation (brain-pattem, etc.);
(b) if there is no corresponding perceptual object, as in the case of the
perfectly straight line, perfect equality, etc.;
(c) in the case of certain abstract category concepts, such as
knowledge, doubt, unity, etc.; and finally,
(d) if the idea has a special metaphysical backing, as he [Descartes]
claims certain mathematics ideas, or for the ideas of God, perfection,
etc.
An example of an innate idea are the conceptions of mathematics and
to guarantee any agreement between them, and to give the whole
exercise any validity and significance, Descartes has to maintain that
this agreement is simply a fundamental (though) contingent fact about
the universe (Buchdahl 1969, 117-118).
15


Here Descartes is introducing the notion of uniformity. Namely if anything is
to be innate or "true" the universe must posses certain constant phenomena. (For
Descartes the entire universe owes its existence and its uniformity to God.)
Facts about the universe are not beyond human capability to understand, they
are, in fact, the basis for all knowledge and accessible to all. The cogito is the first
piece of unshakable, indubitable knowledge. The notion of clarity and distinctness
are characteristics one can use to find other such items of knowledge, and the notion
of innateness guarantees that one has access to such items.
Though Descartes definition of clarity and distinctness, his criterion for truth,
may seem questionable and in some ways complex, it is nonetheless the basic
criterion he uses to put forward certain propositions, as Buchdahl (1969, 117-118)
notes:
1. that a perfect God exists (Meditation V);
2. that mind is really a different substance entirely from matter
(Meditation VI);
3. that the material world exists (Meditation VI).
Mathematics
Another example of innate propositions for Descartes is the use of
mathematics. The certainty of mathematical science is as clear and distinct to
Descartes as is the cogito. It is an example of an innate idea, which exists only in the
thinking substance, the res cogitans. Mathematical certainty11 consists in starting
from data which are so simple, that is it never contains any falsity (Buchdahl 1969,
119), so evident, so clear and distinct that they cannot be doubted by the mind, and
that nothing else is accepted as true until it has been shown to follow no less evidently
from these data (Smith 1963, 66).12
11 Frederick Copleston maintains that Descartes' ideas of clarity and distinctness
come from his mathematics (Copleston 1985).
12 For Descartes, the certainty in mathematics is to a degree dependent on his belief
in an omnipotent, benevolent God. Though the ontological proof for the existence of
God, first put forward by St. Anselem (1033-1109), which Descartes employs, will
not be discussed in this paper, Descartes' belief in an omnipotent, benevolent God is
very important to his method, including his view of mathematics. He writes:
16


For Descartes it is these simples, these innate, self-evident, true propositions,
that one must understand first in order to understand the complexities that follow
from them.
Though mathematics is clear and distinct in that its properties are certain,
Descartes at one point does doubt their certainty questioning whether God could be
deceiving him into believing that 2 + 2 = 4, when in fact it really is equal to 5. He
concludes that because God is not a deceiver13 (which he discusses and "proves" in
Meditation V) mathematical science must be reliable.
Mathematical science is for Descartes an example of an innate idea known a
priori. They are ideas such as those in mathematics that are known without appeal to
anything empirical. They are available through the thinking process alone.
Cartesian Dualism and the Existence
of the Physical World
Dualism is an important notion in Descartes method as he divides the world
into two distinct, opposite substances res cogitans and res extensa. More
specifically, after scrupulously doubting everything Descartes is left only with the
cogito, the self, as certain, which Descartes believes he has already proven the
existence of and established its existence in the res cogitans, one of the substances in
the duality. Now Descartes needs to prove the existence of the other substance, res
extensa. Before doing so he summarizes what it is he knows up to this point:
First I know that everything which I clearly and distinctly understand is
capable of being created by God so as to correspond exactly with my
understanding of it. Hence, the fact that I can clearly and distinctly
understand one thing apart from another is enough to make me certain
that the two things are distinct, since they are capable of being
...the mathematical proofs which we entitle as eternal have been established by God
and are as dependent on him as are all creatures...[Also] it is God who establishes the
laws of nature (A Letter to Mersenne).
13 See Meditation IV.
17


separated, at least by God14. The question of what kind of power is
required to bring about such a separation does not effect the judgment
that the two things are distinct. Thus simply knowing that I exist and
seeing at the same time that absolutely nothing else belongs to my
nature or essence except that I am a thinking thing. I can infer
correctly that my essence consists solely in the fact that I am a thinking
thing. It is true that I may have (or, to anticipate, that I certainly have)
a body that is very closely joined to me. But nevertheless, on the one
hand I have a clear and distinct idea of myself, insofar as this is simply
an extended, non-thinking thing. And accordingly it is certain I am
really distinct from my body, and can exist without it (Meditation VI
[9]).
Descartes lays out his argument for dualism, which comes out of his previous
Meditations, particularity his argument for the existence of self, and acknowledges
that he does have a body, however, he can exist without it.
His argument for the existence of two radically different substances is noted
by Dicker (1993, 196) who maintains Descartes argument mainly rests on ideas like:
(1) If I can clearly and distinctly conceive X existing apart from Y,
then X really can exist without Y, at least by Gods power.
(2) If X really can exist without Y, no matter by what power, then X
and Y are really two different things .
This argument for the mind/body distinction, an example of dualistic thinking,
has had a profound influence on Descartes scientific method. The distinction arises,
once again, from the notion of the cogito, the self. It is important to understand how
it is that Descartes arrives at this distinction in order to understand why dualism is a
consequent of systems which embrace or incorporate tenants of Cartesian
methodology into their research programs.
14 The use of dualism in modem analysis does not incorporate God and
consequently a detailed examination of Descartes belief in God has been omitted from
this analysis. It is important to note though that Descartes' entire system is sustained
by the belief in God, which he sees as guaranteeing the existence of all truths. It is
also important to note that the use of dualism allowed in some ways for Christianity
to accept science as it examined the world in a different 'substance', namely in res
extensa, while spirituality existed in res cogitans.
18


Recall from Meditation I the method of doubt, wherein one begins by
doubting everything even ones own existence. In Meditation I Descartes uses the
dream argument to cast doubt on the senses as any faculty which can produce
certainty. He concludes there cannot be such a faculty. Using the evil-demon
argument, Descartes questions the existence of not only himself, but the physical
world as well. Through these methods he concludes that he does in fact exist because
he thinks. Even an evil demon could not trick him into thinking he does not think;
after all he still would be thinking. This is where Descartes derives the cogito, the
self, and identifies it as a clear and distinct proposition which serves as a role model
in order to identify other true propositions. This is the argument for the first part of
the Cartesian duality res cogitans, thinking unextended substance. Yet it is still
necessary for Descartes to demonstrate the existence of the other substance in the
duality res extensa, unthinking extended substance.
The Existence of the Physical World
Thus simply by knowing that I exist and seeing at the same time that
absolutely nothing else belongs to my nature or essence except that I
am a thinking thing, I can infer that my essence consists solely in the
fact that I am a thinking thing (Meditation VI [7]).
Here Descartes notes that he is "solely a thinking thing". What then of the
physical world which, using the dream argument, he has doubted? Descartes begins
with stating that he has certain faculties, namely imagination, and sensation, that do
not require the existence of a physical world, but only the existence of a thinking
substance. But Descartes also recognizes that he has certain faculties, namely motion
and change of shape, that do require the existence of a physical world because these
faculties could not originate in the res cogitans.
Now there is in me a passive faculty of sensory perception, that is, a faculty
for receiving and recognizing the ideas of sensible objects; but I could not
make use of it unless there was also an active, faculty, either in me or in
something else, which produced or brought on these ideas {Meditation VI
[10]).
Here Descartes is saying that he has a certain understanding and sense of objects
which could not have been caused by him as a thinking thing and therefore must have
19


been caused by some other substance. This other substance must be a material world
because the experiences that it produces are independent of his will.
Descartes proof for the existence of a material world does not progress much
beyond this.15 However, for the purposes of this analysis it is not important to
elaborate it any further except to say that Descartes does emphatically believe that the
material world is separate from the non-material, thinking world. These two
substances are necessarily mutually exclusive for Descartes and comprise the total set
of substances, hence the Cartesian dualism.
Deduction in the Cartesian System
The last argument to understand in the Cartesian system is his use and defense
of deduction. It has already been noted that Descartes defines the criterion of truth
(i.e. certainty) as propositions which are clear and distinct, such as cogito ergo sum.
His division of the world into res cogitans and res extensa indicates where such
propositions will be found; they only come out of res cogitans. Because the senses
can be inaccurate16 one should withhold the attribution of knowledge to such
empirical judgments. Induction, therefore can never be a means of providing
knowledge, but only of beliefs.17 This, in essence, means that all axiomatic
foundations derive from within the res cogitans. All ideas exist in the res cogitans
and consequently deduction occurs there as well. In order to understand this it is
15 "The existence of a material world has created problems for most philosophers
who have attempted to prove it. Locke and Russell tried to show that material things
cause our senses without appealing to God. Berkeley, Mill and Ayer argued that
things are in some way composed out of, or constructed from, the sense experience
themselves. Hume held Descartes' problem as unsolvable and skepticism as the only
rational position. Dewey and Wittgenstein argued Descartes' doubt of the material
world as illegitimate and should not have arisen in the first place" (Dicker 1991, 204-
5).
16 The notion of accuracy is problematic because in order to check whether the
senses are accurate one has to employ the senses.
17
The assumption that induction and deduction are fundamentally different
processes is yet another example of dualistic thinking.
20


necessary to understand Descartes beliefs about the nature of ideas and his views on
cause and effect, which create the chain of deduction.
The Nature of Ideas and the Relationship
Between Cause and Effect
In Meditation ///Descartes discusses his beliefs about the nature of ideas. An
idea, for Descartes, is a representation of an object. More precisely, it is a "mental
representation of its (a specific) object" (Dicker 1993, 90). For example, an idea is
much like a painting which is a representation of a certain object. Ideas, because they
are representations cannot in themselves be false. A painting may not depict
accurately, but the image itself is not considered true or false, but rather existing in its
own right. Therefore an idea itself is not true or false. Falsity (and truth) become
possible only when a judgment is made about whether the idea actually corresponds
to something outside of the mind. There are different types of ideas for Descartes and
some of them possess more representation than others. The amount of representation
they possess make some more reliable than others. This is why induction is not
reliable for Descartes, as the ideas which represent the physical world are less
representative.
It is important to understand the metaphysical framework Descartes uses in
order to understand the nature of ideas. He discusses ideas and objects in the context
of "objective reality and formal reality".
Ideas. Objects of Ideas, and
Objective and Formal Reality
Descartes distinguishes between ideas and the object of ideas. An idea occurs
in the mind and is a representation of an object, where an object exists outside of the
mind and is the cause of an idea. All ideas have causes. Ideas exist in a hierarchy as
do their corresponding objects, and consequently for Descartes, certain ideas
representing certain objects possess more "representation" and represent their objects
as having more reality than others. The representation of the reality an idea possesses
Descartes calls objective reality. Similarly, "the degree of reality that an idea
21


represents its object as having depends on the degree of reality possessed by the
object itself" (Dicker 1993, 95). The reality possessed by the object itself Descartes
identifies as formal reality. The distinction between objective reality and formal
reality is that ideas possess objective reality, which is the degree of reality an idea
represents its object as having; objects possess formal reality, which is the degree of
reality the object possesses itself. Some ideas represent their objects as having more
reality than others and some objects have more reality than others.
The use of deduction ensures certainty because the ideas which begin the
chain of deduction, which are clear and distinct and reside in the res cogitans, possess
more objective reality than ideas about the physical world, which are the beginning
points for induction, and are caused by objects in the physical world.
The previous discussion of why sense perceptions are not reliable is consistent
with this argument as ideas which are caused by the physical world are subsequently
not reliable because sense perceptions cannot be trusted, and hence are not certain.
The identification and the distinction between objective and formal reality and the
identification and distinction between ideas which possess more objective reality than
others is crucial because the criticisms of Descartes system, which themselves form
the intellectual background for the introduction of a new type of Cartesianism, begin
much of their argument there. This will be discussed in chapter two.
After making a distinction between objective reality and formal reality,
another important notion necessary to understand in Descartes system is his notion of
the distinction between cause and effect, which not only plays a large role in
deduction but also is crucial for those who later criticize the Cartesian method.
Cause and Effect
All ideas for Descartes have causes. The causal principle he uses is that "the
cause of an idea must have as much formal reality as the idea contains objective
reality" (Dicker 1993, 97). This principle asserts that an idea must have a cause and
that this cause must be adequate. In terms of deduction a first principle a simple,
clear and distinct proposition is caused by something, namely innateness allows for
its discovery and God its cause. These first propositions become causes to other
propositions, which through deduction cause other propositions, and each cause has
as much formal reality as each effect has objective reality. Because of the hierarchy
of ideas for Descartes, certain ideas have more objective reality and their
corresponding objects have more formal reality, which makes them more reliable and
22


thus certain ideas are deemed as more "true". These ideas are things like, the
representation of God, the cogito, and mathematics.
Descartes also speaks of the use of intuition in his system as it relates to
deduction. Intuition is identified as an integral part of cause and effect because the
first causes are known innately, or through intuition. First principles are known
intuitively and those that follow are known through deduction.
Intuition and Deduction
Though Descartes speaks of deduction and intuition, he does not mean them
as anything fundamentally different (Smith 1963, 70). However in practice he does.
He wants to make a distinction between those primary truths that are self evident and
those others for which their truth can only be deduced from the former.
Deduction is but a series of intuitions, whereby terms not directly
related are discovered to be related through their relations to
intermediaries (Smith 1963, 70).
In the Regulae Descartes explains the need for both deduction and intuition as
both are needed to ascertain the truth.
There can be no question of extending the method so as to show how
these two operations [of intuition and deduction] ought to be
performed, since they are the simplest of all mental operations and
primary. If an understanding were not already of itself qualified to
perform them, it would be unable to comprehend any of the precepts
prescribed by the method, however, easy (Regulae IV).
Deduction therefore is not a source of special knowledge, but rather a process
wherein intuition extends itself. Namely intuition is direct knowledge and deduction
is argument.
Thereby intuition shows itself not to be an isolated act, but a growing
capacity of the mind for truth, each new truth serving as an instrument
in the discovery process of others (Smith 1933, 80).
23


In the Cartesian system one begins with a clear and distinct proposition such
as 2 + 2 = 4. These propositions are necessarily simple as well as self-evident. From
such propositions one can "deduce" other truths. These first self-evident propositions
are simple in that no falsity can exist in them and they can not be reduced to other
propositions. Consequen tly complex propositions are explained by simple
propositions in that a complex proposition consists of simple propositions. Thus,
through the use of intuition simple propositions are known, because they are innate,
and complex propositions can be deduced.
Simple to the Complex
The method of deduction is also advocated by Descartes because he believes
that once the primary, self-evident propositions are understood they then lay the
foundation for complex truths and consequently are the beginning of analysis for
endeavors in scientific discovery.
For Descartes the metaphor "foundation" is appropriate, as recall from
Meditation I he states that if he is to know anything at all about the sciences he must
tear down the edifice already constructed and rebuild from the bottom, the foundation,
up. The "bottom" is the foundation where clear and distinct principles exist and these
principles form the bedrock and starting point for scientific and intellectual endeavor.
Descartes believes that all knowledge is assessable in that the most complex of
concepts can be reduced to primary, basic propositions, which are considered simple.
Descartes is very concerned with the ordering of propositions because it is the order
of them which provides justification from noninferred, self-evident, first propositions
which are attained through intuition and known innately, to inferred, more complex
propositions, attained through deduction. This arrangement is the notion of "due
order". He writes:
In this one requirement [that of due order] we have the sum of all
human endeavor; whoever enters on the pursuit of knowledge must
rely on this as implicitly as he who entered the labyrinth had to rely on
the thread that guided Theseus. But many seekers either do not reflect
on what it describes, or simply ignore it setting themselves to examine
the most difficult questions with so little thought of due order, that, as
it seems to me, they act like a man who would attempt to spring at a
bound from the base to the summit of a house, spurring the ladders
provided for the ascent, or not noticing them (.Regulae V [4]).
24


Here Descartes believes literally in a hierarchy of knowledge which, starting
with simple a priori truths, is discovered through deduction. One can not eschew the
necessary arrangement of propositions, due order, because the process itself is what
ensures truth. If the middle steps are skipped then the conclusion is not guaranteed.
To not respect this "due order" is for Descartes tantamount to not being able to
explain anything at all. This process is natural and necessary if one wants certainty
and wants to say anything true about the world.
To summarize, up to now this chapter has given an overview of the Cartesian
method starting with Descartes goal for the Meditations. Namely that he is
concerned with finding certainty or truth upon which he believes other propositions
can be built, through the use of deduction. His goal is to rebuild the edifice of
knowledge so as to establish something lasting and reliable in science. All knowledge
is accessible in the Cartesian system as long as a certain method is followed.
Descartes believes his method insures certainty.
He begins with the notion that absolutely everything should be doubted the
method of doubt. He then postulates that whatever is immune to doubt is certain -
truth is a residual of the doubting process. This for Descartes is the cogito, the notion
of the self existing. Descartes declares that the cogito is a clear and distinct
proposition and consequently any such proposition possessing such characteristics
must be certain as well. The notion of clarity and distinctness is innate. Nothing
clear and distinct can arise out of the res extensa, which is an unthinking, extended
substance, but only emanate in the res cogitans, which is a thinking, unextended
substance. (The distinction between these two substances is what as known as the
mind/body split.)
Innate propositions, such as the cogito are fundamental in the Cartesian
system as they form the basis for other propositions to be built upon through the use
of deduction. These basic propositions are simple, axiomatic, a priori truths, from
which, more complex propositions can be derived. Thus, all knowledge is accessible
through the use of intuition, which allows for the recognition of basic innate
principles, and through the use deduction, which allows for other truths to be
discovered.
A necessary companion to understanding Descartes method is to understand
some of the criticisms which followed as these criticisms have influenced an
alternative method.
25


Criticisms of the Cartesian Method
Descartes method presented certain problems to some of his contemporaries
and immediate successors. One branch of these criticisms provided the intellectual
and philosophical rationale for a somewhat less restrictive Cartesianism. Descartes
own method is referred to as orthodox Cartesianism, and this other method is
identified as moderate Cartesianism, later to be identified with moderate
foundationalism.
Mainly the criticisms of Descartes focused in three areas; corresponding to
each are three particular applications of the term "Cartesianism" (Edwards, ed., 1967,
vol. 2, 37). The focus of the criticisms of Descartes work is divided into three areas
by Edwards; (1) Physics and derivative sciences; (2) The theory of knowledge; (3)
Metaphysics (Edwards, ed., 1967, vol. 2, 37-42). For the purposes of this paper the
area of interest is number two, as it is from this that intellectual traditions arise which
directly effect the course of inquiry in this analysis.
Criticisms of Dualism and
Belief in a Causal Principle
Perhaps the most profound criticism of the orthodox Cartesian project
is in response to Descartes adherence to dualism, in which he identifies only two
types of substances- res cogitans and res extensa- as mutually exclusive while he
simultaneously maintains that there is a causal principle which can exist between the
two. Many philosophers see Descartes account of two mutually exclusive substances
not only as inaccurate but inconsistent as well within his own conceptual framework,
particularly in terms of how it is he identifies each of the substances presenting
themselves or being represented in the world.
The simultaneous adherence to the dual of res cogitans, thinking unextended
substance and res extensa, non-thinking extended substance, and Descartes notion of
ideas and sensations has presented specific problems for his successors and
contemporaries. Among the first to criticize Descartes adherence to both of these
principles was Simon Foucher.
26


Simon Foucher
Simon Fouchers main criticism of orthodox Cartesianism is that he saw it
keeping the strict ontological dualism between two created substances, mind and
matter, while simultaneously maintaining that ideas, which are modifications of
unextended thinking, can represent inert, unthinking extension, without resembling
it. In addition, Foucher pointed out that the orthodox Cartesians believed in a causal
principle wherein "the cause of an idea must have as much formal reality as the idea
contains objective reality" (Dicker 1993, 97). More specifically an idea has a cause
and the idea itself is a representation of that cause. But the Cartesians claim that ideas
represent material objects acknowledges and identifies a relationship between mind,
res cogitans, and matter, res extensa, which cannot be based in any way on the notion
that the two are at all similar. Because the two are identified by the orthodox
Cartesians as mutually exclusive, the question then becomes, how is it that they can
have a relationship, particularly a causal one, given the two completely different
substances? This is Fouchers main objection.
In addition, the orthodox Cartesians believe in a strict ontological dualism,
insist on causal interaction between the two substances, and consequently must reject
a likeness principle, which states that likeness is necessary between cause and effect,
or between what represents and what is represented. The orthodox Cartesians must
reject a likeness principle specifically because of the dualism they maintain. Foucher
cannot understand how there can be an interaction between two substances without
there being some sort of likeness. According to Foucher, representation is dependent
on resemblance and the two terms are practically synonymous. "Therefore, the
essential difference between mind and matter that the orthodox Cartesians profess
precludes (according to Foucher) the possibility of interaction and representation,
which everyone experiences" (Foucher).
Another criticism made by Foucher is that the orthodox Cartesians proclaim
that an idea is a representation of a material thing, yet ideas themselves are not like
material things, and sensations, which are similarly modifications of the mind, are
identified as not being representative. 18 The orthodox Cartesians identify ideas as
having a representative aspect and maintain that sensations do not. Foucher argues
18
Again, this is why induction is rejected by orthodox Cartesians as induction uses
sensation while deduction uses ideas.
27


that the orthodox Cartesians do not identify or indicate what this representative aspect
is. He maintains that there is no appreciable difference between ideas and sensations
and either both are representative or neither are.
The orthodox Cartesians profess that ideas represent their objects by making
them known. This knowledge must be direct for the orthodox Cartesians, however,
they do not identify sensations as making their objects known or possessing any direct
knowledge. In fact sensations for the orthodox cannon can be misleading yet they
maintain ideas can not be. Foucher again argues that if one is known by direct
knowledge why is not the other?
The criticisms of Foucher were addressed by Malenbranche, who deviated
from the orthodox position, though he embraced ontological dualism, by stating that
mind and matter do not in fact interact at all. Malenbranche provides another
criticism to the orthodox Cartesian system by postulating this.
Malenbranche
Malenbranche maintained the strict orthodox Cartesian dualism but disputed
the orthodox rejection of a causal likeness principle, which like Foucher he agreed
must exist if one thing is to be the representation of another. Like the orthodox
Cartesians, however, he very rigorously maintains that the cause of an idea must
contain as much formal reality as the idea contains objective reality. Though he
embraces the dualism of the orthodox Cartesians, he realizes that it is impossible for
orthodox ideas to represent material objects because the essence of the two substances
are completely distinct and different. He understands that the orthodox Cartesians
cannot simultaneously maintain dualism and a causal principle. Malebranche offers a
solution to this by maintaining an ontological dualism, holding to a likeness principle,
and emphatically stating that the difference between mind and matter is such that the
two cannot and do not interact. Hence the causal principle does not hold, as two
mutually exclusive substances cannot have a causal relationship.
In order to propose this, Malenbranche states that ideas are not modifications
of the mind but rather exist only in God. Therefore God must have an idea of matter
before he creates it and then he allows us to have knowledge of material objects, or
matter, by sharing his knowledge of them with us.
Though Malenbranche agreed with Fouchers criticisms of the orthodox
project, his attempts at a solution were not well received. He was criticized
particularly for his notion that God could have ideas, which represent material
objects, without being at all similar to matter, yet humans could not. In short,
28


Malenbranche did not resolve the dilemma, he simply shifted the argument of
interaction between mind and matter, which are wholly distinct, to an argument of
interaction between God and matter, which he too identified as wholly distinct.
One thing he did achieve, however, was to introduce a different possibility
regarding the interaction between mind and matter. Though Malebranche maintains
that the two substances do not interact, other philosophers opted for different
solutions.
John Locke
John Locke is usually identified as an empiricist; nevertheless he too is
identified as accepting some of the orthodox Cartesian system. In particular he
adheres to the ontological dualism of the orthodox Cartesians but to a somewhat
lesser degree. More specifically, he holds that the essence of both mind and matter
are such that neither can truly be known. For Locke, an idea is:
whatsoever is the object of understanding when a man thinks...[it is]
whatever is meant by phantasm, notion, species, or whatever it is
which the mind can be employed about in thinking (Locke in Watson
1987, 120).
Locke identified two types of ideas of material objects, primary ideas, which
resemble the qualities of material bodies and secondary ideas, which do not resemble
the qualities of material bodies (Watson 1987, 119). The distinction of these two for
Locke is similar to the orthodox Cartesian distinction between ideas and sensations
(Watson 1987, 119). Locke writes:
Bodies actually have the primary qualities of solidity, extension,
figure, motion or rest, and number; these qualities have the primary
power to cause (primary) ideas, which resemble (and hence represent)
the qualities. Certain combinations of primary qualities are called
secondary qualities, and have the (secondary) power to cause
sensations (secondary ideas), which do not resemble (and hence do not
represent) anything in material objects. Sensible qualities in bodies,
therefore, are nothing but primary qualities that in combination have
the secondary powers to cause us to have sensations (Locke in Watson
1987,119).
29


Primary qualities, therefore, are qualities that permanently belong to a body.
For instance to attribute color as a primary quality is a mistake for Locke as color is
not what defines a body but rather is a secondary quality of it. Color is a secondary
quality because there can be a blue, red, gold, or any other color chair where the color
does not alter the fact that the object is a chair.
Similar to the orthodox Cartesians, Locke holds that humans can only
immediately know ideas, including sensations (Watson 1987, 122). Thus for Locke
all knowledge of material objects are mediated by ideas. The main distinction
between the orthodox cannon and that of Locke is that Locke argues that the real
essence of mind and matter are unknown. Locke writes:
Thinking is merely a modification of mind. Extension is merely a
modification of matter. Each of these substances is but a supposed I-
know-not-what, to support those ideas we call accidents (Locke in
Watson 1987, 120).
In addition, Locke contends that sensations do not represent any real qualities
in material things, but they do have a reality in that there is a correspondence between
external things and sensations. This is something the orthodox Cartesian program
does not allow for as it can possibly lead to the use of induction. Locke states:
Our simple ideas are real, all agree to the reality of things: not that they
are all of them the images or representations of what does exist; the
contrary whereof, in all but [primary ideas of] the primary qualities of
bodies, hath been already shown. But though whiteness and coldness
are no more in snow than pain is; yet these [secondary] ideas
[sensations] of whiteness and coldness, pain & etc., being in us the
effects of powers of things without us, ordained by our Maker to
produce in us such sensations; they are real ideas in us, whereby we
distinguish the qualities that are really in things themselves (Locke in
Watson 1987, 120).
Locke introduces the notion that sensations, which do not resemble material objects,
are still real in that there is a correspondence between reality and the sensations which
occur in the mind. This is movement away from the orthodox position as Locke
introduces the notion that sensations can in fact be trusted, at least somewhat. They
may not resemble objects exactly but there is a correspondence between them and
reality.
30


Conclusion Chapter One
Locke in particular provides an intellectual basis for other philosophers to
embrace the Cartesian platform without having to fully embrace the orthodox
position.
The criticisms raised by Foucher, who argued that the orthodox cannon could
not simultaneously maintain a strict ontological dualism and hold a causal
relationship between two mutually exclusive substances, were discussed by both
Malenbranche, Locke, and others. In addition the wholly deductive nature of the
orthodox program, given the identification of ideas and sensations, left some
philosophers discontented. Malenbrache could not solve the orthodox dilemma but
his acknowledgment of Fouchers criticisms and the debates that occurred between
the two probably did encourage further developments in the Cartesian system. In
particular, Locke, who has likewise been criticized for failing to solve the orthodox
dilemma, does introduce new ideas into the Cartesian system. Most importantly he
maintains that there is in fact a correspondence between sensation and reality. Thus
he indirectly introduces the notion that induction can be justified in a system of
inquiry.
The use of induction and the introduction of Fallibility in a Cartesian system
has been identified as a form of moderate foundationalism, and the orthodox
Cartesian position is identified as foundational. The two will be discussed in the next
chapter as well as some of the other phenomena that arise from their platforms.
31


CHAPTER TWO
ORTHODOX AND MODERATE
FOUNDATIONALISM
AND IDEAS THAT EMERGE
Introduction
The criticisms of the Cartesian system made by thinkers such as Foucher,
Malenbranche, and Locke helped to create an intellectual arena for others, such as
Robert Audi, to introduce slightly different variations on the Cartesian method (from
now on to be referred to also as orthodox foundationalism). One such variation is
moderate foundationalism. Both of these modes of inquiry will be discussed in this
chapter. In addition, a detailed discussion of some of the consequences of embracing
these modes will be discussed
The Cartesian method, and those similar to it, incorporate certain properties.
In particular, systems which maintain that there are indubitable, a priori truths upon
which other propositions may be deduced are both foundationalist and reductionist,
therefore are faced with the problem of infinite regress, that there is an infinite chain
of justification for knowledge. Related to these two notions are the properties of
atomism, the fallacy of composition, dualism, absolutism, and the need for
categorization. All are consequences of such research programs. This chapter
describes these consequences in detail and shows how they fall out of the Cartesian
method.
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Orthodox and Moderate
Foundationalism
Orthodox Foundationalism
Orthodox Cartesianism, specifically the philosophy of Descartes, is identified
as foundational. Foundationalism is the theory that one can have immediate and
infallible knowledge of first principles or basic propositions, the foundations, from
which one can deduce further truths (Pojman, ed. 1993, 188). These basic
propositions are referred to as axioms, which form the starting points for inquiry in
deductive systems. Recall that Descartes speaks of tearing down the structure, which
up to that point had housed his epistemically unjustified ideas about the world, and
replacing it with a foundation whose propositions are indubitable and thus sturdy.
The metaphor of foundation used by Descartes is appropriate as it is from
foundational propositions, the axioms, that the orthodox cannon begins.
Propositions, or axioms, must be clear and distinct in the orthodox platform and all
such innate, noninferential propositions provide the basis for inferring other
propositions or knowledge. These primary propositions, the axioms, are immediately
known, that is a priori, and are infallible. Secondary propositions are epistemically
justified by the axioms and are deduced from them.
For foundational systems the notions of infallibility and immediate knowledge
of first propositions are an integral part of the system. They form part of the defining
characteristics of the program.
There are two related ideas in the ideas of infallible and immediate
knowledge: self-evidence and incorrigibility. A proposition is self-evident if one
cannot help but believe it if one stops to understand and examine it; it is obvious and
apparent. Examples of this are the laws of arithmetic, such as 2 + 2 = 4, the law of
non-contradiction, and Descartes "I think therefore I am." A belief is incorrigible for
someone if and only if it is not possible for a person to believe the proposition and
the proposition be false. An example of this is "I think I have a pain." Both types are
considered certain, but only propositions are regarded as self-evident where
incorrigibility is regarded primarily as a property of beliefs. (Pojman, ed. 1993, 188-
189). There is no clear consensus on the definition of the two but all foundationalist
systems identify both.
33


This traditional view, that there is infallible, noninferential knowledge upon
which all other knowledge is based is what is referred to as "classical
foundationalism" (Pojman, ed. 1993, 188-189). For Descartes, a classical
foundationalist, there are two kinds of beliefs which Pojman divides into basic
beliefs and inferred beliefs (Pojman, ed. 1993,188). Basic beliefs are noninferential
and thus justified noninferentially, while inferred beliefs are nonbasic and are justified
inferentially and are based on one or more basic belief. Their relationship is
asymmetrical, in that basic beliefs transfer knowledge and justification to the derived
(inferential) beliefs, but not vice versa. The system is such that first propositions,
such as "I think therefore I am" are noninferential and others that are deduced from
them are identified as inferential. Both are considered knowledge but the origin of
each are distinctly different.
Another crucial determinate of the foundational cannon is the insistence on the
use of deduction and the rejection of induction as a legitimate means towards the
attainment or recognition of truth. The orthodox Cartesian system is highly deductive
and identifies deduction as the only system able to provide absolute true knowledge
through the mediacy of innateness and immediacy. Because of insistence on dualism
and the belief that sense perceptions are unreliable, the orthodox Cartesian
foundationalist maintains that deduction is the only system of inquiry that is viable.
The foundations form the starting point for their deductive program.
Moderate Foundationalism
Descartes is a orthodox foundationalist, but modem foundationalists tend to
loosen some of the restrictions of foundationalism, namely that propositions must be
infallible. They are known as moderate, minimal, or fallibilist foundationalists. This
branch of foundationalism introduces fallibility, the notion that some beliefs could be
false, into its method. In particular, basic assumptions or axioms could be fallible.
Moderate foundationalism still distinguishes between basic, noninfered beliefs and
nonbasic, inferred beliefs. It is this characteristic that identifies the system as
foundational; yet others distinguish it from orthodox foundationalism.
Moderate foundationalism introduces the notion that the interpretation of a
"fact" may differ. An example of this may be that one person may see immediately
that:
34


13x13=169 or even that 169 x 169 = 28,561, while another may
have to work these sums out from simpler self-evident truths, such as 3
x 3 = 9; 3 x 10 = 30,10 x 13 = 130, and the like
(Pojam 1993, 188-189).
The notion that there can be different interpretations of a "fact" is different from the
foundationalist position which never discussed interpretation but assumed it to be
consistent. The acknowledgment of differing interpretations, however, is not the
overriding factor distinguishing moderate foundationalism from orthodox
foundationalism. It is not a sufficient condition for distinguishing it from orthodox
foundationalism.
Perhaps the most crucial element in differentiating moderate foundationalism
from the orthodoxy is the justification of induction as a means of inquiry. Moderate
foundationalism still maintains that there is basic, noninferential knowledge but it
moves away from the orthodox cannon by maintaining that this basic knowledge may
in fact be fallible. Specifically, it must only be typically defensible, that is,
reasonable given common sense. In addition, the moderate foundationalist does not
hold that sensations themselves are necessarily unreliable. (This allows the moderate
to avoid some of the issues surrounding dualism.) These two components in the
moderate argument- fallibility of primary propositions and the reliability of sensation-
allow for induction as a viable means of inquiry.
Robert Audi (1993, page 211) distinguishes between generic and moderate or
fallibilist foundationalism through the use of three conditions. The first and second
conditions define generic foundationalism, where the first concerns knowledge and
the second justification. The third condition defines fallibilist or moderate
foundationalism which he maintains is inductive as well as deductive:
I. For any person, S, and any time, t, the structure of Ss knowledge, at
t, is foundational, and (thus) any inferential (hence non-foundational)
knowledge S has depends on non-inferential (thus in a sense
foundational) knowledge of Ss.
II. For any S and t, the structure of Ss body of justified beliefs is, at t,
foundational, and therefore any inferentially (hence non-
foundationally) justified beliefs S depends on non-inferentially (thus in
a sense foundationally ) justified beliefs of Ss.
III. For any S and any t, (a) the structure of Ss body of justified beliefs
is, at t, foundational in the sense indicated by thesis II; (b) the
justification of Ss foundational beliefs is at least typically defensible,
(c) the inferential transmission of justification need not be deductive:
and (d) non-foundationally justified beliefs need not derive all their
35


justification from foundational ones, but only enough so that they
would remain justified if (other things remaining equal) any other
justification they have (say, from coherence) were eliminated.
Audi further states that condition three is:
fallibilist in at least three ways: foundational beliefs may turn out to be
unjustified or false or both; superstructure beliefs may be only
inductively, hence fallibly, justified by foundational ones and hence be
false even when the latter are true; and the possibility of discovering
error or lack of justification, even in the foundational beliefs is left
open. (Audi 1991, 211)
The moderate, or, as Audi calls it, falibilist, foundational position does not
maintain that basic, foundational, beliefs must be infallible. It does identify basic,
foundational beliefs as distinct from non basic ones but does not argue that the beliefs
are immune to error. This is quite a step from the orthodox Cartesian foundational
platform. The introduction of fallibility into the foundations, or assumptions, allows
the moderate, fallible, foundationalist to employ induction because the moderate must
appeal to empirical means to determine if the foundations are in fact correct. As Audi
states, the "the inferential transmission of justification need not be deductive" (Audi
1991, 211). The moderate platform allows for the possibility of error in the basic
assumptions. The moderate foundationalist identifies error through the emplbyment
of induction. Namely, the platform does not consider sense perceptions to be
unreliable, as does the orthodox Cartesian, and uses them as a tool in the inductive
process. Audi writes:
...in working from the experiential and rational sources fallibilist
foundationalism takes as basic to justification and knowledge, it
accords with reflective common sense: the sorts of beliefs we are non-
inferentially justified in holding...are pretty much those which, on
reflection we think people are justified in hoi ding... We do not for
instance, normally ask people for reasons to think it is raining when
they can see clearly...Prima facie, in accepting it we are accepting an
experiential, not an inferential ground. (Audi 1991, 212)
Moderate foundationalism allows for experientially grounded knowledge.
This is distinct from orthodox Cartesian foundationalism which only admits
knowledge grounded in reason, which must be noninferential, infallible, and
indubitable, and as such it is then considered justifiable. Moderate foundationalism
36


maintains that one can have noninferential justified beliefs as well as inferential
justified beliefs and neither are deemed infallible. Justified inferential beliefs is in
general of the type of knowledge which Audi states is accepted as true prima facie. In
particular this type of knowledge tends to be experiential.
Because one can have experiential knowledge the employment of induction is
considered beneficial to inquiry in the pursuit of knowledge and in truth. Induction,
therefore, is an acceptable means of inquiry in the moderate system and is identified
as a good means to testing the truth of basic assumptions.
In both moderate and orthodox foundationalism other philosophies and
problems are embedded. In addition, both are subject to particular critiques, which
sometimes are similar given the commonalties between the two. Some of these
philosophies as well as some of the criticisms against the two programs will be
discussed in the next section.
Characteristics Of Orthodox
And Moderate Foundationalism
The Infinite Regress Problem
One problem identified in epistemology is the infinite regress problem which
both the moderate and the orthodox foundationalist claim to solve. The infinite
regress problem is identified as an epistemic chain of beliefs or reason which has no
point of cessation. The argument is such that if all knowledge is inferential, that is
each proposition is inferred, or justified, by some other proposition, which is also
justified by another proposition, and so on, the chain is infinite. For instance belief A
may owe its justification to B, which is based on belief C and so on ad infinitum.19
19 Another problem of justification is circularity. Namely Belief A is justified by B,
which is based on Belief C, which is based on Belief A, doubling back in a circle.
Coherentism, which is "the view that truth was defined not as correspondence of
propositions with facts but as integrated and absolute wholes in which individual
propositions received justification and relative truth credentials" (Pojman 1993, 191),
is particularly subject to this problem.
37


Both orthodox and moderate foundationalism claim to solve the infinite
regress problem by arguing that this line of reasoning continues until one reaches a
noninferential, basic belief which is thought to be self-evident and self-justifying.
Thus the regress stops at this belief. The orthodox foundationalists are dogmatic in
stating that this basic belief, or assumption, is infallible, where the moderates
maintain that it is not necessarily infallible, though it still provides justification. In
the orthodox Cartesian system of deduction these basic, noninferential, beliefs are
self-justified, attained through direct knowledge, and hence provide the justification
for the beliefs which are deduced from them. The moderate platform is not as
dogmatic in that they allow for fallibility in the basic propositions, yet they still
maintain that it is the basic propositions which cause the regress to stop 20
The orthodox foundationalist claim to solve the regress problem is at best
tenuous. The entire claim rests on the notion that there are in fact self-evident, self-
justifying beliefs which are not inferential and are known a priori as tme. The
orthodox conundrum is that if indeed there are such self-evident, self-justifmg,
noninferential, beliefs then their system does in fact remedy the infinite regress
problem. If, however, such beliefs do not exist, or perhaps exist but are incapable of
being understood or it is impossible to distinguish them from other beliefs, then the
orthodox foundationalist is not able to claim that the infinite epistemic chain of
justification ceases. The epistemic problem of proving that there are in fact self-
evident, self-justifying, a priori, propositions arises for the orthodox foundationalist
since their system requires it.
The moderate foundationalist claims to solve the infinite regress problem by
maintaining that there are basic, noninferential, beliefs, which stop the regress, yet the
beliefs themselves are not infallible but rather are of a general type which possesses
characteristics that generally are. Perhaps the best argument criticizing the moderate
foundationalists claim to solving the regress problem comes from Laurence BonJour
which is summarized in the following:
1. (Person) Ss Belief B has property A.
2. Beliefs having property A are highly likely to be tme.
3. Therefore, Ss Belief B is highly likely to be tme.
BonJours argument is that in order for the moderate foundationalists belief in B to
be justified he/she must adhere to the above argument. This does not end the regress
70
' Note, however, that both moderate and orthodox foundational system maintain that
tmth does in fact exist. The moderate may allow for fallibility in the assumptions or
axioms but this is due to an error in the constmction of the model and is not attributed
to the notion that tmth itself may not exist..
38


problem, however, as now the moderate foundationalist must appeal to yet another
notion, that of identifying properties such as A, which must be present in all basic
beliefs. Therefore justification is moved to another level. Instead of claiming that
certain beliefs are true, one must now identify sets of properties which are true. So
justification is still not immediate or basic but rather inferential.
The infinite regress problem presents a serious problem for any epistemic
program which desires to make any truth statements. It is important to have a
rationale and justification for beliefs and arguments put forward. If one is constantly
referring to previous statements as justification, and stopping at one, which is thought
to be certain, then the entire justification of the system relies on one proposition. This
proposition, the "foundation", is crucial. Such a method does not allow for
compromise as the axiom is paramount in that it must be true in order for the
inferential propositions which follow to be true. This absolutist construct is like a
row of dominos and consequently relies on ideas, such as clarity and distinctness, to
provide the discernment for why something is foundational or not.
Reductionism
Related to the notion of the infinite regress problem is the notion of
reductionism. Reductionism is the belief that knowledge, or propositions, which are
identified as complex reduce to simple basic propositions which can not be further
reduced. These simple, basic propositions are the point at which both the moderate
and the orthodox foundationalist claim the regress stops. The infinite regress problem
is closely related to reductionism as both are backward looking processes that find the
justification of propositions to reside in the ones preceding them. Reductionism is the
notion that the whole is equal to the sum of its parts where the parts are simple, that is
irreducible. Complex propositions, beliefs, thoughts, and all that is considered to
constitute knowledge, are reducible to basic, simple propositions. The reductionist
cannon is embedded in both orthodox and moderate foundationalism as it is the
foundations which are the irreducible simples, which in turn are the basic propositions
in foundationalism.
In the Meditations Descartes maintains that in order to establish any
semblance of truth or certainty one must start from clear and distinct, simple, self-
evident a priori truths, such as the cogito and mathematics. These truths are products
of intuitions which are innate to humans and consequently available to all. They also
are the building blocks of all knowledge, scientific, or any other, however complex. It
is necessary in the Cartesian foundational system to start with foundations, or axioms,
39


and deduce from them other propositions, which are also considered knowledge but
are more complex given the structure of propositions which precede them. It is
precisely these clear and distinct propositions that build the edifice of knowledge for
the Cartesian system.
The Cartesian system organizes all information into domains and consequently
these domains are further reduced into "simples," the foundations of all knowledge
(Grosholz 1991, 2). Each item of knowledge, from simple, clear, distinct principles
which form the starting points of the reductionist canon, to other items of knowledge
must be understandable solely on the basis of the ideas on which they are built
(Grosholz 1991, 2). Thus one must always be able to lead back from more complex,
compound ideas to the simples from which they arise. Descartes writes in his
Geometry:
Those long chains of reasoning, simple and easy as they are, of which
geometricians make use in order to arrive at the most difficult
demonstrations, had caused me to imagine that all those things which
fall under the cognizance of man might very likely be mutually related
in the same fashion; and that, provided only that we abstain from
receiving anything as true which is not so, and always retain the order
which is necessary in order to deduce the one conclusion from the
other, there can be nothing so remote that we cannot reach to it, nor so
recondite that we cannot discover it (Geometry [4]).
The reductionist viewpoint requires that the universe be constructed in a linear
fashion, as does Cartesian orthodox foundationalism, where all phenomena are
explainable based on others which precede them. No matter how complex an idea it
is always reducible, regardless of the number of steps taken backwards, to simple,
basic truths. In Descartes system, like other reductionist programs, the hierarchy
collapse into homogeneity. This becomes clear in the Cartesian geometry where the
most simple, basic property is the straight line.
I had no intention of trying to master all those particular sciences that
receive in common the name of mathematics; but observing that,
although their objects are different, they do not fail to agree in this, that
they take nothing under consideration but the various relationships or
proportions which are present in these objects, I thought that it would
be better if I only examined these proportions in their general aspect,
and without viewing them otherwise than in the objects which would
serve most to facilitate a knowledge of them. Not that I should in any
way restrict them to these objects, for I might later on all the more
40


easily apply them to all other objects to which they were applicable.
Then, having carefully noted that in order to comprehend the
proportions I should sometimes require to consider each one in
particular, and sometimes merely keep them in mind, or take them in
groups, I thought that, in order the better to consider them in detail, I
should picture them in the form of lines, because I could find no
method more simple nor more capable of being distinctly represented
to my imagination and senses. I considered, however, that in order to
keep them in my memory or to embrace several at once, it would be
essential that I should explain them by means of certain formulas, the
shorter the better. And for this purpose it was requisite that I should
borrow all that is best in Geometrical Analysis and Algebra, and
correct the errors of the one by the other (Discourse on Method and
Other Writings 1637 [5]).
The simples for Cartesian mathematics are line segments, and their form of
association proportions. The complexes will be problems and algebraic curves. Thus
Descartes, in his mathematics, starts with line segments as the basic, simple
foundations, upon which one will be able to build, in order to arrive at complexities
such as curves. This is problematic as curves in themselves exhibit properties which
are not describable in terms of line segments. For example the properties which
geometry concerns itself, points, lines, surfaces, angles, triangles, and other kinds of
polygons are not easily put into such a system of hierarchy (Grosholz 1991, 18).
While points serve as boundaries for lines, and lines for areas, points
do not compose lines, nor lines areas; higher dimensional objects can
not be reduced to lower dimensional objects 21 .(Grosholz 1991, 18)
Reductionism falls out of both orthodox and moderate foundationalist modes
of inquiry. The Cartesian system begins with simple, basic, indubitable properties,
that are clear and distinct and known a priori, and uses deduction to discover other
such truths, which may be more complex. Moderate foundationalism has
reductionism embedded in its system too. Given its adherence to the notion of
foundations as beginning points for inquiry, though the foundations are not deemed
91
" For a more detailed analysis of Cartesian mathematics and how it is reductionist see
Grosholz 1991.
41


infallible, a reductionist mode of thought exits in its program. Though the moderate
system is not dogmatic in its adherence to the infallibility of basic propositions, it
nonetheless does identify basic propositions as simple while it identifies other
propositions as more complex and thus reducible to basic ones.
The reductionist canon is symmetrical in that what is thought to be built up is
also thought to be reducible, or traced from the last proposition to the first. Though
the justification of propositions are asymmetrical, given that foundational truths are
the only justificatory propositions, the relationship between propositions are
symmetrical. One can go backwards from propositions to others by reducing them to
their components.
Reductionism, therefore is a consequent of the Cartesian system, and of any
foundational system which claims that there are basic, foundational propositions, as
they layer information into linear patterns which find logical justification, as well as
explanation, at the foundation, which are identified as basic, simple, irreducible
propositions.
The philosophy of reductionism is important to understand as it is a world
perspective, which exists in other philosophies such as moderate and orthodox
foundationalism but is not limited to these. As a world perspective, reductionism
guides intellectual inquiry and consequently has a direct effect on the choice of
research methods, model construction, and general intellectual endeavor as well as on
the results which emerge.
The reductionist perspective, whether on its own or embedded in other
philosophies, identifies information and knowledge as existing in a specific pattern,
that is, it is arranged in a hierarchtical manner in which complex phenomena are
described solely on the basis of less complex phenomena which precede them. Such a
structure, by definition, requires first, that simple, basic irreducible propositions exist
(atomism), and second that complex propositions are reducible to these simple, basic
propositions (reductionism). The complexity of information, knowledge, and
phenomena are required to be pieces of other, less complex phenomena, simply put
together in an additive format. It is not possible in the reductionist perspective for
complex propositions in themselves to be irreducible, or to be describable in terms of
relationships between propositions which are something other than linear. In the
reductionist cannon the sum of the parts are equal to the whole. This, as will be
discussed later, is problematic, especially when complex information is not so easily
described.
A related philosophy to that of reductionism is the notion of atomism.
Atomism is likewise found in both orthodox and moderate foundationalism, given the
reductionist nature of the two programs.
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Atomism
Related to the notion of reductionism is atomism. Atomism is the idea that
propositions, concepts, conclusions, etc., are reducible to basic propositions and these
basic propositions, or axioms, are irreducible. They are in their most simple state
(which at one time was thought to be the atom). This idea is a necessary component
to the reductionist canon, as the reductionist believes that reduction ceases at some
point, namely at the point where nothing else can be reduced, the atom.22 This point
is the simple, basic proposition upon which other propositions are built. The "atom"
is the simple, irreducible point in reductionism.
Both modem and orthodox Cartesian foundationalism have embedded in their
programs atomism given that both programs embrace reductionism, of which
atomism is a component.
In the orthodox Cartesian system, as in other deductive, axiomatic systems,
these points, where nothing else can be reduced, are the axioms, the clear and distinct
propositions which are indubitable, innate and known a priori.
In programs such as moderate foundationalism, atomism is still a component
as the moderate foundationalist still maintains that there are simple, basic
propositions (basic points if analysis), but does not identify these propositions as
infallible.
Atomism is a component of reductionism. It is the notion that there are in fact
simple, irreducible pieces of knowledge or information. The reductionist uses this
concept and further maintains that these simple propositions comprise more complex
propositions. Atomism as a philosophy can exist independently of reductionism,
however, it is a necessary component of reductionism.
In addition to atomism, another necessary component in reductionism is the
idea that the sum of the parts is equal to the whole. Complex propositions are
described, and in fact arrived at through an additive process where simple
propositions are added to other propositions with the end result being a more complex
proposition. Reductionism has been criticized in particular for maintaining this
notion, the fallacy of composition, which is a defining characteristic of its philosophy
27
Recall that this is the point at which both forms of foundationalism claim to cease
the infinite regress.
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The Fallacy of Composition
The fallacy of composition is the idea that the sum of the parts do not
necessarily equal the whole. More specifically, this notion challenges the idea that
the reductionist components, which are basic, primary, irreducible, and hence
"simple" propositions (the "atoms") do not simply add together to form or to explain
more complex notions, such as group dynamics, or larger phenomena which may exist
in an entire system of interrelated propositions whose structural relationship is not
linear and perhaps indescribable. Some systems may in fact not be reducible to
simple propositions.
Reductionism maintains that complex systems can be explained by simple
propositions, and consequently domains created by the reductionist are unstable.
(Recall Groholz 1991, page 18) hierarchically stratified domains tend to collapse
back into homogeneity. More specifically, the complexity of some phenomena is
structured such that it is identified as easily broken down into simple propositions.
Because such constmcted domains are easily broken down the hierarchy collapses
into homogeneity. Given the reductionist cannon, which has embedded in it atomism,
complex propositions are essentially homogeneous. This in turn implies that complex
phenomena are not complex in the sense that they describe an inter-related set of
propositions where the relationship between these propositions themselves are
complex. Rather, the relationship between propositions is known and the notion of
complexity arises only given the fact that such propositions themselves contain more
than one proposition, which makes them complex as opposed to simple. That is,
complex propositions are not heterogeneous but rather are homogeneous.
Both moderate and orthodox Cartesian foundationalism are subject to the
criticism of the fallacy of composition as both programs design themselves such that
complex information and knowledge are comprised of simple propositions which are
stmctured in an additive manner. That is the sum of the parts, for moderate and
orthodox Cartesian foundationalism, is equal to the whole.
Both atomism and the notion that complex propositions are comprised of
simple, basic propositions, are embedded in the research program of reductionism and
in fact are definition characteristics of it. Reductionism is likewise a component of
both moderate and orthodox Cartesian foundationalism given the philosophies of the
two.
44


Dualism
Another characteristic that is embedded in foundational systems of thought is
dualism. There are different types of dualism and it is important to understand these
in order to comprehend how foundational systems incorporate dualism into their
programs. There is dualism defined in a Cartesian sense which is the division of all
phenomena into res cogitans, thinking, unextended substance and res extensa,
unthinking extended substance. The orthodox Cartesian foundational system
maintains that these are the only two substances in existence. Given that there are
only two and that these two comprise all phenomena, the Cartesian system is said to
be dualistic. As discussed in chapter two, Descartes division of the world into two
distinct substances, res cogitans and res extensa is dualistic as these two phenomena
are mutually exclusive. This division is what is known as the mind/body distinction.
Therefore, the existence of only mind and matter (body) is dualistic as it assumes one
set and further assumes that the set has only two subsets.
Dualism, in a Cartesian sense, is precisely the ontological claim that the world
is mind, res cogitans, and body, res extensa, which are identified as wholly distinct
and different. There is, however, another understanding of the word dualism. It is the
practice of dividing the world, or anything else, into two mutually exclusive
categories. These categories are not limited to the distinction between mind, res
cogitans, and body, res extensa as in the Cartesian sense. More specifically, the
dualism of orthodox Cartesianism incorporates dualism in two senses. In one sense it
is dualistic given that it assumes a division between mind and matter, and it is also
dualistic in an epistemological sense because it uses a dualistic conceptual structure
where only two categories are said to exist and these two categories are mutually
exclusive. It is important to understand both definitions as not all philosophies which
maintain dualism accept the ontological mind/body distinction.
Philosophies can maintain dualism in the second sense of the definition by the
practice of dividing and identifying two mutually exclusive sub-categories, where the
category before division can comprise anything and the two sub-categories together
comprise the entire category, without assuming the mind/body distinction. Orthodox
Cartesian foundationalism is identified as dualistic within both definitions. It
identifies two categories as the only in existence, hence the Cartesian definition, and it
divides a category into only two mutually exclusive sub-sets which comprise the
whole, and hence the second definition of dualism. Most probably the practice of
45


division under the second definition arises from Cartesian thought, however, not all
dualistic philosophies are Cartesian. Not every dualism is not a consequent of the
Cartesian dualism.
Dualism, in both the orthodox Cartesian sense and in the non Cartesian sense
as in the second definition, may not directly be embraced by a given philosophical or
epistemic program, however, it is implicitly sustained through the adherence to other
philosophies which are embedded in both orthodox and moderate foundationalism.
Some of these other philosophies are absolutism and the need for categorization.
Absolutism
Absolutism is the notion that something, be it a proposition, an idea, or a
statement, is absolute; that is, it is guaranteed as the proper, correct, and only way in
which that proposition, idea, or statement can exist. It is a fact. There is no other
possible alternative.
Absolutism is embedded in dualism in both of the definitions discussed above.
In the Cartesian dualism res cogitans and res extensa are identified as absolutes.
There are no other types of substances which exist in the world for orthodox Cartesian
foundationalism and the two that are identified are thought to be correctly identified.
The substances are deemed absolute in that they are seen as existing in one way,
which is identified as the only way possible. Descartes Meditations explores this is
in great detail.
Orthodox Cartesian foundationalism, as in the Meditations, maintains
absolutism. More specifically, the goal of orthodox Cartesian foundationalism is to
identify truth. In order to identify truth the orthodox cannon advocates a method to
search for certainty. This is the goal of Descartes Meditations. It is essential in
axiomatic, deductive, orthodox foundational systems that the basis of justification be
true or absolute. For orthodox Cartesianism the basis of justification is the axiom,
which is the foundation. The axiom is a basic proposition, which is identified as
infallible. Such systems do not allow for a proposition to sometimes be true, or to be
both true and false at the same time. In such systems an axiom exhibits truth, which
in turn implies an either or structure. That is a proposition is either true or false.
Recall that in Descartes Meditations it was the search for truth that led Descartes to
the conclusion that the world consisted of only two mutually exclusive categories.
The search for absolute truth and the belief in it led Descartes to dualism.
Absolutism itself requires an either or structure and hence absolute truth requires
dualistic division.
46


Moderate foundationalism rejects absolutism in its strongest form. It does not
require that axioms be infallible, but it does maintain that self-justifying,
noninferential propositions do in fact exist. The acceptance of fallible assumptions
does not free moderate foundationalism from dualism. The moderate program
accepts the fallibility of the assumptions, that is, it recognizes that an assumption or a
set of assumptions can be wrong and embraces inductivism as a means to testing
whether these assumptions are wrong thus it maintains that an assumption is either
true or false. In recognizing that some assumptions may be false, it introduce truth or
falisty as a viable category for an assumption. Thus, moderate foundationalism also
has dualism embedded in its program. This dualism is inherent in absolutism, as an
assumption can only be absolutely one way or another. It cannot be two or more
things simultaneously. Though moderate foundationalism is not as absolutist as the
orthodox program, because it does not claim that assumptions are infallible, maintain
that is an assumption is either tme or not. Neither program permits assumptions to be
true some of the time and false other times.
From this understanding of absolutism it is not necessarily always a search for
truth or falsity, but in addition it is the notion that an assumption is absolutely one
way or another. It can not be two or more things simultaneously. From this it is clear
that both forms of foundationalism embrace absolutism and dualism. Finding the truth
or the correct assumption is the problem for the for both the moderate and the
orthodox.
The Need for Categorization
Another characteristic of the Cartesian system which helps to sustain dualism
is the need for categorization to create groups which are distinctly different and
mutually exclusive. Edward states:
Philosophical categories are classes, genera, or types supposed to mark
necessary divisions within our conceptual scheme, divisions that we
must recognize if we are able to make any sense in our discourse about
the world. To say that the two entities belong to different categories is
to say that they have literally nothing in common, that we cannot apply
the same descriptive terms to both unless we speak metaphorically or
equivocally (Edwards ed. 1972,47).
47


This general definition of category, which is dominate in analytical
philosophy is an example of the division of certain classes into types which are
mutually exclusive. Descartes res cogitans and res extensa are distinctly different
and not only comprise very different types of substances, but in fact also represent
themselves to the "world" in wholly distinct ways.
Though categorization in itself does not imply dualism, it does introduce the
idea that things in different categorizes are completely distinct and different from one
another. This idea is necessary in dualism as the categories are established such that
they possess completely different properties and consequently are mutually exclusive.
By introducing categories which are mutually exclusive, categorization then is a
component of dualism. Not all epistemic systems which categorize are dualistic as a
system can have subsets of more than two categories which are mutually exclusive
within a set. All dualistic epistemic programs, however, do use categorization. That
is, dualistic programs such as orthodox Cartesian foundationalism and moderate
foundationalism both employ categories which they identify as mutually exclusive,
either overtly as in the Cartesian system, or indirectly as in the moderate foundational
system. The process of identifying mutually exclusive categories helps to sustain
dualism within a particular paradigm. If an assumption belongs to only one category
by definition it can not belong to another, and in a system where only two categories
are identified dualism results.
Both absolutism and the categorization of phenomena into mutually exclusive
categories helps to sustain dualism, within both kinds of dualism as well. Absolutism
forms the notion that there is absolutely one way in which a proposition, an idea, or
an assumption can exist. More specifically, a proposition can not simultaneously
encompass ideas which are not themselves absolute in that they contain one specific
set of actions, behaviors, or ideas which do not contradict each other. Categorization
further sustains dualism as it provides the framework for phenomena to be grouped
such that if a phenomena belongs to one category it can not belong to another given
that categories are mutually exclusive. 23
23 Not all philosophers agree with this definition. For example, though most
analytical philosophers maintain that categories provide form but not content for
cognitive discourse about the world, Hegel did not think of logic as a study of form
without regard to content, but thought of it as a dialectical process in which the two
are inseparable (Edwards ed. 1972, 46-52).
48


Conclusion Chapter Two
Orthodox Cartesian foundationalism appeals to notions such as absolute truth,
innateness, a priori truths, the noninferrintial justification of knowledge, and
deduction while systematically rejecting induction. It differs in certain aspects from
moderate foundationalism, the biggest being the introduction of induction through
experiential based knowledge in the moderate schema. Both moderate and orthodox
foundationalism are similar enough, however, be open to many of the same criticism.
Criticisms of reductionism, atomism, dualism, absolutism, etc. are often made in a
variety of fields, including economics; however, they are rarely attributed to moderate
foundationalism.
The following two chapters argue that neoclassical economics practices
moderate foundationalism. Chapter Three analyzes Milton Friedmans methodology
and shows it as embracing the moderate schema. Chapter Four shows neoclassical
economics as moderately foundational via Friedman, a neoclassical economist. Both
systems employ the same research method. The consequences, discussed in this
chapter, of employing any foundational method of inquiry, are therefore applicable to
Friedman and to neoclassical economics where he resides. This will be discussed in
the conclusion to the paper.
49


CHAPTER THREE
MILTON FRIEDMAN
Introduction
Milton Friedmans seminal essay The Methodology of Positive Economics,
1953 has had far reaching effects in the world of economics. In this chapter
Friedmans essay will be discussed in detail to show how it employs moderate
foundationalism. This is crucial as looking at Friedman helps explain the neoclassical
research platform, the final goal of this paper.
Friedmans Methodology
Friedman begins his essay by discussing the distinction between "positive"
and "normative" economics and argues that the two aspects of economics are often
confused (Friedman 1953, 211).
Confusion between positive and normative economics is to some
extent inevitable...Positive economics is in principle independent of
any particular ethical position or normative judgments. As Keynes
says, it deals with what is, not with what ought to be. Its task is to
provide a system of generalizations that can be used to make correct
predictions about the consequences of any change in circumstances.
Its performance is to be judged by the precision, scope, and conformity
with experience of the predictions it yields. In short, positive
economics is, or can be, an objective science, in precisely the same as
any of the physical sciences (Friedman 1953, 211).
50


The distinction between positive and normative economics is crucial for
Friedman as this distinction helps him defend "science." That is, objectivity is a
necessary requirement of science. For Friedman positive economics falls into the
category of science.
Though Friedman maintains that positive economics is independent of
normative, and must be in order to be "objective," he does, however, maintain that
there is a relationship between the two. Normative economics uses positive analysis,
is dependent on it, and in fact employs it as a necessary component. Any truly
effective policy conclusion is dependent on positive analysis, as Friedman notes:
Any policy conclusion necessarily rests on a prediction about the
consequences of doing one thing rather than another, a prediction that
must be based implicitly or explicitly on positive economics
(Friedman 1953,211).
For Friedman policy conclusion, by definition, belongs to normative analysis.
It is a prescriptive process that individuals or groups undertake in order to reach a
desirable end. This in itself has nothing to do with objectivity but rather is a
subjective process dependent upon certain beliefs. Positive analysis plays a role in
this process by providing the "support" or rationale for normative prescription.
Therefore the relationship between the two is not one-to-one but rather positive
economics is wholly independent from normative as an "objective" endeavor where
normative economics is subjective and employs positive analysis to support those
beliefs and desires which it aims to ensure.
It is within positive economics, Friedman states that most disagreement and
differences arise.
Of course, my judgment that the major differences about economic
policy in the Western world are of this kind [different predictions
about economies of scale] is itself a positive statement to be accepted
or rejected on the basis of empirical evidence...If this judgment is
valid, it means that a consensus on correct economic policy depends
much less on the progress of normative economics proper than on the
progress of a positive economics yielding conclusions that are, and
deserve to be, widely accepted. It means also that a major reason for
distinguishing positive economics sharply from normative economics
is precisely the contribution that can thereby be made to agreement
with policy (Friedman 1953, 212-13).
51


Friedman is stating that disagreement in normative economics arises because
of differences in positive economics. That is, individuals or groups differ in what it is
they think a particular action will yield. Agreement about policy can in fact occur if
there is absolute agreement about what will result from a specific policy. Friedman
sites as an example minimum wage legislation:
Underneath the welter of arguments offered for and against such
legislation there is an underlying consensus on the objective of
achieving a living wage for all, to use the ambiguous phrase so
common in such discussions. The difference in opinion is largely
grounded on an implicit or explicit difference in predictions about the
effacy of this particular means to further the agreed-on end.
Proponents believe (predict) that legal minimum wages diminish
poverty by raising the wages of those receiving less than minimum
wage as well as those of some receiving more than the minimum wage
without any counterbalancing increase in the number of people entirely
unemployed or employed less advantageously than they otherwise
would be. Opponents believe (predict) that legal minimum wages
increase poverty by increasing the number of people who are
unemployed or employed less advantageously and that this more than
offsets any favorable effect on the wages of those who remain
employed. Agreement about the economic consequences of the
legislation might not produce complete agreement about its
desirability, for differences might still remain about its political of
social consequences; but, given an agreement in objectives, it would
certainly go a long way toward producing consensus (Friedman 1953,
212).
For Friedman disagreements can be resolved if energies are spent in
progressing the state of positive economics. A major reason for differentiating
between positive and normative economics is precisely the resolve and agreement that
can be attained about policy when the result of actions are understood in an objective
manner. Positive economics is therefore very important as it is within its parameters
(laws) that statements about the economy can be made.
52


Positive Economics
The ultimate goal of a positive science is the development of a
theory or hypothesis that yields valid and meaningful i.e. not
truistic predictions about phenomena not yet observed. Such a theory
is, in general, a complex intermixture of two elements. In part, it is a
language designed to promote systematic and organized methods of
reasoning. In part it is a body of substansive hypotheses designed to
abstract essential features of complex reality (Friedman 1953, 213).
Theory as Language
Theory, viewed as "language," Friedman says is simply a filing system to
categorize and interpret empirical information. Viewed as language, theory has no
substantive content; "it is a set of tautologies" (Friedman 1953, 213). Consequently,
Friedman argues, it should be judged as such.
Are the categories clearly and precisely defined? Are they exhaustive?
Do we know where to file each individual item, or is there
considerable ambiguity? Is the system of headings and subheadings so
designed that we can quickly find an item we want, or must we hunt
from place to place? Are the items we shall want to consider jointly
filed together? Does the filing system avoid elaborate cross-
references? (Friedman 1953,213)
Creating categories is a necessary framework in order to provide a method to
understand empirical evidence. The canons of logic can alone show whether
language, or propositions within the language, are complete and consistent, or "right"
or "wrong." Factual evidence can alone show whether categories have any
meaningful counterpart empirically (Friedman 1953, 213).
What does this mean? Theory, viewed as language, is a necessary component
in positive economic analysis. Logic can judge if the analytical filing system
constructed is complete and consistent. That is, prior to empirical endeavor an
53


analytical filing system must be created, be logically consistent, logically complete,
precisely defined, exhaustive, non-ambiguous, and simple in that it is not necessary to
cross-reference items (Friedman 1953, 213).
Friedman sites the categories of demand and supply, when viewed as parts of
the language of economics, as "the two major categories into which factors affecting
the relative prices of products or factors of production are classified" (Friedman 1953,
213). When analyzing production, categories within language are necessary in order
to understand production completely. The "usefulness of the dichotomy" between the
two categories supply and demand, Friedman writes, depends on the "empirical
generalizations that an enumeration of the forces affecting demand ...and of the forces
affecting supply will yield two lists that contain few items in common" (Friedman
1953, 213). Friedman goes on to say that in particular examinations of production,
through the language of demand and supply, this generalization is valid for example,
in the analysis of the final market for a consumer good. "In such a market there is a
clear and sharp distinction between the economic units that can be regarded as those
demanding the product and those that can be regarded as supplying it" (Friedman
1953, 214). In other examinations this generalization is not valid. For example "it is
not valid for the day-to-day fluctuations of prices in a primarily speculative market"
(Friedman 1953, 214). Factors such as "a rumored excess-profit tax" are not easily
identified as affecting supply of corporate equities in the stock market or demand
(Friedman 1953, 214.) Determining how consistent and complete a category is, is
done through the "canons of logic." Determining how useful or meaningful a
category is, is done though empirical endeavor. In order for a category to be
meaningful or useful it must have an empirical counterpart. "These concepts
[categories] can still be used and may not be entirely pointless; they are still right
but clearly less useful than in the first example because they have no meaningful
empirical counterpart." (Friedman 1953, 214). What does this mean? Logic is the
determinant necessary in order to construct an "analytical filing system," or
categories, which are a necessary component of theory. Categories provide a system
in which empirical information can be processed and ordered. Whether or not
categories are deemed as meaningful or useful is determined if there are empirical
counterparts found for them.
In addition to theory as language, Friedman writes that "in part it is a body of
substansive hypothesis designed to abstract essential features of complex reality"
(Friedman 1953, 213). Theory as language must be consistent and complete by the
canons of logic. It is viewed as meaningful and useful if an empirical counterpart
exists. It may not be appropriate in particular instances, as when trying to determine
if factors from a rumored excess-profit tax affect supply or demand, but this does not
mean it is "wrong". Inappropriate does not mean "wrong". Friedman says a category
may be useful even though no empirical counterpart exists. Though theory is part
54


language, it is not to be judged under this heading, but rather theory is to be judged
under the heading of substansive hypothesis.
Theory as Substansive Hypothesis
"Viewed as substansive hypothesis, theory is to be judged by its predictive
power for the class of phenomena for which it is intended to explain" (Friedman
1953, 214). This claim is the one most cited as this is where Friedman announces his
famous viewpoint that theory can only be judged as "right" or "wrong" based on how
well it predicts those class of phenomena it is intended to. What does this mean?
Theory is not to be judged under the heading of language but only as substansive
hypothesis and only terms of its predictive power.
...[T]he only relevant test of the validity of a hypothesis is comparison
of its predictions with experience. The hypothesis is rejected if its
predictions are contradicted (frequently or more often than
predictions from an alternative hypothesis); it is accepted if its
predictions are not contradicted; great confidence is attached to it if it
has survived many opportunities for contradiction (Friedman 1953,
214).
Prediction is the litmus test in Friedmans analysis to determine if a hypothesis
is valid. Friedman also states that experience is finite but hypotheses are infinite and
therefore if one hypothesis is valid there are bound to be others which are as well. To
determine which hypothesis is best one should use the criterion of "simplicity and
"fruitfulness."
The choice among alternative hypotheses equally consistent with the
available evidence must to some extent be arbitrary, though there is
general agreement that relevant considerations are suggested by the
criteria simplicity and fruitfulness, themselves notions that defy
completely objective specification. A theory is simpler the less the
initial knowledge needed to make a prediction within a given field of
phenomena; it is more fruitful the more precise the resulting
prediction, the wider the area within which the theory yields
predictions, and the more additional lines for further research it
suggests (Friedman 1953,).
55


Simplicity and fruitfulness provide criteria to determine which hypothesis to
choose given a selection of hypotheses which all are "consistent with the available
evidence." The cannons of logic, through mathematics and tautology, can determine
which hypothesis to use and can assess the validity of the hypothesis chosen but only
in terms of its logical consistency and its completeness. As to its relevance and
validity as a whole, in order to use it to model some part of "reality," a test of the
predictions and how accurate they are is crucial.
Before analyzing this in detail, it is important to first note Friedmans beliefs
on the reality of the assumptions and to what degree, if at all, they determine the
validity of the hypothesis, which so far Friedman has stated are found only in the
predictive power of the hypothesis. Friedman states:
A hypothesis is important if it explains much by little, that is, if it
abstracts the common and crucial elements from the mass of complex
and detailed circumstances surrounding the phenomena to be explained
and permits valid predictions on the basis of them alone. To be
important therefore a hypothesis must be descriptively false in its
assumptions; it takes account of, and accounts for, none of the many
other attendant circumstances, since its very success shows them to be
irrelevant for the phenomena to be explained. To put it less
paradoxically, the relevant question to ask about the assumptions of a
theory is not whether they are descriptively realistic, for they never
are, but rather they are sufficiently good approximations for the
purpose in hand. And this questions can be answered only by seeing
whether the theory works, which means it yields sufficiently accurate
predictions (Friedman 1953, 218).
Friedman argues that the hypothesis of a theory abstracts those crucial and
common elements from the thing it is to explain and to base the validity of the
predictions on them alone is misleading. This is his first criterion. His second, which
he maintains follows from the first, is that a hypothesis be as descriptively inaccurate
as possible in its assumptions if it is to be important. Why? Being descriptively
inaccurate in assumptions does not necessarily follow from the notion that a
hypothesis abstract crucial elements from the complex circumstances it is to explain.
For Friedman though, "abstract" correlates more directly to "simplify" and "simple"
correlates to "unrealistic" which then correlates to inaccurate. Descriptive
inaccuracy of the assumptions, therefore, follows more precisely from Friedmans
earlier notion that a hypothesis be "simple," that it explains a lot by a little, rather than
from the idea that an hypothesis should abstract the crucial and common elements of
56


complex circumstances, which is a result of simplicity. The simplicity of the
hypothesis, for Friedman, implies "inaccuracy" of the assumptions because the
hypothesis is "abstracting" common and crucial elements from complex reality it
therefore must be simple. Being "simple" is "descriptively inaccurate" because those
phenomena from which the hypothesis is abstracting are complex. Simplicity is a
criterion of a "good" hypothesis because it describes a lot with a little. The smaller
the "little," the more "simple", and the more "simple," the more "descriptively
inaccurate." The logic here is that if the assumptions of the hypothesis are good they
must be simple and if they are simple, they must be descriptively inaccurate, and if the
simpler the assumptions are, the better, then the more descriptively inaccurate the
assumptions are, the better.
At this point it is important to re-iterate that "descriptive inaccuracy" does not
necessarily mean "false." As discussed above, it more directly means simple. The
accuracy of the assumptions of the hypothesis, for Friedman, are not pertinent at all
and in fact the only true testable aspect of the hypothesis, to determine its validity, are
the predictions the hypothesis yields (this will be discussed in detail later). It is very
important to understand this aspect as it is under its umbrella that Friedman places his
beliefs about assumptions. It is not that he does not care about the assumptions
accuracy, but rather, under his method, he does not have to explicitly defend or
explain them. Though some of his critics have focused their critiques on Friedmans
claim that the more descriptively inaccurate the assumptions, the better the
hypothesis, they are missing the main aspect of Friedmans analysis. Though they
have valid points in critiquing Friedmans assumption that simplicity necessarily
mitigates descriptive inaccuracy, they often focus on the issue of inaccuracy instead of
understanding that it is rather simplicity which is at issue for Friedman. The reason
this is so crucial to understand in Friedmans essay is because the desire for simplicity
is the first step in revealing Friedmans methodolgy.
Simplicity
Why is it so crucial to understand that Friedman is more concerned about the
assumptions being simple than inaccurate? Friedman equates the two. It is not
inaccuracy that he is after but rather simplicity. As discussed above, the simplicity of
the assumptions means that they describe a lot with a little this is a very important
element for Friedman. Recall that Friedman states: ...the relevant question to ask
about the assumptions of a theory is not whether they are descriptively realistic,
for they never are, but whether they are sufficiently good approximations for the
57


purpose at hand" (Friedman 1953,218). The assumptions are never descriptively
accurate but this does not, even for Friedman, mean that they are always inaccurate.
Inaccuracy is not a main issue in Friedmans essay simplicity is.
Describing a lot with a little is the first thing in Friedmans methodolgy which
brings us to Cartesian thought. Though Descartes precisely states that the
assumptions are infallible and Friedman maintains that fallibility is irrelevant, there
are similarities between the two, enough to state that Friedman is in fact using a lesser
form of Cartesian foundationalism moderate foundationalism. Searching for
simplicity is the first indication of this. Descartes and Friedman employ different
definitions of simple. Though the definitions vary, both use a unit, simplicity, as the
same building block. This is crucial as both are employing the same method by
reducing complexity into simple components. These simples are the a priori
foundations for Descartes and the assumptions for Friedman. Recall that in Cartesian
foundational methodolgy complexities are comprised of simples. Descartes believes
that all knowledge is assessable in that the most complex of concepts can be reduced
to primary, basic propositions, which are considered simple. Friedman is not this
specific, however, he does appeal to the notion that in order to have an effective
model or hypothesis the assumptions must use simple abstractions attained from
complex reality. For Friedman the process of abstracting must entail simplicity
because reality is complex and any abstraction from it is necessarily simple, and in
some cases descriptively inaccurate. Re-quoting Friedman will illustrate the point.
A hypothesis is important if it explains much by little, that is, if it
abstracts the common and crucial elements from the mass of complex
and detailed circumstances surrounding the phenomena to be explained
and permits valid predictions on the basis of them alone...A theory is
simpler the less the initial knowledge needed to make a prediction
within a given field of phenomena (Friedman 1953, 218)
Appealing to simplicity is but one factor which identifies Friedmans methodology. It
is Cartesian in the respect that Friedman, like Descartes, is identifying simple
propositions as those that best describe or capture complex reality. Though the
definition of simple varies between the two, the employment of it is the same. (It is
from within this framework that economic methodology lends itself to reductionism.
This will be discussed in detail later.) Descartes advocates that all the complexities of
reality can be broken down to their simplest form and thus be explained using the
most simple and basic of propositions. Friedmans notion of simple is similar to the
Cartesian axiom in that he does maintain that the best of hypotheses are those which
are simple. In order to capture reality it is essential that hypothesis be simple. By
58


abstracting from reality simplicity necessarily follows. This is common in the
methodology of both Friedman and Descartes.
Because Friedman never maintains that assumptions be infallible, and in fact
maintains that they are sometimes descriptively inaccurate, his methodology is not
directly placed within the Cartesian framework. He does, however, embrace
moderate foundationalism. Appealing to simplicity is but one example of this. Before
continuing in this vein, however, it is important to discuss the remaining aspects of
Friedmans essay one being the use of prediction as the test of the assumptions, which
also relates to Friedmans methodology to moderate foundationalism.
Prediction, the Definitive Test of a Hypothesis
Testing the Hypothesis by the Assumptions
Friedman begins section III with Can a hypothesis be tested by the realism of
the assumptions? (Friedman 1953, 219) by introducing the example of the law of
falling bodies. It is curious that he chooses such an example but definitely no
accident as such a choice is yet another place where Friedman reveals his methodolgy.
Friedman begins by stating
it is an accepted hypothesis that the acceleration of a body dropped in a
vacuum is a constant g, or approximately 32 feet per second on the
earth and is independent of the shape of the body, the manner
dropping it, etc. This implies that the distance traveled by a falling
body in specified time is given by the formula s = Vi gt2, where s is the
distance traveled in feet and t is the time traveled in seconds. The
application of this formula to a compact ball dropped from the roof of
a building is equivalent to saying the ball so dropped behaves as if it
were falling in a vacuum. Testing the hypothesis by the assumptions
presumably means measuring the actual air pressure and deciding
whether it is close enough to zero. At sea level the air pressure is
about 15 pounds per square inch. Is 15 sufficiently close to zero for the
difference to be judged insignificant? Apparently it is, since the actual
time it takes for a compact ball to fall from the roof a building to the
ground is very close to the time given by the formula. Suppose,
however, that a feather is dropped instead of a compact ball. The
formula then gives wildly inaccurate results. Apparently, 15 pounds
per square inch is significantly different from zero for a feather but not
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for a ball. Or, again, suppose the formula is applied to a ball dropped
from an airplane at 30,000 feet. The air pressure at this altitude is
decidedly less than 15 pounds per square inch. Yet, the actual time
from 30,000 feet to 20,000 feet, at which point the air pressure is still
much less than at sea level, will differ noticeably from the time
predicted by the formula much more noticeably than the time taken
by a compact ball to fall from the roof of a building to the ground.
According to the formula, the velocity of the ball should be gt and
should reach its top velocity well before it hits the ground. And
similarly with other implications of the formula. The initial question
whether 15 is sufficiently close to zero for the difference to be judged
insignificant is clearly a foolish question by itself.(Friedman 1953,
219).
Friedman continues by pointing out that there is no relevant standard to
determine whether 15 pounds per square inch is "small" or "large" and the only
standard possible is the air pressure, which under certain circumstances "does or does
not work" (Friedman 1953, 220). Therefore determining what works and does not
work is problematic. How large must the difference be between the two (between the
time it takes for a ball to fall from a building and to fall from an airplane at 30,000
feet) to justify saying that the theory doesnt work (Friedman 1953, 210-20)? In this
situation Friedman maintains that there are two external standards of comparison.
One is the accuracy achievable by an alternative theory with which this
theory is being compared and which is equally acceptable on all other
grounds. The other arises when there exists a theory that is known to
yield better predictions but only at a greater cost. The gains from
greater accuracy, which depend on the purpose in mind, must then be
balanced against the costs of achieving it (Friedman 1953, 220).
What does this mean? Friedman later asserts that examples such as these reveal why
it is impossible to test a theory based on its assumptions and that ambiguity about the
nature of assumptions is unavoidable. The formula s = Vi gt2 works for bodies
falling in a vacuum. It can be maintained that "under a wide range of circumstances,
bodies that fall in the actual atmosphere behave as if they were falling in a vacuum"
(Friedman 1953, 220). The notion that something acts as if it were operating under
certain specifics is a crucial element which has developed from Friedmans analysis.
As if statements are not equivalent to assumptions. A body acting as if it is falling in
a vacuum is not equivalent to the assumption that there is a vacuum (Friedman 1953,
220). Using this analogy Friedman believes he has sufficiently shown that testing a
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theory based on the accuracy of the assumptions is not only ridiculous, but
impossible. It is impossible because there is no "relevant standard of comparison"
within the assumptions to evaluate whether a theory works or does not work. It is
possible though to determine whether a theory works in the end. Friedman once again
referring to the formula s = l/i gt2 states:
What it does say is that in many cases the existence of air pressure, the
shape of the body, the kind of mechanism used to drop the body, the
name of the person dropping the body, and host of other attendant
circumstances have no appreciable effect on the distance the body falls
in a specified time. The hypothesis can readily be rephrased to omit all
mention of a vacuum: under a wide range of circumstances, the
distance a body falls in a specified time is given by the formula s = Vi
gt2. The history of this formula and its associated physical theory
aside, is it meaningful to say it assumes a vacuum? For all I know
there may be other sets of assumptions that would yield the same
formula. The formula is accepted because it works, not because we
live in an approximate vacuum whatever that means (Friedman 1953,
220).
Friedman says the "formula is accepted because it works." It is not accepted because
the assumptions are accurate or rejected because they are inaccurate. Whether or not
the assumptions are accurate or not is irrelevant as the relative actions involved act as
if they are operating under the assumptions. A falling body acts as if it is in a
vacuum. It is impossible, Friedman maintains, to test a theory by the assumptions.
Clearly a ball falling from a building is not in a vacuum yet it acts as if it is. One
cannot test the formula s = Vi gt2 by the assumption that there is a vacuum. This is
Friedmans point. It is absurd to test the a theory by the assumptions.
Friedmans statement that a theory is accepted because it works reflects at
least two ideas. One is the notion that the accuracy of the predictions are the tests to
determine whether a particular theory is valid. Another idea reflected in this
statement appeals to a sense of absolute. (This will be discussed in detail later.)
Friedman continues with his use of as if to further argue that testing a theory
by the assumptions is impossible and, more specifically, to frame his argument that it
is the predictions of the theory that provide the basis for testing it. To illustrate this
Friedman turns to the example of the density of the leaves of a tree.
I suggest the hypothesis that the leaves are positional as if each leaf
deliberately sought to maximize the amount of sunlight it receives,
given the position of its neighbors, as if it knew the physical laws
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determining the amount of sunlight that would be received in various
positions and could move rapidly or instantaneously from any position
to any other desired and unoccupied position. Now some of the more
obvious implications of this hypothesis are clearly consistent with
experience: for example, leaves are in general denser on the south than
on the north side of trees but, as the hypothesis implies, less so or not
at all on the northern slope of a hill or when the south side of the trees
is shaded in some other way. Is the hypothesis rendered unacceptable
or invalid because, so far as we know, leaves do not deliberately or
consciously seek, have not been to school and learned the relevant
laws of science or the mathematics required to calculate the optimum
position, and cannot move from position to position ?...Despite the
apparent falsity of the assumptions of the hypothesis, it has great
plausibility because of the conformity of its implications with
observation (Friedman 1953, 222).
The assumption that leaves seek to maximize the most sunlight possible would most
likely not be an explanation to describe what occurs, but rather, one would probably
state something like sunlight is a necessary component contributing to the growth of
leaves and as such where there is more sun, there are more leaves (Friedman 1953,
222). Both descriptions give come to the same result. The final prediction about the
density of leaves results but the latter explanation, Friedman maintains, is better, not
because it is more realistic, but because "it is part of a more general theory that
applies to a wider variety of phenomena" (Friedman 1953, 223). (This notion appeals
to simplicity.) The experience that leaves do in fact grow this way is another
confirmation that the theory is valid.
Prediction is the ultimate tool in determining the validity of a theory. If it is
impossible to test a theory by its assumptions then it must be that the predictions of a
theory are the only factors which determine whether the model works or is accurate.
It is within this framework that Friedman has been identified as an instrumentalist24.
Instrumentalism is identified as a methodological framework in which something, in
this case the theory based on the assumptions, are simply instruments to an end, in
this case a prediction. Assumptions are simply a means to an end an instrument
towards getting to that end. The final end, the prediction, is the important criterion
which alone can determine the effectiveness, the reliability, the usefulness and finally
the veracity of the model.
Friedman introduces his famous example of the billiard player by stating that:
24 See Mark Blaug 1991 for a more detailed discussion of instrumentalism.
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the billiard player m'ade his shots as if he knew the complicated
mathematical formulas that would give the optimum directions of
travel, could estimate accurately by eye the angles, etc., describing the
location of the balls, could make lightning calculations from the
formulas, and could then make the balls travel in the direction
indicated by the formulas. Our confidence in this hypothesis is not
based on the belief that billiard players, even expert ones, can or do go
through the process described; it derives rather from the belief that,
unless in some way or other they were capable of reaching essentially
the same result, they would not in fact be expert billiard players
(Friedman 1953, 222-223).
The important aspect of this example, which Friedman wants understood, is not the
assumption of the billiard players intricate understanding of the laws governing
bodies, but rather the grand finale of him/her sinking a ball in a pocket. Whether or
not the billiard player is a budding physicist aside, the important issue for Friedman is
that the ball ended in the proper place. The methodology used to reach this end is of
no direct consequence. (One could theorize that God pushed the balls with an
invisible hand through ether.) The only effective way to judge the value of the theory,
for Friedman, is to judge it solely on the final prediction, on the experience itself.
Though it is highly unlikely that Friedman would assume that the billiard player acted
as if God guided his/her ball to the pocket, it is reasonable, as Friedman states, to
maintain that the "billiard player acts as if he knew the complicated mathematical
formulas that would give the optimum directions of travel" (Friedman 1953, 222).
Why? Prediction is the most important aspect of judging whether a theory is valid.
"The constructed hypothesis is presumably valid, that is, yields sufficiently accurate
predictions..." (Friedman 1953, 222). The assumption that the billiard player acts as if
he/she understands the laws of motion leads to the final act of sinking a ball. Whether
or not the billiard player does indeed understand the complexities of moving bodies is
irrelevant because he/she acts as if he/she does. (It is within this framework that
Friedman maintains that an assumption is descriptively inaccurate, which as discussed
earlier is more specifically directed at an assumption being simple.) Because
prediction is the deciding element as to the value of a theory, and the assumptions
lead to the prediction, the assumptions are essential. Though the assumptions are
required to stand up to the cannons of logic, hypothesizing that agents act as if they
are doing a specific act falls from the prediction, the litmus test of a theory. That is,
the prediction is the only element deciding the validity of a theory. As if theorizing
results.
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Given the structure of Friedmans methodology, we can now begin to
understand how it is Cartesian as well as to understand where it departs from the
stricture of the Cartesian system.
Friedmans Methodology:
As Foundationalist
As If Theorizing: A Causal Relationship
Friedman is well known for maintaining that theories can be constructed such
that the phenomena stated can be identified as acting as if engaged in a specific action
or existing in a specific state, as in the example of falling bodies behaving as if in a
vacuum. Given Friedmans argument that the validity and the worth of a theory are
determined by how effectively it predicts, it therefore is essential that a specific type
of relationship exist between the between the assumptions, and the predictions.
Friedman is careful to point this out in all of his examples. In fact, as if theorizing
enables this relationship to exist, though instated by Friedman.
Given the accuracy of the predictions and the notion that the descriptive
accuracy of assumptions are essentially irrelevant, Friedman then can formulate that a
theory is valid and worthy if it meets the criterion of accurate prediction. He is
assuming a relationship between the assumptions and the final predictions of the
model. This is a crucial point. Friedman argues that the assumptions predict as much
as possible using as little as possible, i.e. that they be simple. But Friedman requires
that there must be a causal relationship between the assumptions and the predictions,
identified by logical inference. As theorizing merely becomes the mechanism for
this relationship.
Recall in Friedmans example of the falling bodies that they act as if in a
vacuum. Though Friedman is careful to state that one is not to assume a vacuum, he
does implicitly assume that there is a relationship between acting as if in a vacuum
and the resulting prediction. A body is acting as if in a vacuum means what? It
means that certain statements can be made about that body using the previously
established relationship 5 = Vi gt2. Acting as if is not a neutral statement simply
maintaining that certain behavior is imitated. Rather, it directly defines the
relationship between the assumptions and the prediction. If a billiard player acts as if
he/she knows the "complicated mathematical formulas that would give the optimum
64


direction of travel..."(Friedman 1953, 222) then it follows that the ball hit by that
billiard player will go into the pocket. Why? Because acting as if one knows the
complicated laws governing movement means that using these principles when
playing billiards leads to a specific end. How do you know, because of the logic of
the theory. There is a clearly established relationship between the mathematical laws
of motion and the final prediction of where a ball ends up, which can be logically
deduced. That is, there exists buried within the structure of Friedmans methodology
implied causal relationships between theory and prediction. Assumptions may be
descriptively inaccurate but the relationship between them and the final prediction is
not inaccurate or inconsequential but rather a defined, causal one. This is also clear
in Friedmans example of the positioning of leaves to attain the most sunlight
possible. "The leaves are positional, as if each leaf deliberately sought to maximize
the sunlight it receives..." (Friedman 1953, 221). Why? Because both theory and
experience dictate that leaves are in fact organized on a trees in such a manner so each
leaf is getting the most sunlight it can. Friedman is assuming a causal relationship
between the assumption and the final prediction.
This use of a priori reasoning shows the similarity of Friedmans
methodology to that of Descartes. Friedman assumes a direct, causal relationship
between assumption and prediction that is, if a thing acts as if it is engaged in a
specific act or acts as if it is within a certain framework, etc., a resulting prediction
can be deduced, given the as if The relationship between the as if and the final
prediction is causal. This is also true in Cartesian methodology, and Cartesian-like
methodologies. That is, from the initial assumptions one can deduce resultants that
are direct consequences of assumptions. There is a causal relationship between the
assumptions (as if theories) and the final end (prediction). Though Descartes and
Friedmans beginning steps are defined differently (i.e. assumptions in Descartes
framework do not equal the as ifs) in Friedmans, there is a causal relationship
between the initial conditions and the final output is the same. The details in the
Cartesian system of analysis and Friedmans methodological endeavor differ yet the
methods they employ are extremely similar. Friedmans method can be identified as a
moderate form of Cartesianism, specifically due to one element within his framework,
to be discussed in detail later. First, however, it is important to discuss other aspects
of Friedmans methodology.
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The Appeal to Known Laws: Absolutes
In addition to as if theorizing, a very important element in Friedmans essay is
his appeal to known laws. More specifically, when Friedman chooses the examples
of falling bodies, leaves, and billiard balls, he is appealing to "physical laws." He
appeals to the notion of "truth" in that he implies there is truth or absolutism. Falling
bodies, the leaves on trees, and billiard balls being hit into a pocket all exist in a three
dimensional reality in a specified arena with specified laws or parameters. This is
important because in these examples the laws surrounding each are well defined and
generally accepted. Referring to the formula 5 = Vi gt2 Friedman states: "The
formula is accepted because it works..." (Friedman 1953, 220). In this and in all of
his examples the "final" state is known before any assumption or as if theory is
proposed. The final state forms a parameter which is known, and well established.
Billiard balls end up in a pocket where the laws of physics govern their movement.
Leaves seek to maximize sunlight. These events are apparent from observation and
are also governed by the laws of the parameters within a three dimensional reality as
well as the parameters of photosynthesis. Friedman implies that there exists truth in a
system. In each example he knows the prediction before any theorizing is done. This
is an appeal to absolutes. Certain laws exist which explain the behavior of
phenomena.
The assumptions themselves do not appeal to any sense of absolute or truth
but this does not mean that Friedman does not. Friedmans methodology is dependent
on known laws. In order to postulate the as if these laws must be known. (This is
also related to the causal relationship between the assumptions and the final
predictions.) A falling body acts as if it is in a vacuum because the "what happens to
falling bodies in a vacuum" is known. This is crucial to understanding Friedmans
methodology as it is a deciding factor identifing it as Cartesian. Recall that for
Descartes there exists known, infallible pieces of information, or knowledge which
are revealed a priori and are clear and distinct. Friedman does not identify
"knowledge" or "truth" as overtly, yet he does appeal to such notions when he appeals
to known laws as they are understood to be "true" and absolute.
Friedmans statement that the assumptions can be descriptively inaccurate has
produced a misleading interpretation of his essay. From this statement the
interpretation that Friedman is not concerned with the truth of the assumptions has
arisen. The notion of truth or of absolutes have been traditionally understood to
belong to foundationalists such as Descartes as such philosophies are based on upon
66


them. Friedman does base his methodology on truth in that he appeals to it by
implicitly requiring, or rather by maintaining that the parameters or laws, the theory,
are well defined and known as "true".
His appeal to the absolute is not only found in the appeal to known
parameters, but also in a related area to prediction. Recall that for Friedman the
main test of a theory is not the accuracy of the assumptions but rather the predictions.
The performance of the theory is evaluated based on predictions. The accuracy of the
predictions is determined through deductive reasoning and the empirical testing of
conclusions. A prediction has to be observable in the real world. This is dramatically
different from Descartes who mistrusted any observation and maintained that
observation is misleading and not reliable. This is one reason that Friedmans
methodology can not be classified as completely Cartesian. Descartes based all
assumptions on a priori knowledge found only in the res cogitans. Knowledge can
not exist in the physical world, res extensa, because it is completely unreliable.
Descartes holds that all such fundamental assumptions are infallible. This, as
discussed in chapter 2, is an appeal to absolute- that there exists absolute truth.
Friedman, because he maintains that the assumptions need not be "true" or infallible,
at first glance appears to be moving away from the Cartesian appeal to the notion of
absolute. When analyzed more closely, however, It becomes more apparent that
Friedman, like Descartes does appeal to absolute truth. Friedman also appeals to the
notion of absolute in his appeal to the verification of prediction through the use of
empirical testing.
Though Friedman appeals to absolutes in the predictions as well as in the
parameters, his method is distinctly different from Cartesian foundationalisms in
specifically one way. Because Friedman maintains that empirical verification is
necessary his methodology can not be classified orthodox Cartesian. Rather,
Friedman can be classified as a moderate foundationalist. Before discussing this it is
beneficial to continue discussing the Cartesian aspects of Friedmans method keeping
in mind that moderate foundationalism is of the same genus as orthodox Cartesian
foundationalism .
Dualism: The Normative/Positive Distinction
The initial division of economics into two, mutually exclusive, categories
which together comprise the field of economics employs one of the aspects of
Cartesian dualism that there exists a complete whole which is comprised of two
completely separate, distinct, mutually exclusive parts which together comprise that
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whole. This is a Cartesian notion. Recall that in the methodology of Descartes there
exists at least two forms of dualism. One is the division of all existing form into two
mutually exclusive groups- the res cogitans and the res extensa the mind/body
distinction. Clearly Friedman does not appeal to this dualism. He is, however,
appealing to the second definition of Cartesian dualism by maintaining that
economics consists of mutually exclusive subsets. This form of dualism is pervasive
within many methodologies. The dualism of the mind/body distinction is a very
explicit one. But the general practice of dualism in constructing concepts is implicit
as it often appears as a descriptive "fact" which is assumed to exist either practically
or theoretically.
An example of this second form of Cartesian dualism found in the
methodology of Friedman is in his distinction between normative and positive
economics, as noted above. The first thing Friedman mentions in his essay is this
distinction. This division is important to Friedman because it is within the positive
that the science of economics resides. Though normative economics exists, it is
subjective, prescriptive, ethical judgment, distinctly different from positive economics
which Friedman terms the "science of economics" (Friedman 1953, 211).
Friedman allows for one of the subsets, normative economics, to be affected
by the other, positive economics. Recall that the criticisms of Descartes made by
people like Simon Foucher were directed at the causal relationship Descartes
purported between two supposedly completely, mutually exclusive "substances" res
extensa and res cogitans. Descartes maintains that a causal relationship exists
between the res cogitans and the res extensa though the two are completely distinct.
Because of this he is criticized for failing to hold to the likeness principle. Recall the
likeness principle states that in order for one "substance" to causally effect another
there must be some properties that are similar, or like, for such a relationship to occur.
The criticisms of Descartes failure to hold to the likeness principle apply to
Friedman who maintains that there is a relationship between positive and normative
economics, one can affect the other, while simultaneously maintaining that the two
subsets are mutually exclusive. Descartes in his mind/body distinction maintains that
one can affect the other (see objective and formal reality), but simultaneously
maintains that the two are completely different substances.
For Friedman, positive economics is "what is." That is, it does not vary. For
Descartes the res cogitans does not vary. The distinction between "what ought to be"
(normative economics) and "what is" (positive economics) is mutually exclusive in
that there is a clear demarcation between the two. Both Descartes and Friedman
maintain a strict dualism by dividing a whole into mutually exclusive subsets and
argue that a causal relationship exists between the two yet simultaneously maintain
that similarity does not.
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Friedman As A Moderate Foundationalist:
We have already discussed how Friedmans use of as if theorizing assumes a
causal relationship between the assumptions and the final prediction which follows
the methodological platform of Cartesian foundationalism. Even though the
beginning steps in each method differ, the resulting pathway, or method does not. In
addition to this we have discussed how both Friedman and Descartes appeal to
absolutes, though in different ways, and how Descartes appeal maintains that the
assumptions are known as true and how Friedmans appeal assumes the parameters
are known and true. These two appeals differ, yet the practice of appealing to, or of
assuming, an absolute in the sense that it is true, are the same. Both maintain, though
Friedman implicitly, that there is in fact "truth." This notion of truth is an appeal to
the absolute. Given these characteristics of Friedmans methodology it may seem that
he is embracing the orthodox Cartesian platform but he is not as there are defining
characteristics which separate him completely.
As discussed earlier, Moderate Foundationalism is a form of the Orthodox
cannon yet it loosens some of the restrictions of its dogmatic parent. The particular
restrictions it loosens are substantial enough to set it apart as an identifiable, separate
methodology.
Recall that the moderate foundationalist introduces the notion of fallibility
into the assumptions. This introduction into the foundations, or assumptions, allows
the moderate, fallible, foundationalist to employ induction because the moderate must
appeal to empirical means to determine if the foundations are, in fact, correct. The
use of induction, as discussed earlier, as a viable means of inquiry is a defining
characteristic of the moderate platform. Friedmans requirement of prediction
through empirical testing is in line with the moderate methodology. In fact, it is a
correction of moderate foundationalism in that Friedman recognizes the difficulty in
empirically testing the truth of the assumptions.
Recall that the justification of knowledge is an essential part of an epistemic
program. It is what provides the rationale for considering some pieces of information,
knowledge, and for rejecting others. For Descartes and the orthodox foundationalists
inferential, nonbasic beliefs must be justified by noninferential, basic beliefs. These
noninferential, basic beliefs are known a priori, are infallible, and are essential in that
they, through structure and "due order" provide justification. They are the
"foundations." For the moderate foundationalist, however, the introduction of
fallibility of the assumptions allows for experientially grounded knowledge to provide
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justification for knowledge. This type of knowledge is still considered noninferential
and thus capable of providing justification. Re-quoting Robert Audi illustrates the
point.
...in working from the experiential and rational sources fallibilist
foundationalism [moderate foundationalism] takes as basic to
justification and knowledge, it accords with reflective common sense:
the sorts of beliefs we are non-inferentially justified in holding...are
pretty much those which, on reflection we think people are justified in
holding...We do not for instance, normally ask people for reasons to
think it is raining when they can see clearly...Prima facie, in accepting
it we are accepting an experiential, not an inferential ground. (Audi
1993,212)
Experiential grounding for the justification of knowledge is a defining characteristic
of moderate foundationalism. Friedman maintains that the assumptions can be
descriptively inaccurate (notion of fallibility) and that the true test of a model is how
well it predicts (appeal to experience). These two ideas in particular identify
Friedmans methodology as a variant of moderate foundationalism. Experientially
grounded knowledge is the only type of justifiable knowledge for Friedman.
Prediction is the litmus test of a model for Friedman and in order to determine how
accurate the model is one must appeal to prediction, which is attained experientially.
To put it less paradoxically, the relevant question to ask about the
assumptions of a theory is not whether they are descriptively
realistic, for they never are, [notion of fallibility] but rather they are
sufficiently good approximations for the purpose in hand. And this
questions can be answered only by seeing whether the theory works,
which means it yields sufficiently accurate predictions [experientially
grounded knowledge] (Friedman 1953,218).
Friedman, selects examples to support his methodology which are all based in
experience. Recall his examples of falling bodies, billiard players, and leaves which
seek to maximize sunlight as they are the types of knowledge Audi discusses above as
they appeal to experiential knowledge (as does the individual who maintains it is
raining). Allowing this type of knowledge into a methodological research program
substantially changes its requirement for the justification of knowledge. It also
substantially changes its method of inquiry. For orthodox foundationalism the only
type of knowledge admitted is knowledge based in reason. Knowledge based in
experience is unreliable for the orthodox but for the moderate it is a viable means.
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For Friedman it is explicitly the best method to use in order to determine if the
predictions of a model are "accurate." The performance of a theory is evaluated based
on predictions. The predictions are determined through deductive reasoning and
empirical testing. For Descartes a theory that "works," works because it is developed
and justified in the res cogitans. For Friedman a theory "works" because of empirical
testing, hence experientially grounded knowledge can provide justification.
Friedmans appeal to experientially grounded knowledge allows for his method to
employ induction. In fact, an inductive process requires experience as the
"foundation" or justification of knowledge25
At this juncture it is important to note that in addition to finding the
justification of knowledge based in experience, the moderate foundationalist also
maintains that there is knowledge based in reason. Friedman is not an exception to
this as his doctrine provides the rationale for knowledge based in both. Recall:
...The cannons of logic, through mathematics and tautology, can
determine which hypothesis to use and can also assess the validity of
the hypothesis chosen but only in terms of its logical consistency and
its completeness. As to its relevance and validity as a whole, in order
to use it to model some part of reality, a test of the predictions and
how accurate they are is crucial (Friedman 1953, 217).
In the above Friedman is appealing to at least two forms of justification for
knowledge. One is an appeal to knowledge based in reason via mathematics,
tautology, and the cannons of logic. This loosely falls under his heading of "theory as
language." The other is an appeal to logic based in experience via testing predictions
which falls under his heading of "theory as substansive hypothesis". This is by
definition a moderate foundational platform. He does not simply believe that all
knowledge is justified by experience, which at first glance one might conclude.
Though his methodological program puts substantial weight on knowledge based in
experience, it should not be misunderstood as the only form of justification. The
appeal to the "cannons of logic" and more specifically the use of mathematical models
are major components of Friedmans system. This is precisely why he can be
identified as a moderate foundationalist as he is not completely Cartesian, given his
appeal to experientially grounded knowledge.
25
When referring to "knowledge" it is not simply meant as things which are "known,"
but rather knowledge is a broad category including information in a general sense
which is not necessarily limited to the above. Specifically, information purported to
be known, which varies between research programs, also falls under its umbrella.
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Conclusion Chapter Three
Friedmans methodology is a form of moderate foundationalism. His appeal
to known parameters and absolutes, his notion of dualism, and his as if theorizing,
which is causal, are similar to orthodox foundationalism, yet his basis for the
justification of knowledge in experientially grounded knowledge is in line with
moderate foundationalism. The abundance of similarities between Descartes and
Friedmans methodology provide substantial evidence to maintain that Friedmans
system is highly "foundational" in a Cartesian sense; yet in his acceptance of
knowledge based in experience, of fallibility in the assumptions, and of induction as a
viable means of rigorous, analytical endeavor, his method departs from the orthodox.
The final chapter is intentionally organized similarly to this one in order to
more easily reveal the use of moderate foundationalism in neoclassical economic
theory. Milton Friedmans 1953 essay provides an excellent base for exploring the
neoclassical platform.
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CHAPTER FOUR
NEOCLASSICAL ECONOMIC METHOD
Introduction
In this chapter it will be argued that neoclassical economic methodology is a
example of moderate foundationalism. This becomes clear looking at the method of
Milton Friedman. Though his method is often described as that of an
instrumentalist, in chapter three it was argued that his method is also in line with
moderate foundationalism. In earlier chapters the consequences of embracing the
methods of Cartesianism, or orthodox foundationalism, and of embracing moderate
foundationalism were discussed. Given the previous discussions it is now possible to
analyze the methodology of neoclassical economics, which is well represented in
Milton Friedmans 1953 essay.
Neoclassical Economics
A very useful place to begin the analysis of neoclassical method is to examine
a textbook in microeconomic theory. Though methodology in economics is a well
established field, most articles do not seem to directly explain or address specifically
the types of practices economists in the neoclassical school embrace. Rather, these
articles focus primarily on labeling and differentiating between methodologies and
understanding the consequences of embracing specific research programs.
Methodology itself seems to be discussed in economics within a certain context.
Methodologists do not need to redefine the whole of neoclassical economics in each
paper in order to discuss their methodological concerns. Most papers in the field of
yC
~ See Blaug (1990) for more on Friedman as an instrumentalist.
73


methodology within economics begin with the assumption that the reader possesses a
working understanding of neoclassical economic theory. Because textbooks begin
with the "essentials" and are written for students, looking at them provides specific
concrete examples of neoclassical theory that show neoclassical economic
methodology to be very similar to Milton Friedmans and to reveal its adherence to
moderate foundationalism.
Walter Nicholsons Microeconomic Theory: Basic Principles and Extensions
fourth edition (1989) begins with an explanation of economic models. Economics is
first defined as "the study of the allocation of scarce resources among competing end
uses"(Nicholson 1989, 3). This familiar definition first stated by Lionel Robbins, sets
the premise for two fundamentally consistent themes in the study of neoclassical
economics. One is that productive resources are scarce. Given the assumption that
human wants are unlimited productive resources cannot possibly meet all wants.
Nicholson identifies this as one of the features of economics discussed in his text
(Nicholson 1989, 3). The second feature is that choices must be made as to how to
use these limited resources. Scarcity imposes constraints on these choices, which are
necessarily made by competing ends. "By examining the activities of consumers,
producers, suppliers of resources, governments and voters, economists seek to
understand how resources are allocated" (Nicholson 1989, 3). These two themes are
consistent in all neoclassical economic texts and form the neoclassical definition of
economics stated above. They direct inquiry and are akin to foundations. For
example, the construction of the production possibility frontier, "the locus of all the
alternative quantities of several outputs that can be produced with fixed amounts of
productive inputs" (Nicholson 1989, 779) completely embodies the above
assumptions and furthermore is a building block for general equilibrium theory,
which is a model of the whole economy looking at many markets simultaneously.
The assumptions of scarcity and unlimited wants are identified here in order to
provide an example of the common definition of neoclassical economics and more
specifically to illustrate the appeal of neoclassical economics to, what was labeled in
the last chapter as the appeal to known laws or parameters to known assumptions.
The Appeal to Known Parameters or Laws
Recall the discussion in the previous chapter under this heading identifying
Friedmans appeal to the notion that certain parameters or laws are "known." Though
he emphatically states that the assumptions need not be true, he is appealing to the
notion of "truth" by appealing to parameters themselves, which are established to
74


provide an arena for analysis and more importantly to provide a basis for prediction.
The issue is not whether the appeal to known law is "good" or "bad" but rather to
illustrate how the neoclassical research method employs such a notion. This is crucial
as it is the first step in identifying the methodology used by the neoclassical school.
The assumptions of scarcity and unlimited wants are but two which illustrate an
appeal to what is thought to be known and an appeal to absolute truth.
The theory of consumer behavior, the theory of the firm, general equilibrium
theory, marginal productivity theory, the postulate of rationality, the maximization
hypothesis and all that encompasses these categories, such as the law of demand and
supply, the theory of competition, production functions, the Hicksian theory of
relative shares, etc. are all appeals to "known parameters". They provide the
necessary parameters for analysis to take place. For example, scarcity and unlimited
wants provide two parameters within the neoclassical research program. The law of
demand, under the umbrella of consumer behavior, provides another parameter which
explains one fundamental relationship between price and quantity in neoclassical
economics. Demand curves are downward sloping. That is, there is a negative
relationship between price and quantity for consumers. Mark Blaug states "...the
function of the orthodox theory of consumer behavior is to justify the notion of
negatively inclined demand curves..." (Blaug 1990, 150). Similarly, Blaug, writing of
the theory if the firm, states: ...the function of the orthodox theory of the firm is to
justify the notion of positively inclined supply curves (Blaug 1990,150). Another
example of an appeal to known parameters is an appeal to the notions of
maximization, in particular utility and profit maximization.27
Essentially, the whole of what many economists and methodologists label the
hard core of orthodox economic theory appeals to known laws or parameters. This is
an essential component in understanding the methodology of neoclassical economic
theory. Which specific hard core assumptions are in fact hard core is irrelevant to the
task at hand. What is relevant, however, is to identify the methodology neoclassical
economists embrace. Appealing to known parameters, as discussed in the last
chapter, is an appeal to "truth" in the sense that these parameters are assumed to be
known. That is, they are assumed to exist in a specific manner- in this sense they are
true.
Recall that orthodox, foundational, Cartesianism maintains that there are true,
indubitable facts which exist in the res cognitans only. One of the defining
characteristics is the appeal to and the insistence on the notion of truth. Appealing to
known parameters, and specifically establishing them as laws, is an appeal to truth,
though not as directly. Neoclassical theory possesses many such parameters, some of
97
Both utility and profit maximization will be discussed in more detail later.
75


which are listed above. These appeals reveal part of the methodology of neoclassical
theory.
Simplicity
Nicholsons book first looks at the "role of theoretical models in scientific
inquiry..." (Nicholson 1989, 3). He examines how economic models "might be
verified by information in the real world" (Nicholson 1989, 3). It is within his first
two chapters that we see the methodology of neoclassical economics emerge.
Nicholson, not surprisingly, lays out the use of theoretical models in a manner
very similar to the layout of Milton Friedmans 1953 essay. First, Nicholson
describes a developed economy as so complex that any attempt to capture its
complexity must rely on simplifying it. He sites the economists role as that of
providing a road map in order to understand the complexity of the real world. This is
done by abstracting the "essentials" from the complex real world economy. He
writes:
Since it would be impossible to describe such features [complexities]
of an economy in complete detail, economists have chosen to abstract
from the vast complexities of the real- world economies and to develop
rather simple models that capture the essentials of the economic
process. Just as a road map proves to be helpful, even though it does
not record every house or every blade of grass, economic models of,
say, the market for peanuts are also very useful even though they do
not record every minute of the peanut economy. In this book we shall
be studying the most widely used economic models; we shall see that
even though they are heroic abstractions from the true complexities of
the real world, they nonetheless capture certain essentials that are
common to all economic activities (Nicholson 1989, 4).
This is reminiscent of Friedmans explanation of "simple." Though Friedman
has been interpreted as maintain that assumptions, or abstractions, be as unrealistic as
possible, as was stated earlier, this is just a way of indicating that the simpler the
assumption the better as it therefore describes real world situations better. Nicholson
does not go quite this far; however, he, like Friedman, indicates the necessity of the
simplification of the assumptions in order to allow for comprehension of the
complexity of the real world. A common interpretation of Friedman as an
76


instrumentalist, given his seeming disregard for the "accuracy" of the assumptions,
could apply to the above quote from Nicholsons first chapter. However, in keeping
with the contention of this paper "heroic abstractions," as stated above, do not imply
disregard for the "truth" of the assumptions but rather point to the notion that
"simplicity," as defined in the Friedman sense, is a necessary criterion towards
explaining the complex as it is required that one describe "a lot" (complex reality)
with "a little" (simplicity of the assumptions). This is different from requiring that the
assumptions be unrealistic. Like Nicholson, most economics texts discuss the needs
for abstraction in order to build economic models and theories which in turn provide a
road map to understanding complex real world economies.
The beginnings of neoclassical methodology is consistent with that of
Friedman. Simplicity is a necessary tool in order to comprehend the complexities of
the real economy. Models must simplify.
Nicholson notes that models are used in all sciences, in both physical as well
as social:
...the notion of a perfect vacuum or an ideal gas is an abstraction
that permits scientists to study real-world phenomena in simplified
settings. In chemistry, the idea of an atom or a molecule is in actuality
a very simplified model of the structure of matter. Architects use
mock-up models to plan buildings. Television repairers refer to wiring
diagrams to locate problems. So too economists have developed their
models as aids to understanding economic issues, models that portray
the way individuals make decisions, the way firms behave, and the way
these two groups interact in the market (Nicholson 1989,4).
As //Theorizing: the indirect
approach to validating models
Models are tools for economists as they are for most "scientists." Nicholson
identifies two ways of assessing the worth of a model. One is the direct approach
"which seeks to establish the validity of the basic assumptions on which a model is
based" (Nicholson, 1989,4). This approach is direct in that one would directly
question the accuracy of the assumptions. Firms would be asked "Do you seek to
maximize profits?" Coupled with the assumption of profit maximization are other
77


assumptions, which necessarily go along with it.28 That is, it must be assumed
concurrently that firms know their cost curves in addition to the market in order to
calculate the optimal production necessary to maximize profits. Though the direct
approach is favored by some economists, a majority employ Nicholsons second
approach, the indirect approach, which stresses that a model not necessarily be
accurate but rather in its simplicity predict real-world events. This is directly out of
Friedman. Recall his adamant argument against testing the hypothesis by the
assumptions.
The validity of a model is determined by how well it predicts, not by the
accuracy of the assumptions. The act of theorizing itself necessarily demands
abstracting from reality and therefore no model has completely accurate assumptions.
From this argument, as discussed earlier, Friedman derives as if theorizing.
Nicholson refers to it directly and paraphrases Friedmans discussion of the expert
billiard player acting as if he knows the laws of physics. Under the direct approach
the billiard player would be directly asked if he knows the laws of bodies in motion.
If he does not then the model is invalidated. Conversely, under the indirect
approach, the billiard players understanding of physics is irrelevant. It is only
important that the prediction of the model is accurate. Nicholson writes:
The fact that firms respond to questionnaires by disclaiming any
precise attempt at profit maximization is no more damaging to the
validity of the basic hypothesis than are pool players disclaimer of
knowledge of the laws of physics. Rather the ultimate test of either
theory is whether its ability to predict real-world events (Nicholson
1989, 5-6).
Nicholson presents both the indirect and the direct approach but states that
the majority of economic inquiry examines how simple models predict real-world
events. The use of prediction is a crucial example of how neoclassical methodology
is done. Whether or not neoclassical models do actually predict well30 is irrelevant to
98
This is an example of the use of the Duhem-Quine thesis.
" H.A. Simon stresses the importance of the accuracy of the assumptions and
maintains that assumptions be realistic. See Simon, "Rational Decision Making in
Business Operations", American Economic Review 69, no.4 (September 1979):493-
513.
78


the hypothesis of this paper as the contention of this paper is that neoclassical
economic methodology is consistent with moderate foundationalism and as such as if
theorizing provides a critical component enabling neoclassical economics to be
identified as moderately foundational.
The Use of Maximization: Utility and Profit -
Examples of As if theorizing
The indirect approach requires that the prediction of the model be "tested" by
confronting it with real-world data. Nicholson discusses the use of indirect empirical
tests by citing Friedmans as if theorizing as an example of it. Empirical observation
and testing is crucial in Friedmans methodology. How crucial is it in neoclassical
methodology? Nicholson writes:
This book is about theoretical economic models, but since our
objective is to learn something about the real world, we must be
concerned with the validity of our models. Sometimes we will seek to
establish the validity of a model by pointing to the fact that it is based
on "reasonable" assumptions. More often, however, we will examine
examples from the real world that are in accord with the predictions
that would be made from a simple model (Nicholson 1989, 5).
Examples from the real world are used in order to evaluate the applicability
and validity of theoretical models in neoclassical economics within the indirect
approach. This is an important indicator as to what methodology is employed in the
neoclassical research program. An example will illustrate the point.
Maximization is a hypothesis economists use in a variety of ways. Utility
maximization is one form used to provide a basic model of choice for the individual.
The model assumes that individuals who are constrained by limited
incomes will behave as if they were using their purchasing power in
such a way as to achieve the highest utility possible. That is,
individuals are assumed to behave as if they maximized utility subject
to a budget restraint. Although the specific applications of this model 30
30 For a good discussion on how well neoclassical economic models predict real-
world events see Blaug 1990.
79


are quite varied, as we will show, all of them are based on the same
fundamental mathematical model, and all arrive at the same general
conclusion: In order to maximize utility, individuals will choose
bundles of commodities for which the trade off among those
commodities (the MRS) reflects the economys market prices. Market
prices convey information about opportunity costs to individuals, and
this information plays an important role in affecting the choices
actually made. All of the applications we study reach this same
fundamental conclusion (Nicholson, 1989, 103.)
Notice the use of as if in the above quote. This places emphasis upon the fact
that individuals may not think they are acting in a specific manner but they act as if
they are. Under the direct approach the utility maximization hypothesis would no
doubt fail. If individuals were asked "Do you maximize your utility?" they would
most likely respond in bewilderment as to the meaning of the question. Non-
economists have criticized the theory in a similar way arguing that individuals, while
shopping in the grocery store, could never make lightning decisions as to how to
maximize their utility given their budget constraint, assuming they even have a
"utility curve" (Nicholson 1989, 104). They argue that the assumption is
"unrealistic." Nicholsons response to this is directly out of Friedman:
Economists are not persuaded by this complaint. They doubt that
people behave randomly (everyone, after all, is bound by some sort of
budget constraint), and they view the lightning calculations charge as
misplaced. Recall again Friedmans pool player. He or she also can
not make the lightning calculations required to plan a shot according to
the laws of physics, but those laws still predict the players behavior.
So too, as we shall see, the utility- maximization model predicts
behavior even though no one carries around a computer with his or her
utility function programmed into it. To be precise, economist assume
that people behave as if they made such calculations so the complaint
that the calculations are not accurately made is irrelevant.
It is "irrelevant" if an individual is consciously maximizing utility. It is only
necessary that they act as if they are. Again as if theorizing presupposes a causal
relationship between the assumption and the conclusion, the prediction. This was
discussed in detail earlier yet it needs to be reiterated as the utility maximization
model, among others, provides the basis for analysis of the behavior of a variety of
phenomena. It is a component, though sometimes implicitly, in other economic
theories. As if theorizing implies a causal relationship. That is, there is an implicit
80


relationship between individuals who maximize utility and the consequent of that (the
prediction). This relationship is set up in the structure of if A, then B. If an
individual maximizes utility then specific results occur. Because assumptions similar
to the maximization hypothesis comprise a substantial component of neoclassical
economics as if theorizing, in terms of the assumptions, pervades a majority of
economic analysis. For example, the effects of changes in income or in a goods price
is studied using the utility maximization model.
Another crucial maximization used within economics is the assumption of
profit maximization. Clearly Friedman maintains that whether or not firms do think
they maximize profit is irrelevant as it only matters if they act as if they do. Most
economic texts maintain the same thing. (This rationale falls under Nicholsons
indirect approach.) The use of profit maximization is similar to the use of utility
maximization in that profit maximization describes the behavior of a firm where
utility maximization describes the individual. Nicholson describes the firm: "...a firm
is fundamentally a collection of individuals who have organized themselves for the
purpose or turning inputs into outputs" (Nicholson 1989, 351). There are complex
contractual arrangements reached between the individuals within a firm ranging from
explicit ones such as salary, hours worked, etc. to implicit ones such as how tasks are
to be divided, the relationship between managers and workers, etc. These
relationships change in response to changes occurring which are external to the firm
(Nicholson 1989, 352). The changes within the firm, the behavior, is what
economists hope to model and ultimately explain. One way in which to do this is to
make generalizations about a firms behavior. One of these generalizations is the
assumption of profit maximization.
A profit maximizing firm chooses both its inputs and its outputs with
the sole goal of achieving maximum economic profits. That is, the
firm seeks to make the difference between its total revenues and its
total economic costs as large as possible (Nicholson 1989, 352).
Profit maximization forms the parameters for the analysis of the firms
behavior. It helps to create the firms supply function. Profit maximizing firms
produce an output where marginal revenue (revenue from selling one additional unit)
is equal to marginal cost (cost from producing one additional unit). Do firms in fact
use such analysis? The answer under the neoclassical paradigm is that it does not
matter. It only matters that they act as if they do. Remember if A, then B. Nicholson
illustrates this point:
Over the years a vast amount of evidence had been brought forth that
purports to refute the hypothesis that profit-making firms seek to
81


maximize profits, but on the whole, the hypothesis has withstood these
assaults...In answering questionnaires, firms often deny having
adequate information to make central decisions. On the other hand,
economists have found the profit-maximization hypothesis to be
extremely accurate in predicting certain aspects of the firms
behavior...Attempts to reconcile these two seemingly contradicting
findings about profit have centered on the methodological question of
the role of assumptions in economic theory. As we saw in chapter 1,
Friedman and other economists argue that one cannot judge the
assumption of profit maximization either by a priori logic or by
asking firms what they do. Rather, the ultimate test is the predictive
ability of the hypothesis (Nicholson 1989, 365).
Here again is the notion of as //"theorizing. Firms behave as if they are maximizing
profits just as individuals behave as if they are maximizing utility. Both of these
concepts are directly out of Friedman. As if theorizing is a crucial aspect of
Friedmans methodology. It is also a crucial factor in neoclassical methodology as
these two examples show. The use of maximization in neoclassical economics is
essential. It not only describes the behavior of both individuals and firms but it
provides the basis for many other concepts which are in turn based upon them.
Concepts in neoclassical economics such as supply and demand,, which are regarded
as fundamental components of neoclassical economic theory, are derived using
maximization hypotheses. The demand curve is partially based on utility
maximization. Various utility curves are looked at, holding to notions of transitivity,
continuity, and completeness, and those points on each are where utility is maximized
(where each corresponding budget curve is tangent to its corresponding utility curve)
together comprise the demand curve. Again it is irrelevant as to whether individuals
do in fact maximize utility it is only important that they act as if they do. Given that
they act as //"they do, utility maximization can be used further in analysis to develop
concepts such as demand, which further develop other concepts, like market demand.
Likewise the derivation of supply uses the concept of a profit maximizing firm in that
quantity supply is attained by calculating the optimal combination of inputs which
yield the maximum profit.
The maximization hypotheses related to both utility and profit provide clear
examples of the use of as if theorizing and further illustrate how its use is
incorporated into other concepts. As stated in the last chapter, as if theorizing
assumes a causal relationship between the assumption of "theory" and the conclusion.
The ultimate test of this is found in prediction. Recall that for Friedman prediction
was the litmus test for any theory or hypothesis. Again this is directly related to his
use of as if theorizing as embracing such a method assumes a relationship between the
82


cause (the assumption) and the effect (the prediction). As if theorizing provides the
cause. This type of relationship between the cause and effect is Cartesian. Recall
from chapter one that cause and effect are substantial components of orthodox
Cartesian foundationalism. The notion of as if theorizing is directly out of Friedman.
Thus the neoclassical research method becomes more identified with that of
Friedmans.
Even though an agent is not directly engaged in a specific act (i.e. utility
maximization) that agent acts as if he/she is and if one acts as if he/she is then a
specific state results (the prediction). Prediction, therefore is crucial in both
Friedmans and neoclassical method. Prediction not only justifies the as (f but it also
introduces the notion of empiricism into method, which as stated in the last chapter is
a movement away from the orthodox foundational system to moderate
foundationalism.
Just as Friedmans 1953 essay on methodology leads from as if theorizing to
the necessity of prediction, so too does neoclassical methodology. In fact at this
point it should become more clear how inseparable the two are. More specifically,
any method which introduces the as if into the process implies a relationship between
that as if and something else. As stated earlier the as if assumptions are cause and
prediction is effect. Prediction is a crucial component in Friedmans methodology
and in that of neoclassical economics. The use of utility and profit maximization is
based, theoretically, on how well they predict. This means that observation of the real
world must be undertaken. Prediction necessitates some tool in order to measure it.
This tool for both Friedman and neoclassical economists is empirical data.
Observation of real world events is necessary in order to determine how well these as
if assumptions do in fact predict.
Prediction
In the last chapter the importance of prediction to Friedmans method is
evident. It alone is the definitive test of whether a theory is "good" or not. For
Friedman prediction falls under what he labeled as substansive hypothesis, which is
designed to abstract essential features of complex reality.31 Nicholson places
3 1
The notion of "essential features abstracted from complex reality" assumes a
specific structure of reality and more specifically that certain essentials can be
83


prediction under the above described heading of the indirect approach of testing
theories. Under this heading, and with the aid of as if theorizing, Nicholson justifies
the use of assumptions such as maximization based on how well they predict.
Though there has been substantial debate as to the predictive record of neoclassical
economic theory, much of the basic theory taught, especially in micro and macro
economics, employs assumptions whose ultimate tests comes in their predictability* 32.
That is, the justification for "knowledge," or for maintaining certain assumptions is
found in experientially grounded knowledge. This is distinctly non-Cartesian. It is
with the use of prediction and its necessary dependence on experience that the
neoclassical research method, just like Friedmans, departs from orthodox
foundationalism.
In the following Mark Blaug discusses the need for both "theoretical" and
"empirical" progress in economics but places emphasis on "empirical" progress which
is borne out through prediction:
Theoretical progress may or may not be accompanied by empirical
progress, which is a much more elusive idea than theoretical progress.
By empirical progress I shall mean a deeper grasp of the inner
springs of economic behaviour and hence of the operations of the
economic system. It is always difficult to know whether we have
actually achieved such a deeper grasp and this is one reason and
perhaps the major reason why economists (like most scientists) are
literally obsessed with the idea of making economic predictions.
Every predictive implication of our economic theories that is borne out
by events strengthens our confidence that we have caught a glimpse of
how the economy actually works (Blaug 1994, 117).
Accurate prediction reveals how well we understand the real world workings
of the economy. Just as prediction in physics, chemistry, biology, etc. are thought to
reveal how accurate the theories are, so too in economics. Blaug continues:
This is why every explanation in economics must ultimately be
checked by a successful prediction. Indeed, explanation is simply
prediction written backwards which is the so-called symmetry thesis
extracted in order to capture those important features. Such a structure speaks to this
method as reductionist.
32 Blaug (1990) discusses that neoclassical economics retain their assumptions
regardless of their predictive ability.
84


of the despised logical positivists (see Blaug 1992: 5-10). But the
symmetry thesis is a much older idea and as Alfred Marshall (1961:
773) said the explanation of the past and prediction of the future are
not different operations, but the same worked in opposite directions,
the one from effect to cause, the other from cause to effect (Blaug
1992, 117).
Explanation or theory must ultimately be checked by successful predictions. Roger
Backhouse (1994, 186) writes:
Perhaps the most important aspect of the Lakatosian legacy, however,
is his emphasis on predicting novel facts as an appraisal criterion.
There are several reasons for suggesting this.
1) It fits very closely with the way economists think of what
they are doing. To understand economics, therefore, we need to
understand why this is so. One explanation runs in terms of the
structure of neoclassical theorizing: in the absence of hard empirical
criteria, consistency with rational behavior is used to decide what is ad
hoc. Another explanation focuses on econometrics, pointing to the
relation between predicting novel facts and tests using out-of-sample
data, encompassing and so on.
2) Prediction is an appraisal criterion that will not go away.
Not only do some philosophers still attach great importance to it (for
example, Rosenberg Chapter 11) but so do policy-makers, who wish
to know the consequences that will follow from the various actions
they might take. In so far as the main aim of economics is the
provision of guidance to policy-makers, prediction must be a important
goal. Economics should accordingly be appraised, at least in part,
according to its ability to predict...
Economics should be appraised by how well its theories and models predict, at
least in part, according to Backhouse. For Blaug every explanation in economics
must be checked by a successful prediction. Prediction within the neoclassical
method of research is vital.33 It helps to carve out the methodology within the
system.
33 Again, the importance of prediction in the neoclassical research method is not based
on how accurate these predictions are and have been, but, rather, prediction is
identified as important and often critical.
85


It is now evident how inseparable Friedmans method is with that of the
neoclassical. The use of prediction provides one example of this. For Friedman
prediction is a necessity in research as it alone provides the justification for theory.
Using philosophical terms, it provides the justification for knowledge. That is, one
can have experientially grounded knowledge. This will be discussed in detail later,
but first it is helpful to look at yet another example of how clearly Friedmans
methodology describes neoclassical economic theory.
Dualism
Recall in Friedmans 1953 essay the first thing addressed is the distinction
between positive and normative economics. Friedman is clear on what is positive and
what is normative.
Confusion between positive and normative economics is to some
extent inevitable...Positive economics is in principle independent of
any particular ethical position or normative judgments. As Keynes
says, it deals with what is, not with what ought to be. Its task is to
provide a system of generalizations that can be used to' make correct
predictions about the consequences of any change in circumstances.
Its performance is to be judged by the precision, scope, and conformity
with experience of the predictions it yields. In short, positive
economics is, or can be, an objective science, in precisely the same as
any of the physical sciences (Friedman 1953, 211).
Positive economics is an objective endeavor. It deals with what is not with
what ought to be. The distinction between positive and normative economics is
described in the opening of almost every principles text. The field of economics is an
objective endeavor dwelling in the realm of the positive.
This distinction fits into the category of a dualism in that it is comprised of
mutually exclusive categories which together comprise the whole. Sheila Dow
writes:
Two particular features of Cartesian/Euclidean thought which have far-
reaching methodological implications are atomism and
dualism...Dualism is the practice of organizing thought by means of
86


all-encompassing mutually exclusive categories, with fixed meanings
(Dow 1985, 25).
Recall from chapters two and three the discussion on dualism. Chapter two
outlined dualism in Cartesian thought. Out of this emerged a distinction between two
types of dualism; one being the distinction between the two mutually exclusive
categories of res cognitans and res extensa, the mind/body problem. It is not the type
of dualism that Dow is writing about but rather she is referring to the second type of
dualism identified in chapter two, which fits her definition above. Also recall that
dualism is a consequent of embracing either Cartesian and moderate foundationalism.
Providing some examples of dualisms in neoclassical economic theory will help to
show how its particular method is moderately foundational, and virtually indistinct
from Friedmans.
The following examples from neoclassical methodology illustrate some of the
characteristics discussed in chapter two: absolutism, reductionism, the fallacy of
composition, and need for categorization, which are components of moderate
foundationalism (recall from chapter three).
Self Interest and Rationality
Self interest is an assumption which is an appeal to a known parameter. Given
this characteristic it too is one dual in a category.34 That is, it is assumed that
individuals are self interested and as such the alternative is that they are non-self
interested or in the lingo of neoclassical economics, altruistic. That is individuals are
either self interested or altruistic. These two categories are mutually exclusive in the
sense that their outcomes are completely distinct. The assumption of self interest is
essentially defined as the behavior of an individual who will seek to maximize his/her
individual utility, and such an endeavor is set to minimize pain and maximize
pleasure.
Adam Smith was one of the first to discuss self interest, however, there has
been some debate about the meaning of self interest within his writings. In
neoclassical economics self interest is crucial. Ralph T. Burns and Gerald W. Stone
write in their principle microeconomic text:
34
Recall from chapter two the discussion on how absolutism sustains dualism.
87


Most economists follow the lead of Adam Smith, an eighteenth
century philosopher who laid the foundation for modem economics, by
assuming people act purposefully and rationally to maximize their
satisfactions, given their limited time, information, resources and
budget...This characterization of homo sapiens as homo
economicus...views all behavior as self-interested (Bums, Stone 1992,
8)
The rationality postulate, using self interest, plays a important role in
neoclassical methodology. Because of the insistence of neoclassical methodology on
methodological individualism (atomism) where economic behavior is derived from
the action of individuals. Rationality is a crucial component as these individuals seek
to maximize their utility given certain constraints. In economic terms:
...rationality means choosing in accordance with a preference ordering
that is complete and transitive, subject to perfect and costlessly
acquired information; where there is uncertainty about future
outcomes, rationality means maximizing expected utility, that is the
utility of an outcome multiplied by the probability of its occurrence
(Blaug 1990, 231).
The assumption of rationality is a dualism sustained by absolutism, as discussed in
chapter three. Because of the absolute assumption in the rationality postulate
mutually exclusive categories are implicitly created- rational and non-rational. As
with any dual if not A then B. Individuals are either rational or they are not and they
are rational in a very specific use of the term. Dualism, absolutism, and
categorization are revealed in this assumption because of the mutually exclusive
categories of "rational" and "non-rational." An individual is, absolutely, either
rational or not. In neoclassical economics under the heading of the appeal to known
parameters the individual is rational. The only alternative, however, is to be non-
rational.
The similarities between the methodology of Milton Friedman and the
neoclassical school are by no means chance. The last discussion in the chapter of
neoclassical economics is specifically arranged in order to show how it embraces the
method of Milton Friedman. The chapter on Friedman illustrated how much his
method is moderately foundational. Given that the neoclassical research program
embraces Friedmans method it too is a moderately foundational method. The last
point, however, which clinches this is the use experientially grounded knowledge
within neoclassical method.
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Experientially Grounded Knowledge:
Econometrics and Observation
Recall from the discussion on moderate foundationalism that the use of
experientially grounded knowledge is a definitive characteristic of moderate
foundationalism. The last chapter showed Friedmans insistence on it. Observation
is crucial in Friedmans methodology. It is likewise crucial in neoclassical economic
methodology It is this factor that separates neoclassical economics from orthodox
foundationalism and identifies it as moderate foundationalism.
Mark Blaug in the last chapters of The Methodology of Economics (19921
discusses the use of observation and its effects on economics. He argues that modem
neoclassical economists preach the importance of putting theories to empirical tests
but that "they rarely live up to their declared methodological cannons" (Blaug 1992,
243). The important aspect of this is that neoclassical economists do indeed proclaim
that theories should be out to empirical tests. Though more times than not they prefer
analytical elegance, and wide applicability to predictability nevertheless, they hold
that knowledge can be and generally is experientially grounded as opposed to based
solely on a priori based knowledge as with orthodox Cartesians.
The field of econometrics is a testament to this. The analysis of data reveals
the use of observation as a means toward attaining knowledge. This is completely
unacceptable within orthodox foundationalism, yet a defining component within
moderate foundationalism. Neoclassical economic analysis is dominated by journals
which appeal to the use of observation. A quick survey of recent publications will
illustrate the point. In Volume 23 Number 2 of the Journal of Economic Studies all of
the five articles use observation and econometric analysis. The articles range from
Forests and Economic Welfare (Kant, Nautiyal, and Berry 31) to Growth and Trade
dynamics under regime shifts in Australia (Karunartnepg 55). Similarly the three
articles in the most recent edition of Economic Review use observation as a means of
supporting claims. The Journal of Economic Theory June 1996 is also filled with
articles which appeal to observation, though less econometric analysis is used,
experientially grounded knowledge is used as validation. De Economist Volume 143,
consists of five articles of which 3 directly appeal to observable variables such as the
35 Whether or not observation is in fact used in terms of effecting theory is debatable,
but observation itself is a part of the neoclassical research program.
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inflation rate, interest rate, and debt. Economic Inquiry July 1996, and The Economic
History Review Volume XLVIII, No. 4 also contains articles which appeal to
observation. Not surprisingly, Econometrica, Econometric Theory, and the Journal of
Econometrics contain many articles on econometric theory in a pure mathematical
form thus setting the stage for other economists to use such tools in evaluative
procedures. The appeal to observation is not in every article, but the fact that it is in
so many and is widely accepted by a majority economists as a way of attaining
knowledge, shows that though economics heavily consists of a priori theory, the use
of prediction, removes it from within the orthodox Cartesian platform. However,
neoclassical economic methodology does not escape foundationalism. It clearly falls
within the framework of moderate foundationalism as pointed out in chapter three and
four.
Conclusion Chapter Four
The methodology of neoclassical economics falls nicely into the moderate
foundational schema. The detailed discussion on Milton Friedmans methodology in
the previous chapter revealed its moderate foundational character and the similarities
between it and the neoclassical platform discussed in this chapter reveal the
neoclassical research program as moderately foundational. The appeal to known
parameters, to notions of simplicity, to as zj theorizing in such things as maximization
hypothesis, to the need for prediction, the use of dualism, to rationality and self
interest, and finally to experientially grounded knowledge reveal neoclassical
methodology as moderately foundational. Most of these categories are used in
defining either orthodox, Cartesian foundationalism or moderate foundationalism.
The use of experience and observation move the neoclassical research program from
orthodox to moderate foundationalism.
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