Scholars should verify economic shifts empirically before explaining them

Evidence

It stands to reason that before such provocative theses can be fully assessed, we ought to first determine whether it is in fact accurate to characterize the US economy as having been ‘financialized’. As Merton (1959, p. xiii) once remarked,‘It might at first seem needless to say that before social facts can be “explained”,it is advisable to ensure that they actually are facts.Yet,in science as in everyday life,explanations are provided for things that never were.’ This paper, then, analyzes the available data for what they reveal about the rise of finance in the US economy. As such, the objectives of this paper are primarily descriptive and conceptual in nature—a full causal analysis is left for other writings (see Krippner, 2003). The question addressed here is how to characterize most usefully long-term structural change in the US economy, not how to explain that change, given that it has occurred. While the data problems involved in such an endeavour are daunting,I argue that we must confront the data directly, for the underlying shift in the economy that they signal is so dramatic—and so durable—that it challenges competing frameworks for understanding the nature of contemporary capitalism. — Greta R. Krippner, The Financialization of the American…, 10

Categorization

• XREF: Methodological stance echoes the reader’s interest in empirical grounding before theory-building — the ‘verify the fact before explaining it’ move applies across disciplines. — connects to: Empirical failure does not dislodge orthodox economists from their theory — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 722; Economists’ persistence in error needs institutional explanation, not just psychology — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 490; A German economist proposed grounding economics in empirical behavioral sciences rather than abstractions — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 328
• DEEPTHINKING: The insistence that descriptive rigor precedes causal explanation — that data problems must be confronted directly even when daunting — is a foundational methodological commitment worth sitting with.

Related

• Scholars asserted financialization’s existence without providing direct evidence (similarity 0.84)
• The US economy became increasingly financialized in the post-1970s period. (similarity 0.83)
• Financialization lacks rigorous empirical evidence defining its timing and magnitude (similarity 0.82)
• Frameworks for economic change should be judged by theoretical usefulness, not absolute truth. (similarity 0.80)
• Economic theories function as analytic engines rather than exact copies of reality. (similarity 0.80)
• Applying economic models requires tacit professional judgment, not fixed rules. (similarity 0.78)

Broader Connections

• Empirical failure does not dislodge orthodox economists from their theory #complicates (0.75) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 722
• A German economist proposed grounding economics in empirical behavioral sciences rather than abstractions #expands (0.75) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 328
• Economists’ persistence in error needs institutional explanation, not just psychology #qualifies (0.72) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 490