Chapter 12 criticizes Karl Poppers and Imre Lakatos’ views on theory appraisal, which have been particularly influential among writers on economic methodology, although their influence has waned. Popperian critics of economics are right to claim that economists seldom practice the falsificationism that many preach, but, in contrast to authors such as Mark Blaug (), I argue that the problem is with the preaching, not with the practice: falsificationism is not a feasible methodology. Although Lakatos provides more resources with which to defend economics than does Popper, his views are also inadequate and for a similar reason. Both Popper and Lakatos deny that there is ever reason to believe that scientific statements are close to the truth or likely to be true, and neither provides a viable construal of tendencies. In denying that such reasons to accept generalizations have a role in either engineering or in theoretical science, Popper and Lakatos are implicitly calling for a radical and destructive transformation of human practices.

Chapter 7 is concerned with the global strategy and structure of economic theory. After arguing that Thomas Kuhns and Imre Lakatos notions of paradigms and research programs are in some ways misleading and not sufficiently detailed to be immediately applicable to economics, chapter 7 sketches the structure and strategy of economics as an inexact and separate science and comments on the role of abstract general equilibrium theories in this enterprise. Crucial to the global structure of economics is the conviction that economic outcomes depend mainly on a small set of causal factors that typically capture the most important features of economic outcomes. Economic theories are inexact, because other causal factors are left out, but at a high level of approximation, they are complete, and their scope includes the whole of economic phenomena.

Scientists and philosophers of science are most impressed by theories that make successful, novel predictions: that predict surprising facts in advance of their experimental or observational confirmation. There is a theory of cosmology that has repeatedly been successful in this privileged way, but it is not the standard, or 𝚲CDM, model. It is Mordehai Milgrom’s MOND theory (MOdified Newtonian Dynamics). Unlike the standard model, MOND does not postulate the existence of dark matter. Observations that are explained in the standard model by invoking dark matter are explained in MOND by postulating a change in the laws of gravity and motion.

Karl Popper’s logical and epistemological insights are the basis of a widely used methodology for judging the success of scientific theories – or more accurately, of scientific “research programs,” defined as the evolving set of theories that share a common set of assumptions (or “paradigm” in the language of Thomas Kuhn). Imre Lakatos’s Methodology of Scientific Research Programs judges an evolving theory in terms of how it responds to falsifying instances – via ad hoc adjustments (bad) or via content-increasing hypotheses (good) – and how well it predicts facts in advance of their discovery. A theory that evolves in content-increasing ways, and that predicts novel facts in advance of their confirmation, is called “progressive”; a theory that fails to do so is called “degenerating.” Particularly important are predictions that differ from those of a competing theory – which in the case of MOND is the standard cosmological model.