Real Estate Valuation Theory by Manya M. Mooya

Author:Manya M. Mooya
Language: eng
Format: epub
Publisher: Springer Berlin Heidelberg, Berlin, Heidelberg

Positivism

If the concept of equilibrium is the most enduring feature of mainstream economics , positivism is its methodological bedrock. So much so that it has been argued that the distinguishing feature of mainstream economics not its content but rather its methodology (see Lawson 2003, 2006). Thus while there might be a lack of unanimity regarding whether the assumptions of neoclassical economics , like rational choice and equilibrium, are still relevant in defining the mainstream, there is general consensus that positivism is its methodological orientation.

We introduced the essential features of the positivist philosophy in the previous chapter. To recapitulate, positivism holds that society, like the physical world, operates according to general laws . As explained previously, the positivist conception of general laws is formulated in terms of ‘empirical regularities ’, defined as correlations between two variables taking the form ‘if x, then y’. This, as we have seen, is the ‘covering-law’ model , the model which provides the basis for explanation and prediction in mainstream economics .

The origins of the positivist philosophy in economics c an be traced to attempts at emulating the predictive and explanatory successes of the natural sciences, especially Newtonian physics. Adopting the latter’s methodological apparatus was seen as essential to that end, as well as to the status of economics as a scientific discipline. In their quest to emulate the work of the physical scientists, economists saw that the former’s (predictive and explanatory) successes seemed to depend upon the ability to find deterministic (i.e. mathematical) relationships between phenomena. Allais (1992, p. 25, cited by Lawson 2003, p. 13) puts it thus:The essential condition of any science is the existence of regularities which can be analysed and forecast. This is the case for celestial mechanics. But it is also true of many economic phenomena. Indeed their thorough analysis displays the existence of regularities which are just as striking as those found in the physical sciences. This is why economics is a science, and why this science rests on the same general principles and methods as physics.

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