The Philosophical Foundation of Mainstream Macroeconomics

The purpose here is to explore the philosophy implicit in mainstream macroeconomics in terms of how real economic systems are understood and how knowledge about them is built and assessed. Mainstream macroeconomics has evolved in response to policy demands in the wake of the financial crisis. But this evolution has been constrained by the internal methodological requirements of its dominant theoretical approach which are often incompatible with the external requirements of evidence and policy application. The core theoretical approach has persisted, particularly with its emphasis on microfoundations. Yet the notion of internal consistency by which the microfoundations project is justified is challenged by a broader, philosophical, notion of consistency. The long-running expression of opposition in mainstream macroeconomics between logical coherence and empirical coherence (or between rigour and realism) accordingly requires examination at the philosophical level. The case is made on philosophical grounds for considering approaches to macroeconomics which avoid this kind of opposition.