ȁȂȇ Partʺ: Economicsnineteen do not have to be published. With a little judicious selection
here and there, it will turn out that your data are just barely consis-
tent with your thesis adviser’s hypothesis ... , modulo an information
asymmetry, any old information asymmetry, don’t worry, you’ll think of
one.
Walter Eucken (ȀȈȃȇ, Pt.ŕŕ, esp. pp.ȀȈȁ–ȀȈȂ) criticized two rather
opposite trends in theory. Often the question is asked how things would
go in an a priori model built with little reference to reality. Ļe very fram-
ing of the question excludes reality. On the other hand, Eucken continues,
analysis may work with crude, sweeping concepts like “capitalism,” “lais-
sez faire,” or “socialism.” But both a priori models and imprecise “blanket”
concepts can be of little help in investigating reality.
James Tobin (ȀȈȇǿ, p.ȇȅ) comments on overlapping-generations mod-
els of money. Long before, economists had already pointed out how a
common medium of payment facilitates multilateral trade, whereas barter
would restrict transactions.
Ļe insight tells us why the social institution of money has been ob-
served throughout history even in primitive societies. An insight is not a
model, and it does not satisfy the trained scholarly consciences of modern
theorists who require that all values be rooted, explicitly and mathemati-
cally, in the market valuations of maximizing agents. But I must say in all
irreverent candor that as yet I do not feel significantly better enlightened
than by the traditional insight.
Let me quote two physicists. Pierre Duhem (ȀȈȄȃ, esp. chap.ŕŢ) does
not deny the usefulness of models. He recommends “intellectual liberal-
ism.” “Discovery is not subject to any fixed rule.... Ļe best means of
promoting the development of science is to permit each form of intel-
lect to develop itself by following its own laws and realizing fully its type”
(ȀȈȄȃ, pp.Ȉȇ–ȈȈ). Duhem questions the claim that providing a “mechan-
ical or algebraic model” for each of the chapters of physics satisfies all
the legitimate wishes of understanding (p.Ȁǿǿ). Perhaps the most fruitful
procedure in physics has been the search for analogies between distinct
categories of phenomena, but we should not confuse it with modeling
(pp.ȈȄ–ȈȆ). Ļe use of mechanical models “has not brought to the progress
of physics that rich contribution boasted for it.” Its contribution “seems
quite meager when we compare it with the opulent conquests of abstract
theories. Ļe distinguished physicists who have recommended the use of
models have used it [that method] far less as a means of discovery than as
a method of exposition” (p.ȈȈ).