A Critical Examination of Methodological Approaches in Economics: Theoretical Foundations and Implications

Abstract

This paper aims to foster a nuanced and comprehensive understanding of the intricate relationship between methodological choices, theoretical frameworks, and the practical implications of economic thought. More precisely, it seeks to provide a comprehensive understanding of how methodological choices influence economic conclusions and policy recommendations. From a theoretical standpoint, this paper explores the various methodologies used in economics. It analyzes the philosophical assumptions and core principles of major economic schools of thought, including classical, neoclassical, Keynesian, Marxist, and Austrian economics. A key focus is the dissection of central methodological debates, contrasting methodological individualism with holism, and positivism with interpretivism. The paper also examines the epistemological foundations of economic inquiry, contrasting these different schools of thought. The paper demonstrates how different frameworks, stemming from inherent assumptions and limitations of each methodological approach, lead to varying understandings of economic phenomena, analytical conclusions, and policy recommendations. It scrutinizes how fundamental methodological choices – encompassing epistemological stances and preferences for individualistic/holistic or positivist/interpretivist approaches – significantly influence the construction of economic theory and its practical application. The study concludes that economic analysis is deeply rooted in methodological frameworks, and varying assumptions across schools of thought can lead to substantially different interpretations and outcomes and ultimately emphasizes the importance of methodological awareness in evaluating economic research. Based on the analysis, it is recommended that researchers and policymakers maintain a strong awareness of the underlying methodological choices inherent in different economic theories and analyses. This awareness is crucial for a more nuanced and comprehensive understanding of economic phenomena and for evaluating the validity and applicability of various policy recommendations.