From Robbins to Friedman and Beyond

Abstract

In the early 1950s, Milton Friedman canonized neoclassical economics for his era of economists by accepting Robbins’ concept of scarcity as a core disciplinary concern and insisting that economists’ main concern was with “positive economics,” solely concerned with “what is,” not with what “ought to be” (the domain of “normative economics). He argued that economists’ empirical research must be guided by simplified models that need not, and could not, pass the test of descriptive reality. Indeed, he argued that no theory could be fully descriptive. Accordingly, “perfect rationality” and “perfect competition,” while lacking egregiously, in descriptiveness, were acceptable devices for analyses, especially if they eased analyses and if the predictions drawn from the models past repeated empirical tests. Neither Robbins nor Friedman made the economy within the human brain a central issue.