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In the philosophy of science, instrumentalism is the view that a scientific theory is a useful instrument in understanding the world. A concept or theory should be evaluated by how effectively it explains and predicts phenomena, as opposed to how accurately it describes objective reality.
Instrumentalism avoids the debate between anti-realism and philosophical or scientific realism. It may be better characterized as non-realism. Instrumentalism shifts the basis of evaluation away from whether or not phenomena observed actually exist, and towards an analysis of whether the results and evaluation fit with observed phenomena.
Historically, science and scientific theories have advanced as more detailed observations and results about the world have been made. Instrumentalism provides a framework for the practice of science and scientific method. Instrumentalism is not specifically anti-realist in the sense that it does not necessarily deny the existence of postulated entities. But it is not realist in the sense that predictive success is accepted as a more important value than truthful and accurate descriptions. As a consequence of this stance, instrumentalists may often postulate knowingly false assumptions, so long as they are deemed to aid the predictive potency of (empirical) theories.
Instrumentalism is particularly popular in the field of economics, where researchers postulate fictional economies and actors. Milton Friedman is a famous proponent of the instrumentalist approach.
On a logical positivist version of instrumentalism, theories about unobservable phenomena are regarded as having no scientific meaning. Scientists may make claims about unobservable objects, but these claims should not be regarded as meaningful. Evidence is necessarily limited in any scientific enquiry, and this means underdetermination is a common result, where competing theories are posited on the same set of evidence.
The usefulness of an instrumentalist position becomes apparent in sciences where core concepts are likely to be illusive or disputed, such as quantum physics, and astronomy.
An instrumentalist position was put forward by Ernst Mach. Thomas Kuhn's The Structure of Scientific Revolutions posits problem-solving as a key component of scientific practice, with the emphasis on truth or reality reduced, as he provides extensive examples of how our conceptions of reality have changed over time.
Critiques and responses 
The instrumentalism of Ernst Mach was criticized by Charles Sanders Peirce, the founder of pragmatism (and later pragmaticism). Peirce emphasized that a supposition of reality and truth seems to be the only way to explain scientific progress and to justify the scientific practice of seeking explanations of regularities in better theories. In particular, Peirce explained that unobservable objects had an important role in science, as long as their existence yields in principle empirical consequences that could be tested (in principle).
Instrumentalism can be formulated as the thesis that scientific theories - the theories of the so-called "pure" sciences - are nothing but computational rules (or inference rules); of the same character, fundamentally, as the computation rules of the so-called "applied" sciences. (One might even formulate it as the thesis that "pure" science is a misnomer, and that all science is "applied".) Now my reply to instrumentalism consists in showing that there are profound differences between "pure" theories and technological computation rules, and that instrumentalism can give a perfect description of these rules but is quite unable to account for the difference between them and the theories. 
Instrumentalism denies that theories are truth-evaluable; instead, they should be treated like a black box into which you feed observed data, and through which you produce observable predictions. This requires a distinction between theory and observation, and within each type a distinction between terms and statements. Observation statements (O-statements) have their meaning fixed by observable truth conditions, e.g. "the litmus paper is red", whereas observation terms (O-terms) have their meaning fixed by their referring to observable things or properties, e.g. "red". Theoretical statements (T-statements) have their meaning fixed by their function within a theory and aren't truth evaluable, e.g. "the solution is acidic", whereas theoretical terms (T-terms) have their meaning fixed by their systematic function within a theory and don't refer to any observable thing or property, e.g. "acidic". Though you may think that "acidic" refers to a real property in an object, the meaning of the term can only be explained by reference to a theory about acidity, in contrast to "red", which is a property you can observe. Statements that mix both T-terms and O-terms are therefore T-statements, since their totality cannot be directly observed.
There is some criticism of this distinction, however, as it confuses "non-theoretical" with "observable", and likewise "theoretical" with "non-observable". For example, the term "gene" is theoretical (so a T-term) but it can also be observed (so an O-term). Whether a term is theoretical or not is a semantic matter, because it involves the different ways in which the term gets its meaning (from a theory or from an observation). Whether a term is observable or not is an epistemic matter, because it involves how we can come to know about it. Instrumentalists contend that the distinctions are the same, that we can only come to know about something if we can understand its meaning according to truth-evaluable observations. So in the above example, "gene" is a T-term because, although it is observable, we cannot understand its meaning from observation alone.
See also 
- Page 507 of Stewart: Stewart, W. Christopher (1991). "Social and Economic Aspects of Peirce's Conception of Science". Transactions of the Charles S. Peirce Society (Indiana University Press) 27 (4): 501–526. JSTOR 40320349. Unknown parameter
- Karl R. Popper, Conjectures and Refutations: The Growth of Scientific Knowledge, Routledge, 2003 ISBN 0-415-28594-1
- Kuhn, T.S. The Structure of Scientific Revolutions. Chicago: University of Chicago Press, 1962. ISBN 0-226-45808-3
- Ian Hacking Representing and Intervening, Introductory Topics in the Philosophy of Natural Science, Cambridge University Press, Cambridge, UK, 1983.