The two methods and the hard core of economics

Abstract

While methodological sciences have no object and are supposed to adopt a hypothetical-deductive method, substantive sciences, including economics, should use an empirical or historical-deductive method. The great classical economists and Keynes did that and were able to develop open models explaining how equally open economic systems work. Thus, the hard core of relevant economics is formed by the classical microeconomics and the classical theory of capitalist economic growth and by Keynesian macroeconomics. In contrast, neoclassical economists aiming to build a mathematical science wrongly adopted the hypothetical-deductive method and came to macroeconomic and growth models that do not have practical use in policymaking. The exception is Marshall's microeconomics, which does not provide a model of real economic systems but is useful to the analysis of markets.

Keywords:

• historical-deductive method
• hypothetical-deductive method
• mathematical economics
• new historical facts
• open systems