Yet this view jars somewhat with the dominant methodological direction of travel in economics. That methodological lead was provided by Karl Popper in the 1930s (Popper (1934)). In The Logic of Scientific Discovery, Popper argued for a “deductive” approach to advancing knowledge. This involved, first, specifying a clear set of assumptions or axioms. From those were deduced a set of logical propositions or hypotheses. And then, and only then, were these hypotheses taken to the data to be validated or falsified. This pursuit of empirically-falsifiable hypotheses had even-earlier antecedents. The use of dynamic optimisation techniques goes back at least to Leon Walras (Walras (1874)). And he, in turn, drew on the tools developed by mathematicians such as Leibniz, Lagrange and Euler. These techniques were used to construct early “general equilibrium” models of the economy, models which where internally consistent when looked at as a whole. Newtonian physics was built on the same principle of internal consistency within systems, with energy within that system always preserved. Those systems were subject to disturbances which could cause them to oscillate dynamically. Ultimately, however, these systems typically had an equilibrium or steady-state to which they returned. As one of the simplest examples, Newton’s pendulum exhibits damped harmonic motion once displaced before returning to a state of rest. Much of mainstream macro-economics and finance has essentially followed this intellectual lead. It typically starts with a set of assumptions or axioms – in economics often defining the preferences of consumers and the technology facing firms.

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