The scientific analysis of the economic process requires a scientific and explanatory heuristic; and the analyst must abide by the canons of empirical method.
Insight says much about Canons of Empirical Method. There is no sense in repeating it all here. But we list here certain commentary in the hope that it will motivate the reader to visit Insight, A Study of Human Understanding. [ CWL 3, pages 70-102/93-125]
- Canon of Selection
One should ask only questions that involve sensible consequences. One should direct one’s efforts to issues that can be settled by “the decisive evidence of observation and experiment.”
This first canon amounts to a definition of what empirical science is. A theory or a hypothesis is scientific in the meaning of empirical science if it has sensible, observable, verifiable consequences. If the theory has no implications as to what you will see at a determinate place and time, or what you can feel or otherwise observe, then it is outside the realm of science.. … [CWL 10, 141]
To have that canon of selection you need the conceptual structure provided by a mathematics for a physics, … [CWL 10, 142]
The conceptual system must be rich in implications. In other words, its basic terms have to be properly defined and its range of implications clearly determined. Then you have an empirical science and apply a canon of selection which picks out of the conceptual system the elements that can be verified. [CWL 10, 142 ]
the conceptual system of functional macroeconomic dynamics must be rich in implications. In other words, its fundamental functional terms – basic, surplus, ordinary surplus, pure surplus, macroeconomic costs – have to be properly defined and their range of implications clearly determined. Then you have an empirical scientific purely relational hypothesis and can apply a canon of selection which picks out of the conceptual system the relations that can be verified.
- Canon of Relevance
“empirical inquiry aims at reaching the intelligibility immanent in the immediate data of sense.” This intelligibility resides in the relations of things, not to our senses, but to one another” “The technical term to denote this type of intelligibility is formal causality.”
Ought there not to be introduced a technical term to denote this type of intelligibility? … what we have called the intelligibility immanent in sensible data and residing in the relations of things to one another, might be named more briefly formal causality or rather, perhaps a species of formal causality. [CWL 3, 78/]
There is a further type of insight that arises immediately from the data. Such is the grasp (insight, or act of understanding) that precedes and grounds the definition of the circle. Such was Galileo’s insight formulated in the law of falling bodies. Such was Kepler’s insight formulated in the laws of planetary motion. Such was Newton’s insight formulated in the theory of universal gravitation. Such has been the point in the now well established technique of measuring and correlating measurements. Such is the goal of classical heuristic structure that seeks to determine some unknown function by working out the differential equations, of which the unknown function will be a solution, and by imposing by postulation such principles as invariance and equivalence …Fourthly, it notes that this intelligibility, immanent in the immediate data of sense, resides in the relations of things, not to our senses, but to one another. Thus, mechanics studies the relations of masses, not to our senses, but to one another. Chemistry defines its elements, not by their relations to our senses, but by their places in the pattern of relationships named the periodic table. Biology has become an explanatory science by viewing all living forms as related to one another in that complex and comprehensive fashion that is summarily denoted by the single word, evolution. [CWL 3, 77-78; 100-102]
Canon of Parsimony
“the empirical scientist can not affirm what he does not know.” This canon excludes from scientific affirmation all statements that are unverified and, still more so, all that are unverifiable.”
- Canon of Complete Explanation
Seek the complete explanation of all phenomena or data
- Canon of Statistical Residues
Residues exist which call for statistical inquiry.