Lachmann on Valuing Realistic Assumptions

While outlining Milton Friedman’s “The Methodology of Positive Economics” a few days back, I criticized his method of choosing between “valid” hypotheses on the basis that:

“logical completeness and consistency” [are] criteria which “are relevant but play a subsidiary role. (p. 5)”

Mainstream economists have clearly sided with Friedman on this debate, preferring “simplicity” to realism. However, as someone interested in Austrian tradition, I found comfort in the following from Ludwig Lachmann’s paper on “The Significance Of The Austrian School Of Economics In The History Of Ideas”:

Since we lack successful prediction as a means of evidence, we must of course devote special care to the validity of our theoretical assumptions.

Although I’ve just begun to read Lachmann’s work, he is quickly moving up the ranks of my favorite economists.