The critique of philosophical foundations of neoclassical economics is significant, because of its hegemony on economic education and research programs in Iran and worldwide academies. Due to an epistemological fallacy, methodological individualism plays a prominent role in the philosophy of economic; since the ontological aspects of economy are reduced to methodological considerations. Accordingly, critique of methodological individualism is regarded as the main entry for philosophical analysis of neoclassical economics. This article aims to analyze and appraise the methodological individualism (...) from critical realism’s point of view. Critical realism is taken as a stand for criticizing methodological individualism, because critical realism and neoclassical economics as a positive approach to economics, both share a realistic worldview. The critical realism’ critique of methodological individualism is bases on analyzing the concepts of formalism, syllogism, social atomism, isolation and reduction. From critical realism’ point of view because of unrealistic postulations of methodological individualism, neoclassical economics is turned to an abstract and deductive science such as mathematics with a low potentiality of explanation. (shrink)

The usefulness of ‘realism’ in explaining Russia’s decision to invade Ukraine has become a keenly contested debate not only in International Relations but in wider public intellectual discourse since the onset of the war in February 2022. At the centre of this debate is the punditry of John J. Mearsheimer, a prominent offensive realist who is a Professor of International Relations at the University of Chicago. This article argues that although Mearsheimer is indeed a realist, his offensive realism (...) is but one of many different realist theories that can forward an explanation of the Ukraine War. Beyond the apparent hegemony of structural realism (the branch of realism to which Mearsheimer’s offensive realism belongs), it is argued that classical and neoclassical realist frameworks can provide more nuanced and, ultimately, convincing arguments as to why Russian President Vladimir Putin decided to invade Ukraine. This is because both classical and neoclassical realism can incorporate insights from non-realist studies—such as the concepts of civilization and ontological security—and combine them into an overarching power politics framework. Although neither classical nor neoclassical realism is flawless in their explanations, they demonstrate that realism does not just have to be about international power structures but can offer multivariate accounts of why a state, like Russia, decided to act, such as invading Ukraine. (shrink)

This article seeks to historicize both the Russian invasion of Ukraine in 2022 and the debate on realism occasioned by Russian aggression in Ukraine since 2014. Using the research of Gerard Toal on Russia’s construction of its security interests in the post-Soviet spaces that include Ukraine, the article argues that neorealist geopolitical explanations fail to do justice to the roles of contingency and culture in setting Russia’s so-called ‘red lines.’ It also identifies an agency problem in realism: realists (...) not only fail to do justice to the agency of small states like Ukraine in this conflict but elide the moral and practical agency of decisionmakers like Russian President Vladmir Putin. The article also suggests that the current realism debate is the tip of an iceberg: realism has long had a problem specifying the relation of its theory to its practice. The article concludes by discussing the long shadow of 19th century imperial history over contemporary discussions of spheres of influence and great power status. (shrink)

Classical economics was oriented towards the advancement of the common interest as defined by the political institutions of the state, whereas neoclassicism is defined in a social and political vacuum. Furthermore, the former related realistically to an excess supply of labour, while the latter assumes full employment. These differences have significant implications for income distribution, accumulation, growth and development. Classical economists advocated free trade to increase domestic productivity and employment at stable or growing real wages. Contemporary globalization recreates the classical (...) surplus labour economy to reduce domestic wage levels through moving domestic production from high to low wage areas around the globe. Free trade becomes necessary so that the goods produced abroad can be imported into capital exporting countries. However, without a corresponding growth of exportables, the trade balance must be adversely affected. Furthermore, adverse changes in income distribution diminish domestic demand for goods. The policy of globalization must become self-defeating. (shrink)

Due to the famous methodenstreit it is often well argued that Menger’s approach to social sciences can be seen as anti-historical, as according to him pure empirical studies are insufficient to establish a firm economic theory. By suggesting that some theorems have to precede historical studies, Menger may be seen as a representative of the a priori tradition in scientific method. The modern method in the mainstream of economic thinking is also to a large extent anti-historical and a priori, but (...) because of its lack of realism and extensive reliance on very limiting assumptions. The main strength of the Mengerian anti-historical approach is lesser faith in imaginary constructs, implying a higher degree of realism in theorizing. (shrink)

In this paper I challenge the pernicious aspects of Milton Friedman's methodological outlook that continues to hold sway over mainstream neoclassical economists. I do this by showing how Friedman's own methodological dicta could have been used against him when he famously advanced the expectations critique of the Phillips curve at his presidential address to the American Economic Association. I use this case study to further suggest that psychological and neurophysiological data should not be deemed irrelevant to economic science.

Robert Lucas' article on the neutrality of money represented the first effective challenge to Samuelson’s neoclassical synthesis methodological separation between static microeconom...

It is a popular view thatpractical deliberation excludes foreknowledge of one's choice. Wolfgang Spohn and Isaac Levi have argued that not even a purely probabilistic self-predictionis available to thedeliberator, if one takes subjective probabilities to be conceptually linked to betting rates. It makes no sense to have a betting rate for an option, for one's willingness to bet on the option depends on the net gain from the bet, in combination with the option's antecedent utility, rather than on the offered (...) odds. And even apart from this consideration, assigning probabilities to the options among which one is choosing is futile since such probabilities could be of no possible use in choice. The paper subjects these arguments to critical examination and suggests that, appearances notwithstanding, practical deliberation need not crowd outself-prediction. (shrink)

The article analyzes the process of modification of Japan’s foreign policy after Donald Trump’s election as US president. As short- and middle-range aims of Japan’s diplomatic strategy were outlined with expectation of victory of Hillary Clinton, Tokyo was forced to abruptly change its policy. Relying on the neoclassical realist theory, the article examines the complex interaction between the external factors, such as security threats from North Korea or China, and domestic factors both in Japan and the US, that is (...) personal, institutional, societal and economic determinants. It is argued that while it was strategic convergence between Tokyo and Washington that enabled relatively smooth cooperation between Prime Minister Abe and President Trump, internal factors, such as right-wing credentials of both decision makers, distorted and to some extent facilitated this process. (shrink)

In the debate on realism of models in economics, the Austrian School and Hayekin particular, seem to have, in a certain way, remained outside. Assuming neoclassical models asunrealistic, the theory of the market as a process looks like a more realistic proposal. However, oneof the fundamental issue s in Hayek’s dissent is not so much the unrealism of the assumptions, but that the market equilibrium theory was not correctly raised, especially with regards to the perfectknowledge assumption. Despite this, (...) in this setting and in line with a previous paper (Zanotti & Borella, 2015), we will argue that Hayek’s spontaneous order may be understood as the Austrian School’s “model”, assuming Mäki’s MISS version of models (Models as Isolations and Surrogate Systems) and emphasizing the place of the ontological foundation of Hayek’s proposal when assessing his model. (shrink)

El objetivo de este artículo es revelar algunas claves de la política exterior chileno -boliviana de la década de 1950 vista desde la región de Tarapacá. Para ello, indagamos en una serie de variables que determinan las orientaciones de las respectivas políticas exteriores de ambos países, desde las teorías de las percepciones y el realismo neoclásico: intereses, capacidades, imágenes e ideologías. Desde estos argumentos, y rastreando notas de prensa de esa década, analizamos el comportamiento de la diplomacia y paradiplomacia chilena (...) y boliviana en el marco del diálogo teórico mencionado. (shrink)

The F-twist is giving way to the methodology of scientific research programs. Milton Friedman's “Methodology for Economics” is being supplanted as the orthodox rationale for neoclassical economics by Imre Lakatos' account of scientific respectability. Friedman's instrumentalist thesis that theories are to be judged by the confirmation of their consequences and not the realism of their assumptions has long been widely endorsed by economists, under Paul Samuelson's catchy rubric “the F-twist.” It retains its popularity among economists who want no (...) truck with methodology, but among the increasing number of able economists who are writing on methodology the F-twist has been surrendered, not so much because these writers have decided it is false, as because something better has finally come along. (shrink)

In this paper we present a model of vocational education and training (VET) that can be used to guide decisions relating to VET in Africa today. This model takes the critique of the neoclassical, neoliberal model of VET as its starting point. Guided by Bhaskar's Critical Naturalism, we use immanent critique to consider the adequacy of proposed alternatives to the neoclassical approach, such as: the heterodox approach, which foregrounds explanations based on human capital and political economy; and Hodgson (...) and Spours' social ecosystem model, which addresses some of the limitations of the heterodox account by including, social and ecosystem elements. Finally, we offer a version of the social ecosystem model that, according to our analysis, explains more of the empirical evidence than previous models. Our version of the social ecosystem model differs from earlier versions in terms of its explicit reference to the critical realist ideas of position- practices and emergence. (shrink)

This book is about forming effective critiques of neoclassical economics. Its focus is on constructive criticism of the foundations neoclassical theory, beginning with what Alfred Marshall called the `Principles of Economics'. It concludes that there is still much that can be done to make neoclassical economics more realistic.

This paper is part of the general debate about the need to rethink economics as a human discipline using a heuristic to describe its object, about the need to explicitly reject the positivistic approach in neoclassical economics, and about the urgency to adopt a different methodology, grounded on a realistic set of initial assumptions able to cope with the complexity of the decision making process. The aim of this paper is to show the use of Occam's razor in the (...) economic debate around realism in economic modelling. Occam's razor can be intended as a principle of logic that emphasises simplicity, or as a heuristic tool that emphasises parsimony. Neoclassical economists, such as Samuelson, have explicitly used Occam's razor as a logical principle to highlight the strict logic and simplicity of neoclassical economics; neoclassical models, however, are based on unrealistic assumptions. Some approaches of heterodox economics, au contraire, have used Occam's razor as a powerful heuristic tool to emphasise parsimony, building up models grounded on realistic initial assumptions and capable of embedding complexity into the general explanation of economic behaviour, as in Simon's bounded rationality (1955; 1957) and Hayek's notion of human rationality (1948; 1952; 1974) and cultural and social evolution (1967; 1978). (shrink)

Conventional theory assumes that economic agents perform at optimal levels of efficiency by definition and this is achieved when individuals behave in a particular fashion. Moreover, neoclassical production theory masks the process by which optimal output can be achieved. I argue that economic theory should be revised to incorporate some key findings of behavioural economics, while retaining the conventional theory’s normative ideal of optimum output whilst rejecting its normative procedural ideals of how to achieve optimality in production. I argue (...) that neoclassical procedures can be expected to yield sub-optimal levels of output and therefore should not be benchmarks for procedural rationality. I present an alternative more realistic and analytically precise specification of the production function related to the fast and frugal heuristics narrative pioneered by Gigerenzer and Leibenstein’s x-efficient theory. This approach incorporates an understanding of the appropriate procedures, psychological and organization variables, decision-making capabilities and end-goals required to achieve optimality in production and, thereby, grow the wealth of nations, thereby enhancing the material wellbeing of the population at large. This also provides us with the tools to better identify economic inefficiency and the conditions that contribute to it. (shrink)

The proliferation of digital data has been the impetus for the emergence of a new discipline for the study of social life: ‘computational social science’. Much research in this field is founded on the premise that society is a complex system with emergent structures that can be modeled or reconstructed through digital data. This paper suggests that computational social science serves practical and legitimizing functions for digital capitalism in much the same way that neoclassical economics does for neoliberalism. In (...) recognition of this homology, this paper develops a critique of the complexity perspective of computational social science and argues for a heterodox computational social science founded on the meta-theory of critical realism that is critical, methodological pluralist, interpretative and explanative. This implies diverting computational social science’ computational methods and digital data so as to not be aimed at identifying invariant laws of social life, or optimizing state and corporate practices, but to instead be used as part of broader research strategies to identify contingent patterns, develop conjunctural explanations, and propose qualitatively different ways of organizing social life. (shrink)

In this paper I consider various shifts in my research and understanding stimulated by seeking how to combat social ecological crises connected to modern economies. The discussion and critical reflections are structured around five papers that were submitted to Environmental Values in an open call to address my work. A common aspect is the move away from neoclassical environmental economics, and its reductionist monetary valuation, to a more realist theory and multiple methods. This relates to my work on environmental (...) ethics, plural values, stated preference validity and deliberative monetary valuation. Expanding beyond the narrow confines of mainstream orthodoxy has involved exploring a range of other disciplines (e.g. applied philosophy, social psychology, human geography, political science, social anthropology, history of thought and philosophy of science) and learning from this literature to rethink economics and develop social ecological economics. A broad range of subjects are covered here, including: personal responsibility, social practice, psychology of the individual, participatory processes, value (intrinsic, instrumental and relational), Nature–society relationships and interdependencies, critical realism and the conduct of unifying interdisciplinary science. I end with a series of comments concerning the failings of orthodox economics and the conduct of scientific research for social ecological transformation. (shrink)

The article aims to demonstrate that the nudge theory suffers from three main weaknesses stemming from its theoretical dependence on behavioural economics. The first two weaknesses endanger the paternalistic goal, whereas the third does not justify the libertarian attribute. The first weakness lies in the incomplete realistic characterisation of behavioural economics theory that is the central theoretical pillar of Nudge theory. The second weakness is even more relevant. The normative model of behavioural economics is neoclassical rationality. It can be (...) applied to choices in conditions of risk, when it is possible to forecast the probability of the outcomes of one’s choices. On the contrary the real life problems are inside a complex and uncertain environment. In an uncertain environment the neoclassical algorithms are no longer valid, in that they postulate the knowledge of the probability of the outputs. Thus errors and bias, as observed in behavioural economics, are not such in many instances, but they are instead adaptive and therefore rational responses to the context of decision-making. Therefore nudge theory that pursues the normative paternalistic objective of neutralising the bias and judgement errors discovered by behavioural economics and putting paternalistically the citizen on the right track, is in fact proceeding in the wrong direction. The last weakness concerns an assumption of Nudge theory about the duality of mind. System 1 represents the intuitive mind, while System 2 corresponds to the analytical one. System 1 tends to make decisions quickly and unconsciously, while System 2 follows a slow and conscious process. Biases and judgement errors are mainly generated by System 1. However, System 2 may later intervene to correct them. From this premise, the Nudge theory affirms its libertarian character. In this paper I will argue that the dualism of the mind would not entail the reversibility of some nudges, particularly of default states. In this way the fundamental pillar is weakened to justify the libertarian character of the nudge theory. (shrink)

The root of any system of economic theory is the theory of price. But while modern Austrian economists have put a great deal of effort and ingenuity into building up the superstructure of their discipline since the mid-1970s, they have paid scant attention to ensuring that the price theory supporting the edifice is a sound and settled doctrine. The result is that, for many current Austrians, price theory is a “dynamic” version of neoclassical price theory. More precisely, it is (...) Chicago price theory with a theory of entrepreneurship and of competition as a rivalrous process grafted onto it. This ad hoc approach to Austrian price theory thus relies heavily on the analytical tools and techniques developed by Alfred Marshall, Frank Knight, and Jacob Viner. George Stigler later elaborated these individual contributions into a systematic price theory.The prevailing approach almost completely ignores the fact that there exists an alternative “causal-realist” tradition of price theory that was founded by Carl Menger and developed by his followers both in Austria and abroad. These include especially Böhm-Bawerk, J.B. Clark, Frank Fetter, Herbert Davenport, Philip Wicksteed, and Ludwig von Mises. The causal-realist tradition, which is explicitly anti-Marshallian and anti-Stiglerian, maintained a shadowy presence in Austrian economics for most of the postwar period. It is only in recent years that some Austrian economists, seeking a sound price theory to sure up the foundations of their discipline, have explicitly recognized and embraced it.Israel M. Kirzner’s neglected book, Market Theory and the Price System, which was first published in 1963 and reprinted in a new edition this year, was the first and only systematic attempt to marry Stiglerian price theory with elements of the causal-realist tradition. Murray N. Rothbard, who had already reformulated and significantly advanced the causal-realist tradition in his own treatise Man, Economy, and State, wrote a comprehensive and quite critical referee report on Kirzner’s book manuscript for the publisher in 1961. His comments have never been published before.This article contains two parts. The first part is a response to certain claims and omissions made by Peter J. Boettke and Frédéric Sautet, the editors of the new edition of Kirzner’s book. The second part contains Rothbard’s report on the book as a supporting document for the arguments of the first part. By proceeding in this way the goal is to clarify the important issues at stake for Austrian price theory. (shrink)

ABSTRACTBehavioural economics provides a more realistic model of man than neoclassical economics. But ‘behavioural economic man’ likewise has his shortcomings. An important aspect is the neglect of...