The ideology of finance-part I: "Ideology and the theory of financial economics"

Official URL: https://dx.doi.org/10.4324/9781315188911

The paradigms of modern finance are the result of a type of academic thinking inspired by a positivist philosophy. Philosophers of science argue that this positivism of Milton Friedman is “value neutral”; that is, it is not influenced by any particular political view of the world. In this paper, using the ubiquitous Efficient Markets Hypotheses as an example, we argue that both the ontology and the epistemology of financial economics are decidedly value impregnated, however well the methodology masquerades as perfectly objective. It is important that scientists (researchers) recognize the ubiquity of ideology in finance and admit and understand the values implicit in its neoclassical methodology. With different beliefs and their attendant methodologies, the concept of “market efficiency” would be quite different, if it at all existed.