The critique of equilibrium theory in economic methodology: A constructive empiricist perspective

Abstract

Kaldor, one of the leading figures of the post‐war ‘Cambridge School’, has produced a large volume of methodological writings since the mid‐1960s, which we will argue represents one of the major critiques of orthodox equilibrium economic theory produced this century. While Kaldor's position represents a fundamental and radical rejection of the methodological basis of equilibrium economics, he did not provide a systematically formulated alternative methodology for economics. Recent attempts at providing such a reconstruction has argued that scientific realism provides the most convincing philosophical interpretation of Kaldor's methodological contributions. In this paper we will argue that van Fraassen's constructive empiricism represent a more compelling alternative methodological framework to realism for systematizing Kaldor's important contributions. In particular it will be argued that this constructive empiricist reading of Kaldor has the capacity to critically undermine the methodological basis of orthodox equilibrium economics. In addition we explore the potential of this alternative framework to provide a novel and challenging reconstruction of economic methodology.