Friedman armed finance theorists against ‘unrealistic’ critiques of their models.

Evidence

When, in the 1950s and the 1960s, an older generation of more descriptively oriented scholars of finance encountered the work of the new finance theorists, their reaction was, as has already been noted, often a species of “the perennial criticism of orthodox' economic theory as unrealistic”’ (Friedman 1953a, p. 30) that Friedman’s essay was designed to rebut. Friedman made explicit a vital aspect of what, borrowing a term from Knorr Cetina (1999), we might call the “epistemic culture” of modern orthodox economics. In so doing, he gave finance theorists a defense against the most common criticism of them, despite his doubts as to whether some parts of finance theory were genuine contributions to economics. — Donald MacKenzie, An Engine, Not a Camera, 62

Categorization

• XREF: Introduces Knorr Cetina’s ‘epistemic culture’ concept, a bridge to STS literature on how disciplines construct and defend knowledge. — connects to: Unrealistic assumptions do not count as legitimate criticisms in financial economics — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 63; Economists’ modeling may bend economic reality toward theoretical assumptions — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 116; Merton Miller championed Friedman’s disregard of model assumptions while Modigliani preferred realism — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 188 (+3 more)

Broader Connections

• Mainstream economists defended theory by scapegoating Greenspan-style market fundamentalism #corroborates (0.75) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 700