Cambridge's Contribution to Methodology in Economics

Sheila C. Dow

Introduction

Over its history, Cambridge has had a notable impact on the methodology of economics, and it is the purpose of this chapter to chart and discuss this contribution. We focus on some central methodological themes: the aims and scope of economics, how to deal with the limitations of both pure induction and pure deduction as a basis for an economic methodology; the appropriate nature and role of assumptions, of mathematical deduction and of real experience; and the place of moral considerations in economic theory. Methodology is understood as arising from epistemology and ontology, so we will include philosophy in our coverage. Indeed, it is in providing philosophical foundations that a significant part of the Cambridge contribution lies. Since ontology entails an understanding of the subject matter of economics, methodology is seen as encompassing also a view on the scope of economics.

By contribution we will mean explicit methodological (or philosophical) analysis by Cambridge economists and its effect on the methodological analysis of others, whether or not the effect involved a misinterpretation of the original analysis. While Cambridge has seen a wide range of methodological

This chapter has benefited from comments from Geoff Harcourt.

S.C. Dow (h)

Emeritus Professor of Economics, University of Sterling, UK

Adjunct Professor of Economics, University of Victoria, Canada e-mail: This email address is being protected from spam bots, you need Javascript enabled to view it

R.A. Cord (ed.), The Palgrave Companion to Cambridge Economics,

DOI 10.1057/978-1-137-41233-1_2

practice and of theoretical contributions which embodied distinctive implicit methodological positions, we only consider explicit references to methodology. Even then the coverage is inevitably limited, not least because of the number of major figures who have been based at Cambridge and the wide reach of Cambridge’s influence through the international spread of its former students.

Further, the development of philosophical and methodological thought alongside theoretical developments has been a complex process; the interpretations offered here inevitably gloss over much of that complexity. Particular emphasis is placed on interpretations emanating from Cambridge. The focus will be on some common threads which could be said to constitute a Cambridge tradition in economic methodology.^[1] Martins’s (2013) remarkable study and his chapter in the current volume makes the case (with reference to philosophical foundations) that there has been a revival in Cambridge of the political economy tradition of Smith and Ricardo. Here rather we start with the older political economy tradition in Cambridge, starting with Newton’s experimental method, and consider contributions to methodology which could be seen as deviations from this Cambridge tradition, as well as the more recent revival of the older methodological tradition. In the process we trace the evolution of Cambridge’s contribution of a ‘third way’ approach to methodology.

We consider first the Cambridge philosophical tradition as it existed at the emergence of classical political economy at the end of the eighteenth century, focusing, in particular, on mathematics, since it provides the background to Malthus’s methodological contribution in his debates with Ricardo. The Methodenstreit then provides the context for the publication of John Neville Keynes’s The Scope and Method of Political Economy at the time of Marshall’s launching of political economy at Cambridge as a discipline separated from economic history. The older Newtonian Cambridge tradition resumed its influence with John Maynard Keynes’s A Treatise on Probability, which is discussed in relation to contemporary Cambridge philosophy and in terms of the subsequent methodology of Keynes’s economics. Keynes’s followers in the Circus were more explicit on the subject of methodology, in a tradition continued and developed by Cambridge scholars up to the present day working outside the mainstream methodology tradition which now dominates the Faculty of Economics and Politics. It will be argued that keeping alive discussion of the philosophy of economics has been as important a contribution as particular philosophies of economics.

[1] See Dow et al. (1998) for a discussion of what constitutes a ‘tradition’ in economic thought.