Pragmatism in Economic Methodology: The Duhem-Quine Thesis Revisited

THOMAS A. BOYLAN and PASCHAL F. O’GORMAN

PRAGMATISM IN ECONOMIC METHODOLOGY:THE DUHEM-QUINE THESIS REVISITED

ABSTRACT. Contemporary developments in economic methodology haveproduced a vibrant agenda of competing positions. These include, among others,constructivism, critical realism and rhetoric, with each contributing to the Realistvs. Pragmatism debate in the philosophies of the social sciences. A majordevelopment in the neo-pragmatist contribution to economic methodology hasbeen Quine’s pragmatic assault on the dogmas of empiricism, which are nowclearly acknowledged within contemporary economic methodology. This assaultis encapsulated in the celebrated Duhem-Quine thesis, which according to anumber of contemporary leading philosophers of economics, poses a particularlyserious methodological problem for economics. This problem, as reflected inHausman’s analysis, consists of the inability of economics to learn from exper-ience, thereby subverting the capacity to test economic theories. In this paper wedispute this position. Our argument is based on a combination of Quine’s holismwith Van Fraassen’s constructive empiricism, especially the latter’s analysis ofempirical adequacy and his pragmatic approach to explanation. The resultingreorientation of economic methodology restores the capacity of economics tolearn from experience and reinstates the imperative of developing alternatives toorthodox theorizing in economics.

KEY WORDS: causal holism, Duhem-Quine thesis, economic methodology,pragmatism

1. INTRODUCTION

There is no doubt that Peirce, James and Dewey constitute the threemajor figures of classical pragmatism. The extension of pragmatismto more contemporary philosophical figures such as Quine, Rortyand Wittgenstein is not so clear cut.1 In this paper our principalconcern is with Quine. In Word and Object Quine points out that“Peirce was tempted to define truth outright in terms of scientificmethod, as the ideal theory which is approached as a limit whenthe (supposed) canons of scientific method are used unceasingly onexperience” (Quine, 1960, p. 23). Against this Peircean effort, Quine

Foundations of Science 8: 3–21, 2003.© 2003 Kluwer Academic Publishers. Printed in the Netherlands.

4 THOMAS A. BOYLAN AND PASCHAL F. O’GORMAN

maintains that we have no good reason to suppose that science willend up with one unique theory. “It seems likelier . . . that countlessalternative theories would be tied for first place. Scientific method isthe way to truth, but it affords even in principle no unique definitionof truth” (ibid.).2 This disagreement with Peirce on the definitionof truth could be used to exclude Quine from the role call ofpragmatists. Against this, Quine, in the first John Dewey Lecturesdelivered in Columbia University in 1968, claims “I am bound toDewey by the naturalism that dominated his last three decades”(Quine, 1969, p. 26). He goes on to point out that with “Dewey Ihold that knowledge, mind and meaning are part of the same worldthat they have to do with and that they are to be studied in the samespirit that animates natural science. There is no place for a priorphilosophy” (ibid.). This is not the place to debate the defining char-acteristics of pragmatism. Neither is it the place to debate whetheror not Quine is really a pragmatist. For our purposes we are satisfiedwith the consensus that Quine saw himself within the pragmatisttradition as developed by Dewey and that he clearly falls within thelooser ambit of neo-pragmatism.

Our central focus is contemporary economic methodology, espe-cially how Quine’s philosophical reflections have and could influ-ence the debate in this vibrant domain. Aside from causal holism,which expressly acknowledges its close links to numerous aspectsof Quine’s naturalism,3 the more limited, well-known Duhem-Quineunderdetermination thesis (D-Q thesis for short) constitutes theprincipal Quinean voice in this methodological debate. Our basicclaim in this paper has both a negative and a positive dimensionto it. Negatively, we argue that the recent application of the D-Q thesis to this debate by Hausman (1992) is too restrictive andseriously inhibiting.4 Our positive thesis is that economic meth-odology has much to gain by directing its attention to Quine’spenetrating pragmatist analysis of science, summed up in his holisticnaturalism. In addition to liberating economic research from theparalysing limitations imposed by Hausman’s analysis (which inpart is rooted in common sense realism) a pragmatist Quineanapproach enables economic methodology to steer a middle coursebetween the extremes of rhetoric on the one hand and critical realism

PRAGMATISM IN ECONOMIC METHODOLOGY 5

on the other. In short economic methodology has much to gain froma pragmatist, rather than a realist, approach.

The paper is structured as follows. In the next section we brieflyoutline some of the principal ways in which the D-Q thesis hasentered economic methodology, with special attention to Hausman’singenious reading of this thesis. In section 3, we show howHausman’s reading is too restrictive for both orthodox and non-orthodox economic research. In section 4 we re-interpret the D-Qthesis in a pragmatist way within a causal holist reinterpretationof Quine’s naturalism. In the following section we reclaim Quine’snaturalism for economic methodology by suggesting a number ofadditional areas in which his philosophical reflections are relevantto economic methodology.

2. THE DUHEM-QUINE THESIS IN ECONOMIC METHODOLOGY

The Duhem-Quine thesis occupies a peculiar position in the writ-ings of contemporary economic methodologists. For some it iscredited with generating major developments in philosophy ofscience. Blaug, for instance, within the context of his discussionof Popper’s methodological falsificationism, argues that Popper was“not only aware of the Duhem-Quine thesis but indeed the wholeof his methodology is conceived to deal with it” (Blaug, 1980,p. 18). Hands, in a discussion of Lakatos’s methodology of scientificresearch programmes, argues that it was largely the existence ofthe ‘Duhemian Problem’ which led Lakatos in the first instanceto abandon falsificationism and to develop the methodology ofscientific research programmes (Hands, 1979, p. 295). Arising fromthe perceived centrality of the D-Q thesis one could reasonablyanticipate an extensive literature on its implications for economicmethodology. This anticipation would be further reinforced by thefact that the social sciences in general and economics in partic-ular are clearly subject to the Duhemian stricture of the absence ofcrucial experiments in the domain of theory appraisal.

Within the economic methodology literature, however, the D-Q thesis has not been the subject of the extended analysis thatone might have expected. Seminal contributions by Cross (1982,1984) attempted to address the implications of the D-Q thesis in


the context of the testing of a specific economic hypothesis, i.e., thestability of the demand for money function. Cross invoked Lakatos’smethodology of scientific research programmes and argued thata modified version of it provided an adequate response to theepistemological problems identified by the D-Q thesis for economicmethodology. Though Cross’s response was challenged by Heijdraand Lowenberg (1986), for instance, it represented the first explicitattempt to examine the implications of the D-Q thesis in theeconomic methodology literature and is the most cited contributionon the topic to date. A much more recent contribution by Sawyer etal. (1997) follows the spirit of Cross’s contribution by selecting fourspecific hypotheses in economics and by examining the implicationsof the D-Q thesis for the testing of these hypotheses. They concludethat only with respect to quite specific types of auxiliary hypoth-eses can the effects of the D-Q thesis be lessened and they maintainthat the challenge for future work is “to diminish the effects of theDuhem-Quine thesis by constructing theses robust to many types ofauxiliary hypotheses” (Sawyer et al., 1997, p. 21).

What these contributions have in common is a clear focus onthe implications of the D-Q thesis for the testing of individualhypotheses in economics – in the case of Cross a single hypoth-esis is examined, while Sawyer et al. (1997) select four particularhypotheses. More recently a new development has emerged in theliterature which invokes the D-Q thesis to highlight the difficultiesand ultimately the impossibility of testing at a more aggregate orholistic level of analysis. This shift in focus away from individualhypotheses to extensive complexes of sentences, such as neoclas-sical economics or trends in post-Keynesian economics, is evidentin Boitani and Salanti (1994).

In an engaging discussion of the role of theory in the con-text of their analysis of different strands of post-Keynesianeconomics, including new Keynesian economics, Boitani andSalanti (1994) concluded that just two possibilities presented them-selves. Accepting some form of methodological and theoreticalpluralism, these authors argue that one either confines oneself to‘internal’ criticism, i.e., to appraising the sole inner consistency ofeach theoretical perspective with its own methodological justifica-tion (Salanti, 1989a, b) or alternatively, if one continues to maintain


that economists should not surrender to the view that economictheories are incommensurable, then one must be prepared to embarkon protracted methodological discussions on how economic theoriesor models are to be empirically appraised. In connection withthe latter possibility the authors conclude “one is likely to gothrough the Duhem-Quine thesis on the impossibility of testingsingle hypotheses within complex scientific theories” and that such“an impossibility undercuts all forms of testing, particularly in adiscipline like economics, the subject matter of which can hardlybe submitted to experiment and is continually changing in historicaltime” (Boitani and Salanti, 1994, p. 148, italics ours).

We now turn to Hausman’s ingenious reading of the D-Qthesis in economic methodology. According to Hausman, the D-Qthesis poses a serious practical problem for orthodox economics(Hausman, 1992, p. 207). In line with the standard reading of theD-Q thesis, Hausman interprets it as saying that a hypothesis is nottested in isolation: prediction is effected by embedding the hypoth-esis in other auxiliary premises. Hausman’s reading runs as follows:“If one is unable to place much confidence in the other premisesneeded to derive a prediction P from an hypothesis H, then there isa serious practical problem. Indeed it becomes almost impossibleto learn from experience. This is the situation in economics”(ibid.). Hausman directly links this pessimistic conclusion to hisown ‘weak-link principle’: “When a false conclusion depends ona number of uncertain premises, attribute the mistake to the mostuncertain of the premises” (Hausman, 1992, p. 207). In orthodoxeconomics “the simplifications and ceteris paribus clauses needed toderive predictions concerning uncontrolled market phenomena fromequilibrium theory5 are the weak links” (op. cit., p. 208). A falseconclusion does not adversely reflect on the core of orthodox theorybecause, when we compare this core to the auxiliary premises givenin orthodox simplifications and ceteris paribus clauses, the core isblessed in that it is largely known to be true. In short, for Hausmanorthodox economics is “blessed with behavioural postulates that areplausible, powerful and convenient and cursed with the inability tolearn much from experience” (Hausman, 1992, p. 226). Later headds that “Economists . . . are blessed with the knowledge that thereis a great deal of truth to equilibrium theory, and they are cursed


with such difficulties in testing that they are rarely in any position tochange their initial assessment” (Hausman, 1992, p. 276).

Let us briefly turn to this blessing, namely that “there is agreat deal of truth to equilibrium economics”. As Mäki correctlypoints out, Hausman uses this thesis to defend his conclusion “thateconomists are justified in being reluctant to reject the basic tenetsof equilibrium theory when faced with negative evidence” (Mäki,1996, p. 23). In this connection it is necessary to distinguish betweena strong and weak version of Hausman’s ‘blessing’. The strongversion subscribes to the thesis that “there is a great deal of truthto fundamental equilibrium theory” (Hausman, 1992, pp. 210, 276).The weak version subscribes to the thesis that there is some truthto basic equilibrium theory. Thus Hausman draws our attention to“the good reasons economists have to find some truth in equilib-rium theory” (Hausman, 1992, p. 277). The weak version, however,does not support Hausman’s conclusion identified by Mäki above.Almost every theory which merits inclusion in the history of sciencein general and the history of economic thought in particular hassome truth to it. These “some truths”, however, were not sufficientto support a legitimate reluctance to reject basic tenets. In short, tojustify his position, Hausman must subscribe to the strong versionof his blessing.

This blessing is in turn central to Hausman’s analysis of theoryappraisal in economics; “One part of my view of the appraisalof equilibrium theory is that equilibrium economists are justifiedin having a good deal of confidence in its basic generalisations”(Hausman, 1997, p. 399). Earlier, Hausman tells us that, “confi-dence in the implications of economics derives from confidence inits axioms rather than from testing their implications” (Hausman,1992, p. 1). Unlike Popperian theory appraisal, which starts withbold conjectures and develops confidence in so far as the implica-tions of these conjectures pass empirical testing against the bar ofexperience, orthodox economists are blessed in that they start froma core which has a great deal of truth.

We now briefly turn to the curse. There are a number of dimen-sions to it. Firstly, economists have only a relatively small numberof telling controlled experimental results. Secondly, their marketdata is poor. Moreover, when applying basic equilibrium to concrete


situations, they have recourse to the ‘weak-link principle’. Whenthis curse is combined with the blessing, we have, according toHausman, a unique situation in economics, namely, “it becomesalmost impossible to learn from experience” (Hausman, 1992,p. 307). Thus one could reasonably maintain that in Hausman’smethodology there is not only a legitimate reluctance to reject basicequilibrium theory, there is a legitimate resolute reluctance in that“it becomes almost impossible to learn from experience”.

The causal holist methodology of economics developed under theinfluence of Quine’s holistic naturalism, does not accept Hausman’srestrictive thesis that it is almost impossible to learn from exper-ience in the domain of economics. Indeed this claim, if correct,would by Quinean criteria exclude economics from the domain ofscience. Economics would not be a science at all – a thesis whichHausman utterly rejects. As Quine himself suggests in referringto his own position as “empiricism without the dogmas” and as,for instance, Mary Hesse pointed out thirty years ago, for Quinescientific knowledge does face the bar of experience (Hesse, 1970).Any science must learn from experience. Indeed Quine spells thisout in numerous works. In his ‘Epistemology Naturalized’ he insiststhat “whatever evidence there is for science in sensory evidence”remains a “cardinal tenet of empiricism” (Quine, 1969, p. 75). Partof Quine’s originality lies in his intriguing account of how scientificknowledge comes before the bar of experience in a holistic, not anatomistic, fashion. Quine is advocating an empiricism without thedogmas, not some form of idealism where experience plays no role.If, as Hausman would have it, orthodox economics finds it almostimpossible to learn from experience, then orthodox economics isnot scientific. In short, economics, like any other science, must learnfrom experience.

3. LEARNING FROM EXPERIENCE: A CHALLENGE TOORTHODOXY?

In its original presentation, causal holism used the methodologicalwritings of the Cambridge economist, Nicholas Kaldor, to illus-trate how orthodox economists could learn from experience. Kaldor,however, saw orthodox economics as being in a state of crisis.


Clearly any economist who shares such a view will totally rejectHausman’s reading of the D-Q thesis, where the core of ortho-doxy is blessed and the weak-link principle deflects the impactof testing to simplifications and ceteris paribus clauses. Are thereorthodox economists who do not share Hausman’s thesis? It iswell known that Frank Hahn, who played a pivotal role in thedevelopment of general equilibrium theory in the post-war period,explicitly argues that Hausman’s core of equilibrium economics iscompletely inadequate to the demanding tasks of orthodox theoret-ical research (Hahn, 1996). Rather than re-engaging the parametersof this intriguing altercation between Hahn and Hausman, we referto Kuenne’s recent theoretical work on rivalrous consonance inthe theory of oligopoly to show the methodological inadequacy ofHausman’s thesis (Kuenne, 1974a, b, c, 1986, 1998).

In Kuenne’s view oligopoly theory, which occupies a peculiarposition in economic analysis, is in an unsatisfactory state. Thereare a number of reasons for this, of which, in Kuenne’s estima-tion, the pursuit of the most general results, with its corollary of“seeking to derive theorems of universal applicability to oligo-polistic behaviour” (Kuenne, 1986, p. 1) is not compatible withthe empirical reality of oligopolistic behaviour. For Kuenne, by itsvery nature, “oligopolistic industry is importantly distinctive, withpricing, output, selling costs, innovation, and efficiency outcomesthat are heavily impacted by personalities, industry history, andthe nature of the product” (ibid., p. 1). In addition, Kuenne arguesthat “conjectural schemata are strongly wedded to single-objectivemodelling, generally the maximisation of profit or expected utility”,and consequently “cannot capture the richness or the plurality ofobjectives sought by a typical oligopoly” (ibid., p. 1). In short,Hausman’s core lacks the conceptual resources necessary for theconstruction of a descriptively adequate model of an oligopoly.

Kuenne, moreover, agrees with Koopmans’s position that the roleof the theorist is to follow the empiricist, not to lead him (Koop-mans, 1957, p. 143), and is grateful for the “welcome guidance” thatthe theorist has received from the foundational empirical researchreflected in the work of Kaplan et al. (1958) for the U.S., Fog(1960) in Denmark, and Johnsen (1968) in Sweden. From theseseminal empirical studies and the consequent work they have gener-


ated, Kuenne deciphers the emergence of major theoretical guideposts. The modern oligopolistic firm, “follows a multiple-objectivestrategy. In very few cases can any simply defined profit maximisa-tion be discerned; rather, to an almost exclusive degree, the goalssought are a set of mutually constraining and conflicting aims,imperfectly conceived and articulated, uncertainly co-ordinated, anddecentralised in administrative origin and achievement” (Kuenne,1986, p. 2). Kuenne’s position, in direct opposition to Hausman,is firmly based on the methodological principle that theorists can,do and should learn from experience. It is always unfortunate for afield, maintains Kuenne, “when empirical investigator and theoristsfail to communicate in continuous fashion, or when the theorist’sframeworks are not applicable to the empiricist’s tasks” (ibid., p. 3).

Kuenne, however, is not maintaining that theory should be aban-doned. On the contrary. Theory, for Kuenne, must be operational. Itsvariables must be “observable or derivable from real-world data bypractically available – not merely conceptually feasible – methods”(ibid., p. 3). Theory should accord with general equilibrium intwo senses. Within industry, Kuenne argues, it should facilitatethe analysis of interdependent decision making of the major rivals,but retaining their individual identities in order to encapsulate “theessence of the oligopoly problem”. In addition, it should be capableof being embedded in a larger model that includes the interdepend-ence between industry and customers. Finally, for Kuenne, it “mustbe flexible enough to incorporate the richness of realistic variety inrival’s goals (primary and secondary), industry power structures, andattitudes toward competition and co-operation”. We reject, Kuenneargues, “the notion of a universally applicable theory of oligopolisticbehaviour, and embrace the need for less ambitious analyses tailoredspecifically to given industries” (ibid., p. 3). In summary, Kuenne’sgeneral disposition towards theory construction is that “generaltheoretical frameworks be infused with empiricism, operationalism,and more modest but achievable ambitions . . . its architecture isshaped by the desire to incorporate the empiricist’s findings” (ibid.,pp. vii–viii). Guided by his considered diagnosis of the problemand informed by his methodological reflections, Kuenne proceedsto construct a novel theoretical framework which he terms “rival-rous consonance” to be pursued through a strategy of “simulative


theorising”. His theory of rivalrous consonance “reflects a particularview of the role of theoretical models”, where the “usefulness oftheoretical models is to yield primarily qualitative theorems aboutthe structure and functioning of economic entities – theorems thatideally can be tested against the evidence of reality” (ibid., p. 15).If this approach or some variant of it is not adopted, then Kuenneposes the pertinent question, “that in the face of a rich and complexeconomic reality”, will economic theory be able “to progress beyondthe unattainable fantasies of its youth?” (Kuenne, 1986, p. 14). Hisconsidered answer is unambiguously in the negative.

In Kuenne’s challenging approach to oligopoly theory, econom-ists are neither blessed by Hausman’s orthodox core nor cursed tothe extent that they can learn little from experience. Hausman’smethodology simply cannot accommodate theoretical economists,like Hahn and Kuenne, who are very capable of both learning fromexperience and of innovating theoretically beyond the restrictivepale of Hausman’s core.

4. THE DUHEM-QUINE THESIS REVISITED

A significant dimension of the Duhem-Quine underdeterminationthesis is focused on the theory of testing. In this context we distin-guish between three versions of this thesis. As already noted, theunderdetermination thesis holds that single descriptive propositionsare never tested in isolation; rather, empirical testing presupposescomplexes or systems of sentences. We call this the weak versionof the Duhem-Quine underdetermination thesis. This weak thesisat the level of testing follows from the meaning dimension ofQuine’s holism. Since meaning is characterised as existing withina system of sentences, it follows that, at the level of testing, a singledescriptive sentence cannot be tested on its own. More precisely, theassertion of Quine’s holism at the level of meaning and the denialof the weak Duhem-Quine underdetermination thesis at the level oftesting is inconsistent.

A second and stronger underdetermination thesis is also implicitin Quine’s work. Hesse formulates this stronger thesis as follows.“No descriptive statement can be individually falsified by evidence,whatever the evidence may be, since adjustments in the rest of the


system can always be devised to prevent its falsification” (Hesse,1970, p. 195, italics ours). The weak thesis simply asserts that singlepropositions are not tested individually. The weak thesis makesno reference to the issue of adjusting the system for the purposesof preventing the falsification of some preferred proposition orbelief. This latter issue is raised and resolved by the formulation ofthe stronger underdetermination thesis. This stronger formulationasserts that science can dramatically adjust its system in order toprevent the falsification of any descriptive sentence taken by itself.

This stronger Duhem-Quine (D-Q) underdetermination thesisexplicitly allows for the bar of experience at a holistic level. It isa scientific system as a whole, rather than individual propositions,which comes before the tribunal of experience. Nevertheless, evenif one grants this, Popperians, for instance, are arguably correctin pointing out that actual science can and does refute definiteportions of a theory and this stronger version of the underdetermin-ation thesis cannot coherently account for this fact (Popper, 1963,p. 243). Popperians are drawing our attention to the scientific prac-tice of empirically testing individual propositions which is as old asscience itself. While the stronger D-Q thesis challenges this practice,we maintain that the weak D-Q thesis does not. Rather, the latterretains the scientific practice but fully acknowledges its fragility andfallibility.

By way of illustration, let us briefly look at two of the usualways in which it has been suggested that an isolated propositionmay be refuted. The first concerns the Popperian notion of testingvis-à-vis background knowledge. According to some Popperians wecan hold the background knowledge stable and thereby refute anisolated hypothesis. Weak Duhem-Quine theorists have no objec-tion to this pragmatic approach. On the contrary, they quickly drawour attention to the fact that such an acceptance or retention ofthe background knowledge is, even by Popperian standards, provi-sional. Consequently, this Popperian strategy is not incompatiblewith the weak Duhem-Quine thesis. Indeed there is nothing in thelatter approach which rules out this kind of pragmatic strategy. Theweak D-Q thesis underlines both the delicateness of this strategy andits pragmatic character. Second, practising scientists tend to dividetheir theories into high-level and low-level parts and they frequently


hold that the lower-level is better corroborated or confirmed thanthe higher-level. Consequently, if a scientific theory is falsified byempirical evidence, the scientists, quite correctly, tend to locate theresponsibility in the less confirmed parts of the theory. Withoutprejudice to the complexities of confirmation theory, weak Duhem-Quine theorists have no difficulty either with this pragmatic strategy.In short, weak Duhem-Quine theorists do not make a fundamentalor epistemological distinction between the theoretical and observa-tional aspects of science. This, however, does not mean that they donot accept the wisdom of various pragmatic procedures developedduring the course of the history of science. Their point is that thesepragmatic approaches have no grounding in some absolutist found-ational epistemology. The fifth milestone of Quine’s naturalism,namely, the abandonment of a first philosophy, comes into playat this juncture. Our epistemological endeavours are much morefragile and modest than those sanctioned by the reconstruction ofthe whole edifice of knowledge from indubitable foundations.

We now turn to the Duhem-Quine underdetermination thesis inits third and strongest version. This is summed up in Quine’s dictum:“Any statement can be held true come what may, if we make drasticenough adjustments elsewhere in the system” (Quine, 1953, p. 43).This strongest thesis is very radical. It applies to every kind ofstatement – descriptive, theoretical, law-like, a priori, analytical,logical laws and so on, whereas the stronger thesis merely appliesto descriptive statements. Another milestone of Quinean naturalism,namely, the famous rejection of the analytic/synthetic dichotomy, isa principal player in this extension to every kind of statement. Sincethe whole of our knowledge is a man-made web which touchesreality only along the edges, there is no foundational epistemolo-gical way of neatly dividing this web into purely analytical andsynthetic dimensions or, if one prefers, into logical and empiricaldimensions. Hence the thesis is extended to every kind of statement.Moreover, unlike the stronger thesis, it goes way beyond the issue ofthe falsifiability of an individual descriptive statement or scientifichypothesis. The focus is on the truth of these and other statementsor hypotheses, rather than their falsifiability. The strongest thesismaintains that any statement can be held true by adding sufficiently


drastic adjustments to the rest of the system. Clearly, this strongestthesis sails very close to the winds of relativism.

Quine himself endorses all three theses. Indeed, since the weakand the stronger theses are implied by the strongest underdetermin-ation thesis, the three theses are frequently not clearly distinguishedfrom each other. For our purposes, however, this distinction is vital.We are not embracing the D-Q thesis in its strongest version. Rather,we are starting with Quine’s holism at the level of meaning, espe-cially the thesis that all scientific descriptions are theory-laden. Ourquestion is: what price must be paid at the level of testing foraccepting this holistic thesis at the level of meaning? Quine himself,at least as commonly interpreted, wants to extract the highest price,i.e., the strongest underdetermination thesis. We maintain that thereis no need to pay such a high price. The weak underdetermina-tion thesis is necessarily implied by Quine’s holism at the levelof meaning, but this in turn does not necessarily imply either thestronger or the strongest thesis. In particular, in view of the Quineanmilestone, that there is no prior philosophy, the weak D-Q under-determination theorist holds that the age-old scientific strategy oftesting statements in isolation is not grounded in some absolutistfoundational epistemology. According to this milestone, there is nosuch epistemological vantage point. However, that does not implythat this age-old strategy, when properly used, is not a wise practice.The weak D-Q underdetermination theorist retains it as such andthereby draws our attention to its sheer contingency and fallibility.In principle, science has the option of questioning the results of theempirical testing of individual sentences.

Past experience teaches science not to exercise this principleexcept in exceptional circumstances. But is not this the point ofHausman’s weak-link principle? Exceptional circumstances arise ineconomics. The weakness of the orthodox simplifications are suchthat it is reasonable to divert the impact of negative evidence ontothese and away from the privileged core. However, in applying theD-Q thesis to orthodox economics, Hausman is assuming that thecore of orthodoxy is guaranteed as being for the most part true.In our Quinean view the core of orthodoxy, like the core of anyother science, is theory-laden. This is the point being made by suchorthodox theorists as Hahn and Kuenne. They also make the addi-


tional point that the core of orthodoxy as specified by Hausman istoo restrictive to carry out theory-laden research within orthodoxy.The core itself is not privileged: it is open to the bar of experience.

Why is the core of orthodox economics so blessed for Hausman?A principal reason is seen in his later work, namely his acceptance ofcommon-sense realism. Common-sense realism makes economicsan unique science, distinct from physics. “Physics postulates newunobservables, to whose common-sense existence realism does notcommit us. Although economics refers to unobservables, it doesnot, in contrast to physics, postulate new ones.” Rather, economicunobservables “have been part of common-sense understanding ofthe world for millennia” (Hausman, 1998, pp. 197–198). The coreof orthodox economics is guaranteed by common-sense realism.For instance, the orthodox notion of rationality is guaranteed byour common-sense notion of a rational person which is central toWestern thought.

Causal holism, directly under the influence of Quine’s natur-alism, rejects this common-sense realist defence of the core oforthodox economics as defined by Hausman. For a causal holist,while the theoretical notion of rationality used in economics isintimately connected to our common-sense notion of rationality,the two notions are in no way identical. The theoretical notionof rationality is, in Quinean terminology, an explication of thecommon-sense notion. In this connection it is vital to note that anexplication is not a definition: it does not, for instance, specify theessential characteristics of rationality. On the contrary when theo-rists explicate any common-sense notion they focus on particularfunctions of that notion

that make it worth troubling about and then devise a substitute, clear and couchedin terms to our liking that fills those functions. Beyond those conditions of partialagreement, dictated by our interests and purposes, any traits of the explicans comeunder the head of ‘don’t cares’. Under this head we are free to allow the explicansall manner of novel connotations never associated with the explicandum (Quine,1960, pp. 258–259, italics ours).

Thus, as an explication, the theoretical notion of rationality obtainsall kinds of novel connotations which the common-sense notiondoes not possess. Moreover, whereas there is only one true essenceof rationality, there is a number of effective ways of explicating this


common-sense notion and the choice is a matter of theoretical fruit-fulness. Thus Hausman’s notion of rationality is, according to FrankHahn, borrowed from text-book economics and is useless for thekind of orthodox theoretical research which Hahn wishes to carryout. The Quinean pragmatist concurs with Hahn: the common-sensenotion of rationality does not render the theoretical notion unas-sailable. In short, for Hausman common-sense realism guaranteesmuch of the core of orthodox theory, whereas for Quineans, therelationship between core theoretical notions and common-sense issuch that the common-sense notion does not epistemically privilegethe theoretical notion. Common-sense does not bless the core to theextent of guaranteeing that it is for the most part true. Hausman’sreading of the D-Q thesis is a long way from both the spirit and theletter of Quine’s pragmatic naturalism.

5. RECLAIMING QUINE FOR ECONOMIC METHODOLOGY

According to causal holism, Quine’s philosophy of science is neitherfully nor properly appreciated in recent debates in the methodologyof economics. The spirit of our approach to Quine is summed up inKeynes’ famous tribute to Marshall (with the obvious substitutionof the term ‘economic’ by the term ‘philosophical’) “. . . those indi-viduals who are endowed with a special genius for the subject andhave powerful economic intuition will often be more right in theirconclusions and implicit assumptions than in their explanation andexplicit statements, that is to say their intuitions will be in advanceof their analysis and terminology” (Keynes, 1924, p. 335). In otherwords Quine’s works are rich in gold but they are not all gold.

In this section we briefly illustrate a number of additionalways in which Quine’s pragmatic naturalism makes a challengingcontribution to contemporary economic methodology. Firstly, thisnaturalism strongly suggests that any attempt to epistemologicallyprivilege orthodox economics or to argue for its hegemony ismisguided. Neither its domain, namely individual and collectivehuman actions and their institutional settings, nor its scientific modeof theorizing can privilege orthodox (or indeed any other) economictheory as the final theory. The end of any science is a pluralism oftheories and Quine’s naturalism denies that there is anything special


or unique about economics as a human science which would make itany different. In light of this Quinean background, causal holism hasargued for a pluralism in economics at the level of theory construc-tion. The hegemony of orthodoxy must be, on Quinean grounds,rejected.

This, however, does not necessarily imply that orthodoxeconomic programmes such as general equilibrium theory are tobe rejected. Economics as a science is, to use Quine’s favouriteanalogy, like a ship at sea (Quine, 1960, p. 3) and, like any well-run ship, there is a division of labour: some take on very appliedwork (e.g., contributing to government policy) while others take onvery abstract theoretical work. There is nothing in Quine’s natur-alism which in principle prohibits the abstract research programmeof general equilibrium theory. What is prohibited is the direction ofall the academic and other resources in one direction only. Again,within Quine’s naturalism, we need not expect that this researchprogramme will itself end up in one final outcome. All researchis constrained by the requirements of coherence, simplicity, a tastefor old things and the bar of experience (Quine, 1960, p. 23) and,as Putnam perceptively points out (Putnam, 1995, p. 10), part ofQuine’s pragmatist contribution is to show that the application ofthese constraints can conflict. In the trade-offs between them morethan one final outcome is likely. In short Quine’s naturalism chal-lenges us to methodologically re-engage major areas of orthodoxresearch, such as general equilibrium theory, in a much richerphilosophical framework than those hitherto used.

One of these common frameworks is centred on the assumptionthat the principal aim of any economic theory is to explain, asdistinct from describing or predicting, the observable phenomena.This, for instance, is the position of critical realism (Lawson, 1997).By re-engaging Quine’s naturalism, we are in a position to constructa more fruitful alternative account of the roles of economic theory.In the first place, as with most of us whether realists or not, forQuine, theory is indispensable to science: we cannot do sciencewithout theory. However, for Quine, theory is indispensable atthe descriptive, not the explanatory, level. The truism of contem-porary philosophy of science, namely that all scientific descriptionis theory-laden, was pioneered in a unique way by Quine. According


to the causal holist application of this Quinean thesis to economicmethodology, the conceptual resources of ordinary language arenot adequate for the detailed accurate description of all aspectsof contemporary economies and economists construct theories inorder to enhance their descriptive resources. Thus for instanceKeynesian and post-Keynesian economics may be read in this way.Moreover, by connecting economic theory to the task of describingactual economies in all their complexity, Quine’s naturalism alsochallenges economic methodology to re-engage its approaches toeconomic explanation. In this context, by focusing on the prag-matics of explanation, causal holism effects this re-engagement ina way which is radically different from critical and other scientificrealists. Finally Quine’s naturalism when applied to economic meth-odology clearly identifies economics as a science very distinct fromthe rhetorical interpretations of either McCluskey (1985) or Klamer(1988).

In short, economic methodology, by re-engaging Quine, can steeran exciting and challenging middle course between the excesses ofrealism on the one hand and those of rhetoric on the other. Our hopeis that we have in some small way begun to set economic methodo-logy on this novel course. The full course has yet to be finished andthe outcome is unknown.

NOTES

1. One might be surprised to see the later Wittgenstein mentioned here.However, this question is seriously posed by Putnam (1995).

2. We do not take Quine seriously with his rhetorical flourish that a countlessnumber of alternative theories would tie for first place when the race ofscience is over. It suffices for Quine’s case that more than one theory wouldtie for the laurels of final science.

3. Causal Holism was first presented in Boylan and O’Gorman (1995).4. We would like to remind the reader that according to some methodologists,

Hausman offers us “the best philosophical account” (Mäki, 1996).5. Hausman calls orthodox economics equilibrium theory.


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Department of EconomicsNational University of IrelandGalway, IrelandE-mail: [email protected]

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Pragmatism in Economic Methodology: The Duhem-Quine Thesis Revisited