McCloskey critique
The McCloskey critique refers to a critique of post-1940s "official modernist" methodology in economics, inherited from logical positivism in philosophy. The critique maintains that the methodology neglects how economics can be done, is done, and should be done to advance the subject. Its recommendations include use of good rhetorical devices for "disciplined conversation."[1]
The diagnosis and solution[edit]
McCloskey says that most economists when they write are "tendentious", assuming that they know already, and concentrating on a high standard of mathematical proof rather than a "scholarly" accumulation of relevant, documented facts about the real world. The advice she offers colleagues here is to spend more time in the archives, and write more heavily researched papers from specific observations in the real world (she argues that this is the norm in the natural sciences on which economics believes it is modelling itself, but that most economics practitioners actually base their methodology more closely on pure mathematics).
Since she says: "No one really believes a scientific assertion in economics based on statistical significance" the solution she proposes to establishing cause and effect in economics is "calibrated simulation". Calibrated simulation relies on measurement and numerical techniques (such as Monte Carlo methods) to test the robustness of its predictions, without requiring a closed-form solution proving that the postulated relationship will always hold (or will be reached in "equilibrium", or be impossible). As an illustration, she contrasts the Babylonian and Greek "rhetoric" used to back up the claim that the square on the long side of every right angle triangle has the same area as the sum of squares on the other two sides: While Greek geometry found a 'universal proof', the Babylonian engineers simply measured the sides of a thousand right triangular stones, and applied the heuristic that since all of these obeyed the relationship so would the rest. McCloskey believes that the Babylonian approach is more applicable to economics, and that Moore's Law and advances in modeling software will soon make it easier to use and understand than the Greek approach.
In Calibrated Simulation is Storytelling she writes that one way to describe scientific theories is how mechanically mathematical they are: at the one end lie such hypotheses as Newtonian celestial mechanics which can be reduced entirely to equations - at the other are important works such as The Origin of Species which are "entirely historical and devoid of mathematical models". McCloskey says that economics would benefit from recalibrating its output within that spectrum to the more historical, "narrative" analysis.