Cambridge's Contributions in the Twenty-First Century

Many of the current strands of heterodox thought can be traced back in one way or another to Cambridge. Now heterodox economics involves a large worldwide community bound by a critique of monist adherence to mainstream methodology and the promotion instead of methodological pluralism.

Although the Faculty of Economics and Politics at Cambridge is now almost exclusively mainstream, Cambridge has again been making a distinctive methodological contribution to heterodox economics in the form of critical realism as spearheaded by Tony Lawson (1997b, 2003) and developed by the Cambridge Social Ontology Group.^[1] Critical realism encapsulates much of the Cambridge middle way tradition (while also, like earlier Cambridge contributions following Maynard Keynes, drawing on elements of the Marxian tradition).

Critical realism is primarily a philosophical position, introduced by Lawson (1997b) as drawing on the philosophy of Roy Bhaskar, countering Enlightenment (especially Humean) philosophy according to a positivist reading of it. But a reading of Scottish philosophy as providing a philosophical foundation for the Newtonian tradition, and developing it for the social sciences, in fact shows that it provides an alternative foundation for critical realism, and one which accords with the Cambridge tradition (Dow 2002). Critical realist philosophy puts the focus on the ontological level, on the grounds that any epistemic question requires reference to some position or other as to the nature of the subject matter; the focus is on devising theory by a methodology which best allows practical questions to be addressed, rather than by any internal criteria. One of the major achievements of critical realism is to have made this so explicit, such that it has become increasingly commonplace in heterodox economics to spell out the underlying ontological position.

The argument in favour of making ontology explicit is aimed at bringing to the surface the contradiction between the closed-system ontology implied by mainstream methodology and the common understanding of the economic system as being open—a modern version of the Cambridge position. For critical realists, a closed-system ontology is defined in terms of event regularities which allow for identification of economic laws, which in turn allow prediction. An open-system ontology refers to a subject matter which is evolving, including evolving internal relations, such that there are no uniformities to uncover and little scope for precise prediction. Real social systems are seen as being structured according to three levels: the actual, the empirical, and the real. The aim of economic enquiry is to build up understanding of causal mechanisms operating at the (unobserved) real level, but if the system is open, this understanding takes the form of identifying tendencies which may or may not be operating, singly or together, in any one set of circumstances.

The methodology for identifying tendencies is a development of the Cambridge middle way, eschewing the deduction/induction duality. Rather than seeking evidence in the form of repeated instances, critical realists seek to identify patterns, in the form of stylised facts, or partial regularities, or ‘demi- regularities’. This involves an application of the mind, employing, for example, metaphor, in order to ‘see’ patterns which might be indications of causal mechanisms for further investigation. Particularly revealing are contrastive demi-regularities, which suggest the presence of a causal mechanism in some circumstances but not in others. These mechanisms are to be investigated by means of methods suited to the subject area; this may include some type of formal mathematics if it can be justified as contributing to the analysis—a pluralist methodology.

However, the plurality o/methodologies is seen as being limited to different research interests, while united by a shared open-system ontology and epistemology (Lawson 2003). Thus, critical realists distinguish different schools of thought by their particular subject matter of interest: gender, institutions, class, and so on. Since social systems involve both power relations and moral conventions, ideology and moral judgements are part of the reality which economists analyse. Further, the purpose of critical realist economics is given as social transformation as a moral imperative.

The presentation here of the contributions to methodology emanating from Cambridge has in fact been an exercise in the Cambridge methodological tradition that we have drawn out from the historical account. The topic was approached with some idea of the conceptual issues, and a pattern was then identified from general reading, in the form of the middle way methodological approach. But the expression of that approach differed between different circumstances, and continues to evolve. Also, the consistency with which it has been applied was variable. In particular, the influence of Marshall and Neville Keynes (reflecting the dominance then of the Millian approach) constituted a divergence from the posited Cambridge tradition, and served to confuse the evolution of the revived tradition in Cambridge. Further, the influence of all the major figures covered here is coloured by the different interpretations of them by readers coming from different methodological perspectives (including within Cambridge). While a tradition has been identified here as Cambridge’s important methodological contribution, this is inevitably a provisional judgement.

• [1] Amartya Sen can also be interpreted as contributing to methodology in line with the predominantCambridge tradition, with significant influence on current developments in economics. While his methodology is too large a subject to include here, see Martins’s (2013) detailed treatment.