Models, Fictions and Explanations: A Study in Historical Epistemology of Economics

This paper examines the standard criticism of the neoclassical economic theory that takes mathematical formalism and the practice of modelling as the most problematic aspect of orthodox economics. The aim of the paper is to explore the epistemic properties of models in science (particularly in economics), and to incorporate the insights from the recent debates in the philosophy of science into the framework of historical epistemology of economics. The main claim of this paper is that history is important for understanding how economic models operate and why have they been accepted as legitimate instruments of inquiry in economic theory. However, since modelling practice clearly is not limited to neoclassical economic theory, the difference between economic orthodoxy and heterodoxy has to be explained in a different way. The paper argues that the theory of fiction can provide an important clue inasmuch as the epistemological and political commitments are a part of the story that underpins the modelling practice in economics.