2. EMPIRICISM AND FALSIFICATIONISM In this section I will first give a short philosophical overview of the develop­ ment of logical positivism and falsificationism and then switch quickly to their application by several methodologists who have used these concepts for criticising economics. Logical positivism or verificationism suggests itself as a natural starting point, as it was the groundbreaking fundament of modem philosophy of science. Falsificationism can also best be understood against this backdrop, since Popper explicitly designed it to overcome the epistemic problems attached to logical positivism. As history has shown, Popper suc­ ceeded in this: falsificationism (and not verificationism) is now the bench­ mark from which one is expected to distinguish one's own position. That is not to say that falsificationism is without problems or generally accepted, but it is still an important position in economic methodology. As the con­ cept is widely known, abrief introduction to the main philosophical ideas will suffice. The specific applications to economics are of greater interest here and will thus be outlined in more detail: I will summarise the positions of four critics that have stressed the need for economics to become more empirical, start­ ing with the classic work ofTerence W. Hutchison and ending with arecent position by Scott Moss. The empiricist position in economic methodology is still the most influential one, even if its classic form is today mostly con­ sidered obsolete. The most important and therefore longest subsection discusses problems ofthe empiricist criticism outlined at the beginning ofthis chapter. This anal­ ysis uses well-known concepts from philosophy of science and shows why criticising standard empiricist claims is the first step towards a new method­ ology. At the end of this section two case studies illustrate the shortcomings of the empiricist methodologies in economics with some palpable examples. The first case study is a longitudinal overview of modem economic-growth theory, and the second concentrates on the current quarrel between rational­ choice and experimental economists. Both case studies show the relation be­ tween theoretical and empirical work in economics and thereby give hints as to why some of the demands of the empirical methodologists are ill-argued. 2.1. FROM LOGICAL POSITIVISM TO FALSIFICATIONISM It is widely accepted that modem philosophy of science started in the 1920s with logical positivism. The so-called Vienna Circle, including members such as Carl Gustav Hempel, Moritz Schlick, Otto Neurath and RudolfCar- 24 2. Empiricism and falsificationism nap, was the driving force behind the programme oflogical positivism. In the crazy times between the two world wars this programme can be seen as an attempt to establish (or defend) conceptual clarity and academic standards against some of the fashionable nonsense of that time. Inspired by the early Wittgenstein and the work of Bertrand Russell, it was a basic assumption of the Vienna Circle that synthetic judgements apriori are impossible, which means that we cannot know facts about the world by mere1y thinking about it, without digging into any empirical details. As a re­ sult, the main negative task of the Vienna Circle was to criticize metaphysics as meaningless and finally abolish it from philosophy and science. What re­ mained for philosophywas the logical analysis oflanguage and the somewhat utopian aim ofbuilding a unified science. Obviously, if metaphysics was to be criticized as meaningless, a criterion of meaning was needed.1 Logical positivism chose verifiability as the necessary criterion for a statement to be meaningful. In his seminal essay »Überwind• ung der Metaphysik durch logische Analyse der Sprache«, Rudolf Camap il­ lustrates with much clarity how the criterion of verifiability may be applied in order to exterminate meaningless metaphysics.2 He classifies meaningless statements into two classes: 1. Meaningless by semantics and 2. Meaningless by syntax. A statement is meaningless by semantics if it contains predicates that are in no way reducible to basic empirical statements - the so-called »proto­ col statements«.3 Camap gives the example of the fictional predicate »babig« which is supposed to have no empirical content at all. Thus, we have no way to detect if something is »babig« or not. For Camap it follows that such a predicate is meaningless and hence should be exterminated. Camap claims that there are many predicates in metaphysics which are meaningless4 and that there is no way out of this, since metaphysics tries to accomplish exact1y Note that strict meaninglessness is different from »nonsense«, i. e. statements that are simply wrong (all fish can fly) or practically irrelevant (the average height of persons whose name ends with the letter »h« is 1.78 m). There is an ongoing discussion about whether Carnap was indeed a verificationist. See e. g. Creath (1982), Richardson (1998) or Mormann (2000). The question may be interesting, but it is of no importance for my work, as Carnap's position can be inter­ preted as a prototype of a verificationist and is a traditional starting point for any form ofverificationism. See Carnap (1931), p. 222. Those protocol statements were later often referred to as »sense data«. It does not need to be the case that those predicates are newly invented words. Usual words can lose their original empirical meaning without gaining a new one. See Car­ nap (1931), p. 224-225. .