Causal Laws, Functional Relations and Tendencies

Abstract

This paper draws upon critical realism to argue that the widespread use of functional relations and laws in economics is misconceived. This misconception stems from the inappropriate use of a deductivist mode of theorising; an empirical realist ontology; and a notion of causality as mere regularity or constant conjunction, all of which are associated with functional relations and laws. Not only does critical realism identify the cause of the misconception, it sustains an alternative causal/explanatory mode of theorising; a stratified ontology; a notion of causality as powers; and an alternative notion of law as tendency. Marx's ideas on the tendencies to employment and unemployment are used as an example of economic theory consistent with these alternatives.