| Economies in transition are the rule rather than the exception; witness the turmoil in eastern Europe, the cries for radical restructuring often heard in the 1992 US presidential election campaign, and the structural adjustment programs imposed over the past decade in many low-income economies. While economists are prominent in policy development for transitional economies, their orthodox theoretical tools are frequently ill-suited to the task. Resulting policy failures lead directly to massive human suffering, but the strictures of orthodox methodology preclude application of more suitable alternative theories.; The proclaimed and tacit methodologies of economics are contrasted, and the origins of both are explored. The methodology that appears explicitly in journal articles is found to be wanting; the arguments of Friedman, Simon, Arrow, and others are examined. The actual practice of economics more often reflects an unspoken methodology traceable to the formal American philosophical pragmatism of Peirce and Dewey. The lack of serious discourse and formal debate, however, is clearly suboptimal. It places development economists in particular at a structural disadvantage in any attempt to justify the additional costs of a pragmatic research agenda in inhospitable research environments.; The implications of an unexplored methodology are traced through a very practical examination of two key economic models. Computable general equilibrium models, along with neoclassical institutional models, are assessed according to both orthodox and pragmatic methodological standards. While the models themselves are logically consistent, their senseless application to transitional economies creates numerous difficulties. These difficulties are discussed in detail.; Failed policies and growing doubts about the usefulness of economic policy prescriptions suggest the need for a reexamination of the treatment of methodology in economics. A pragmatic alternative is proposed, illustrated by an example from Sierra Leone. The outline of a restructured economic research program for constructive analysis of transitional economies is presented. |
