Introductory note: In 1998, I published a long article, "Problems with Realism in Economics," in which I attacked the realist programs of Uskali Maki and Tony Lawson. Maki's essay here is from a handbook or encyclopedia of economic methodology and was published before my critical essay. Lawson's essay is a response to my criticisms of him. The first of the two central points in my essay is that the controversy between realists and instrumentalists concerning goals of economics, which is an important issue in economic methodology, is largely independent of semantic and epistemological questions about so-called "theoretical entities" -- unobservable entities or properties such as quarks or electrons postulated by scien­tific theories to explain or predict observable phenomena. My second point is that the reason why the latter questions are of little importance is that economic theories, unlike theories in physics, rarely postu­late new entities or properties. Of course, entities or states such as beliefs and preferences are not objects of perception and thus unobservable, but they are not new sorts of entities. They are identical to or at least continuous with entities and properties that are crucial to everyday life. So there is no way to adopt an anti-realist attitude toward economics without holding a similar attitude toward everyday phenomena.

One other thing with respect to question 5 below. When Lawson talks about the "transfactual operation of causal mechanisms" he means that causal tendencies continue to "operate" even when counteracted and even when their operation cannot be detected in the data, which (of necessity) concern what is observable.

1. Maki distinguishes between ontological, semantic, and epistemological realism. Which of these (if any) stands opposed to instrumentalism, especially of the kind espoused by Friedman?

2. Maki argues on p. 437 that "a number of economists have been shown or can be shown to subscribe to one or another form of realism," and he includes Friedman on the list. How important is this finding?

3. Lawson argues that one should distinguish between seeking explanatorily powerful theories on the one hand and mathematically tractable models on the other. What does the distinction between the two project have to do with Lawson's concern with realism?

4. In Lawson's view, mathematically tractable models presuppose "that the social world is everywhere closed," while explanatorily powerful theories take the social world as open, where by a closed system Lawson means "a system in which event regularities occur." Does this seem right to you? Does mainstream economics suppose that the social world is everywhere closed?

5. Lawson summarizes his view on p. 445 as follows, ". . .this social ontology covers both a 'vertical realism', entailing a commitment to underlying social structures, powers and entities, etc., and also a 'horizontal realism' covering the transfactual operation of causal mechanisms in open and (any conceiv­able) closed systems alike, that is, whatever the [observable] outcomes. In this I find that causally effica­cious (and often largely unobservable social structures and mechanisms, etc., indeed exist indepen­dently of our investigations of them and, individually and collectively, constitute proper objects of social scienti­fic study." What does this mean? What's problematic? What would mainstream economists accept or reject?

6. Lawson defends the view that good economics (which might not include mainstream economics), like theories in physics, postulates unobservables in order to explain and predict observations. He is responding to my view that the unobservables in economics are continuous with everyday concepts and that questions about their reality challenge everyday realism rather than marking a divide between those entities whose existence is part of everyday life and those entities postulated by science. He gives as examples of at least partly unobservable novel relations such as "gender, race, employer/employee, student/teacher, money. . ." and "structures of power, social processes, social positions, social rules, evolving totalities, specific institutions, etc." Is Lawson right?