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Methodological issues in theorising the financial, economic and social system: realistic and systematic abstraction

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  • Andrew Brown

    (University of Leeds, UK)

Abstract

The global financial and economic crisis, and in particular the perceived failure of economics to predict the crisis, has led to questioning of the methodology of economics. Some have championed the methodological approach of ‘critical realism’ as fostering a more realistic economic theory than that currently predominant. This paper will argue that, whilst critical realism correctly poses the need for realistic abstraction, critical realism fails to deliver because it does not offer any aid towards systematic abstraction (despite proponents’ claims to the contrary). The application of critical realism can readily identify myriad relevant aspects of the crisis (financial, economic, political, social, psychological, local, national, international, short-run, medium-run, long-run and so on). Yet, critical realism precludes any adequate comprehension of how these myriad aspects cohere to constitute the capitalist system as a whole. The paper goes on to argue that critical realism corrupts an approach (appropriately termed ‘system abstraction’) which can genuinely aid the development of economic theory that is both realistic and systematic. This superior approach aids system-wide theory by offering a step-by-step method that begins with an abstract conception of ‘value’ and moves towards a concrete comprehension of the world market.

Suggested Citation

  • Andrew Brown, 2013. "Methodological issues in theorising the financial, economic and social system: realistic and systematic abstraction," Working papers wpaper03, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
  • Handle: RePEc:fes:wpaper:wpaper03
    as

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    References listed on IDEAS

    as
    1. Andrew Brown & Gary Slater & David A. Spencer, 2002. "Driven to abstraction? Critical realism and the search for the 'inner connection' of social phenomena," Cambridge Journal of Economics, Oxford University Press, vol. 26(6), pages 773-788, November.
    2. D. COLANDER & al., 2010. "The Financial Crisis and the Systemic Failure of Academic Economics," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 6.
    3. Tony Lawson, 2009. "The current economic crisis: its nature and the course of academic economics," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 759-777, July.
    4. Andrew Brown, 2008. "A materialist development of some recent contributions to the labour theory of value," Cambridge Journal of Economics, Oxford University Press, vol. 32(1), pages 125-146, January.
    5. John B. Davis, 2008. "The turn in recent economics and return of orthodoxy," Cambridge Journal of Economics, Oxford University Press, vol. 32(3), pages 349-366, May.
    6. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521415019.
    7. Andrew Brown & David Spencer, 2012. "The nature of economics and the failings of the mainstream: lessons from Lionel Robbins’s Essay," Cambridge Journal of Economics, Oxford University Press, vol. 36(4), pages 781-798.
    8. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521425230.
    9. Andrew Brown, 2007. "Reorienting critical realism: a system-wide perspective on the capitalist economy," Journal of Economic Methodology, Taylor & Francis Journals, vol. 14(4), pages 499-519.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    critical realism; capitalist system; abstraction; synthesis; value;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • G00 - Financial Economics - - General - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • P00 - Economic Systems - - General - - - General

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