Understanding the Limits of Pure Theory in Economics: Knight and Mises

Per Bylund

A chapter in Research in the History of Economic Thought and Methodology: Including a Symposium on Frank Knight's Risk, Uncertainty and Profit at 100, 2021, vol. 39C, pp 3-18 from Emerald Group Publishing Limited

Abstract: Knight’sRisk, Uncertainty, and Profitis, by the author’s own account, “a study in ‘pure theory’.” From pure theory, the scientific method’s “successive approximations” explain empirical phenomena. But Knight did not fully develop the boundary conditions for theory. In this chapter, the author elucidates the demarcation of pure theory inRisk, Uncertainty and Profit. For comparison and contrast, the author uses Mises’s Austrian aprioristic methodology praxeology and its strict distinction between theory and thymology. The author finds that Knight and Mises largely agree on the nature and importance of pure theory but differ on its meaning and use. The author’s findings suggest that Knight, while arguing for aprioristic pure theory, still places empirical observation first.

Keywords: Frank Knight; pure theory; theoretical economics; methodology (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rhetzz:s0743-41542021000039c001

DOI: 10.1108/S0743-41542021000039C001

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