Contemporary Philosophy of Science and Neoinstitutional Thought

Orthodox neoclassical economists as well cannot make sense of economics, but they too can make sense of logic and so they stipulate that economics must be presented in terms of their favorite logical system -logical empiricism-and therein lies one of the fundamental stumbling blocks to progress within the discipline of economics. The neoclassical paradigm that now dominates the profession is purportedly based upon a methodological foundation of logical empiricism, which the neoclassical economists themselves cannot conform to, but which nonetheless has proven to be quite useful in undercutting the legitimacy of those alternative research programs that do not support the ideological conclusions of neoclassicism. One such alternative research pro- gram, neoinstitutional economics, has been conveniently dismissed as illegitimate because it is not scientific ; that is, it does not conform to the rigorous demands of logical empiricism. Although neoclassical economics does not meet the requirements of its own methodological precepts, our purpose is not to dwell on the inadequacies of the neoclassical paradigm or to discuss the substance of neoinstitutional thought. Rather, our purpose is to clarify the methodological foundations of neoinstitutional thought and to argue that neoinstitutional economics represents a legitimate research program that is, by virtue of its methodology, more consistent with recent developments in the philosophy of science