This paper examines some economic forecasts made in late 1930 that were intended to predict economic activity in the United States in order to shed light on several methodological issues. We document that these forecasts were extremely optimistic, predicting that the recession in the US would soon end, and that 1931 would show a recovery. These forecasts displayed egregious errors, because 1931 witnessed the largest negative growth rate for the US economy in any year in the twentieth century. (...) A specific question is what led forecasters to make such serious and substantial empirical errors. A second more general issue involves the methodology of forecasting. The 1930 forecasts were sometimes based on explicit analogies with previous serious business cycles. Modern forecasting approaches are based on techniques that may not be recognized as analogies. Using the 1930 forecasts, we examine the implicit?analogy content of forecasts, and what might render such implicit analogies valid or invalid. This 1930 forecast example also resonates beyond the confines of economic methodology because forecasts about the Great Depression are of continuing interest to the profession at large, and we produce a forecast series not previously available. (shrink)
Gregor Betz explores the following questions: Where are the limits of economics, in particular the limits of economic foreknowledge? Are macroeconomic forecasts credible predictions or mere prophecies and what would this imply for the way economic policy decisions are taken? Is rational economic decision making possible without forecasting at all?
Providing health care in the most cost-effective way has become a priority in recent years. This book tackles the important issue of the potential conflict between economic expediency and the welfare of individual patients. Contributors examine different attitudes to this complex problem, along with a variety of legal and historical perspectives. The book addresses particular aspects of health care, such as medical expert systems, general practice, medical education, and clinical decision-making where the direct involvement of doctors in allocating scarce (...) and expensive resources is perhaps most obvious. (shrink)
The morality of an economic system characterized as an Adam Smith type system is compared with one characterized by central planning. A prima facie case is made that, while the latter has attributes that satisfy a necessary condition for having moral attributes, the former does not and, as a result, has no moral attributes. But then a deeper look at the situation reveals that the directed systems really do not satisfy the necessary condition either. Both the directed and undirected (...) systems end up in the same boat. Neither have any moral attributes. (shrink)
The necessity to provide for a stable regional development as one of the main priorities of regional social and economic policies in the unstable world economics is justified. A wide classification of stability types in region development is considered and factors influencing the institutional stability are singled out.
What is the appropriate criterion to use for distributive justice? Is it efficiency, need, contribution, entitlement, equality, effort, or ability? Globalization and Economic Ethics maintains that far from being rival principles of distributive justice, efficiency and need satisfaction are, in fact, complementary norms in our emerging knowledge economy. After all, human capital plays the central role in effecting and sustaining long-term efficiency in the Digital Age. This book explores the vital link between human capital formation and allocative efficiency using (...) the properties of the market and the knowledge economy as analytical tools. (shrink)
_____This book challenges us to take a broad and ethical view of economic behavior, which includes all forms of exchange and human interaction, from how we spend our money to how we fulfill our role as responsible human beings in a global ecological framework. Drawing on Jewish ethical teachings, mystical lore, and tales of the Hasidic masters, the author examines a wide range of subjects, including competition, partnerships, and contracts, loans and interest, the laws of fair exchange, and tips (...) and presents. _____ The Kabbalistic teachings in this book not only impart wisdom about the world of money, but also lead us to self-understanding and the magic of knowing who we are, what we really want, and how to receive it. _____. (shrink)
This study examined how ethical case study content and the process for working through case material influenced training effectiveness. Specifically, the effects of behavioral modeling content and the use of forecasting prompt questions on knowledge acquisition and transfer were tested. Graduate students participating in a case-based ethics training course read a case where the main actor demonstrated key behaviors effectively (mastery model), some behaviors effectively and some ineffectively (mixed model), or no behaviors (no model). The students then responded to (...)forecasting or summarizing prompts. Results revealed a main effect for modeling content. Explicitly modeling key behaviors within a case improved constraint analyses, sensemaking, and decision ethicality on a transfer task. The mastery model using effective behaviors was most beneficial. Forecasting prompts resulted in better transfer performance when the main actor used a mix of ineffective and effective behaviors. Implications for designing ethics training programs are discussed. (shrink)
The beliefs of economists are not solely determined by empirical evidence in direct relation to the theories and models they hold. Economists hold 'ontological presuppositions', fundamental ideas about the nature of being which direct their thinking about economic behaviour. In this volume, leading philosophers and economists examine these hidden presuppositions, searching for a 'world view' of economics. What properties are attributed to human individuals in economic theories, and which are excluded? Does economic man exist? Do markets have (...) an essence? Do macroeconomic aggregates exist? Is the economy a mechanism, the functioning of which is governed by a limited set of distinct causes? What are the methodological implications of different ontological starting points? This collection, which establishes economic ontology as a coordinated field of study, will be of great value to economists and philosophers of social sciences. (shrink)
Ever since the formation of the field of economic methodology in the 1990s, doubts have been raised about its discursive closure from both inside and outside the field. Rather than embarking on a programmatic discussion, I present a historical narrative regarding the conditions of the formation of the field, which may have necessitated this closure. These conditions are found in the role methodological reflections played in the formalist revolution of the 1950s and in its critique in the 1970s. Both (...) episodes gave occasion to, but did not require the import of philosophy of science in the mid-1970s. Since the 1980s, when the field became separately established through post-Popperian methodology, it remains an open question whether this imposition still holds. (shrink)
Stories form an integral part of models. An economic model can not be fully characterized simply by knowing its structure: the model can only be completely described when we know how it works and what it can do. This activity of manipulating a model requires a narrative device, such as a question, which sets off a story told with the model. The structure or system portrayed in the model constrains and shapes the stories that can be told, but without (...) stories showing how the structure works, we cannot tell what might happen in specific cases. Without these narrative elements, we cannot apply model-structures directly onto the facts of the economic world, nor demonstrate outcomes about the hypothetical world represented in the model. Thus, stories are not simply devices of persuasion, but constitute an important part of the identity of a model. (shrink)
I comment on the controversy between McCloskey and Ziliak and Hoover and Siegler on statistical versus economic significance, in the March 2008 issue of the Journal of Economic Methodology. I argue that while McCloskey and Ziliak are right in emphasizing ?real error?, i.e. non-sampling error that cannot be eliminated through specification testing, they fail to acknowledge those areas in economics, e.g. rational expectations macroeconomics and asset pricing, where researchers clearly distinguish between statistical and economic significance and where (...) statistical testing plays a relatively minor role in model evaluation. In these areas models are treated as inherently misspecified and, consequently, are evaluated empirically by other methods than statistical tests. I also criticize McCloskey and Ziliak for their strong focus on the size of parameter estimates while neglecting the important question of how to obtain reliable estimates, and I argue that significance tests are useful tools in those cases where a statistical model serves as input in the quantification of an economic model. Finally, I provide a specific example from economics ? asset return predictability ? where the distinction between statistical and economic significance is well appreciated, but which also shows how statistical tests have contributed to our substantive economic understanding. (shrink)
Over the last several decades the view that economic reality is somehow fundamentally complex has increasingly taken hold among economists, not only those focused on abstract theory but even policymakers as well (Greenspan, 2004). Consequently such economists have been forced to wrestle with the problem not only of how to forecast, which has always been difficult, but even how to understand the apparently most simple economic phenomena in principle as well. More to the point, even how to think (...) about how to understand such phenomena has become a serious challenge. In short, economists increasingly must grapple with fundamental problems of epistemology, how to know what they know in a complex economic reality. This paper will consider three foundational aspects of this problem. The first involves to what extent the source of the problem is endogenous to nonlinear dynamics. The second involves to what extent it is logical and computational. The third will consider whether or not the epistemological problem is really an ontological problem. The problem of nonlinear dynamics and epistemology is most clearly seen in relation to chaotic dynamics, particularly the problem of sensitive dependence on initial conditions, also known popularly as the “butterfly effect.” If minute changes in initial conditions, either of parameter values controlling a system or of initial starting values, can lead to very large changes in ultimate outcomes of a system, then it may essentially require an infinite exactness of knowledge to completely understand the system. Likewise such problems as fractality of basin boundaries in systems with multiple basins.. (shrink)
Economic thinking is largely the construction of models and their use in various cognitive activities. So, understanding the conduct of inquiry in economics requires understanding economic models and their various uses. This paper connects models to a somewhat improved version of Laudan's distinction between mini-theories and global theories. Specifically, the paper indicates that economic models are mini-theories, and says something about the relations between models and the broader networks of beliefs that constitute global theories in economics. But (...) the claim that models are mini-theories is intended as an initial and only partial account of the nature of models. As this paper indicates, viewing models as minitheories leaves room for adopting some further, more penetrating account of the nature of models, and underdetermines the choice as to which more profound account of models is selected. (shrink)
(2013). The systemic failure of economic methodologists. Journal of Economic Methodology: Vol. 20, Methodology, Systemic Risk, and the Economics Profession, pp. 56-68. doi: 10.1080/1350178X.2013.774848.
In theories that idealize the object of study, falsity is inserted somehow. However, the actual propositions by which the idealization takes place need not be false at all. An example from physics illustrates that the Ideal Gas Law and Boyle's Law are respective idealizations of the van der Waals Law. The idealizational procedures involved in reasoning from the latter to the former can be repeated at a higher level of abstraction than that of the laws as we know these from (...) physics textbooks. Thus, idealization and abstraction can be seen as relatively independent methods of reasoning, the one to be carried out with or without the other at the same time. This underlines Uskali Mäki's taxonomy, which shows that horizontal isolations in economic reasoning form a procedure completely different from vertical isolations. In contrast, however, to his taxonomy, I propose to define idealization as horizontal isolation. The lessons for the policy relevance of science ? and of economics in particular ? are that the use of ideal models does not necessarily imply a total lack of their external validity. Further, I show that abstraction in theorizing, under certain conditions, may increase the policy relevance of theories, rather than that it is decreased. Abstract theories tend to count the actual social world ? where policymakers try to intervene ? among their models more easily than concrete theories. Finally, this paper also deals with one very problematic aspect of the common use of clauses in order to hedge economics hypotheses. Many idealizational clauses have a propensity for imprecise reference, due to which it is impossible to judge the external validity of economic models. I shall indicate how this problem relates to issues of interdisciplinarity in social science. (shrink)
Since the mid?1950s the spread of formal models and econometric method has greatly improved the study of the past, giving rise to the ?new? economic history; at the same time, the influence of economic history on economists and economics has markedly declined. This paper argues that the contribution of history to the advancement of economics is still paramount, as is evident from the evolution of monetary theory and institutions.JEL classification: NO1, A12.
By using a metatheoretical interpretation of the development of international trade theory as an example, I illustrate that, as is manifested in the practices of economic theorization, a theoretical representation can be decomposed into two component representations: a formal representation and a causal narrative representation. I further maintain that, with respect to both component representations, the concern of isomorphism is important in that it is the guiding idea that underlies economists' practice of identifying both an adequate formal model and (...) a plausible causal story to represent the targeted phenomenon. As a result, it can be argued that the nature of the representational relation is manifested in the practices of economists as they imagine the imaginable causal stories on the basis of imaginative causal structures depicted in the causal models of the targeted phenomenon. (shrink)
The contrastive approach to explanation is employed to shed light on the issue of the unrealisticness of models and their assumptions in economics. If we take explanations to be answers to contrastive questions of the form, then unrealistic elements such as omissions and idealizations are (at least partly) dependent on the selected contrast. These contrast?dependent assumptions are shown to serve the function of fixing the shared causal background between the fact and the foil. It is argued that looking at the (...) explanations offered by economic models in contrastive terms helps to be precise about their explanatory potential, and hence, to assess the adequacy of their unrealistic assumptions. I apply the insights of the contrastive approach to the ?new economic geography? models, and to a selection of criticisms directed at them. This case illustrates how a contrastive analysis can help the solution of disputes concerning the unrealisticness of particular models. (shrink)
This paper rejects the idea that rationality can be defined as optimization, on theoretic, empirical and methodological grounds. It proposes instead a more general theory of rational action in the context of individual growth, change and development over time, in an uncertain world of social interaction, in which choices are part of a learning process. Such a theory of economic behavior is empirically testable, which is not true of either optimization or satisficing, involves conflict and tension rather than harmony, (...) and leads to possible government action rather than laissez-faire. It also broadens economic theory to include relationships among individual behavior, institutions and values. (shrink)
Economics and culture are in a complex, developing relation to each other. Yet, to introduce ?culture? into economic theory requires, first of all, an appropriate understanding of culture itself. The crucial point of this paper is that culture in its development and structure is only understandable if one considers it in connection with the autonomous structural development of the forms with which the subjects experience and construct their world. In recognition of the socio?cultural organization of human society, there is (...) no absolute autonomy of individuals in comparison to society and economics, while together with this interdependency the development of rationality exceeds mere instrumentality. Through ontogenesis, every individual is located ?within the boundaries of society?. What are consequences for economic theory? First of all: Economics is a cultural science in a double sense. Its object is the changing world of economic phenomena that are bound in a very specific cultural context. However, culture is not only relevant for the phenomena of socio?economic life, but also for the phenomena of economic science, i.e. for the development of economic thought. (shrink)
Validity was first given a more specifically scientific meaning by psychologists in the early twentieth century in the contexts of psychological tests. Following the classification of different validity-types in the American Psychological Association's Technical Recommendations (1954), validity travelled from psychological tests to psychological experiments through the work of Donald Campbell. Thus the idea was introduced that also experiments could be more or less valid. In addition, a distinction was made between the internal and the external validity of an experiment. Of (...) the two domains in which validity was employed in psychology, only the internal and external validity of experimental methodology travelled to economics. The initial implementation of validity in economic experimentation was reluctant, and focused upon showing how external validity in particular was not problematic in economic experiments. However, the gradual adoption of validity by economists working with experiments eventually led to the clear, analytical definition of internal validity by Francesco Guala, a definition that was subsequently taken over by other economists. In its travels from psychological tests to psychological experiments to economic experiments the concept of validity generally retained its meaning as the accuracy of a scientific procedure. At the same time, however, it was put to use in dissimilar ways and elicited different discussions in the scientific realms in which it was applied. (shrink)
This volume reflects the results of a symposium held at Tillar House, the ASIL headquarters in Washington, DC, in November 2008 which brought together philosophers, legal scholars, and economists to discuss the problems of understanding ...
This paper distinguishes the base domain of an economic theory (in which predictions are relatively unambiguous) from, respectively, the domains of intended application and of legitimate testing; it argues that the domain of legitimate testing is not generally restricted to that of intended application; and discusses the obligations on researchers imposed by a position that presumes experimental environments in the base domain of a theory to provide legitimate test, unless there is compelling reason to expect behaviour in the domain (...) of intended application to conform more closely to the theory. Experimental tests of choice theory are discussed as an example. (shrink)
Some have attempted to justify benefit/ cost analysis by appealing to a moral theory that appears to directly ground the technique. This approach is unsuccessful because the moral theory in question is wildly implausible and, even if it were correct, it would probably not endorse the unrestricted use of benefit/ cost analysis. Nevertheless, there is reason to think that a carefully restricted use of benefit/ cost analysis will be justifiable from a wide variety of plausible moral perspectives. From this, it (...) is reasonable to conclude that such use of the technique is probably morally justified and should be acceptable to most people. (shrink)
We carry out a textual analysis of Sraffa's main published contributions to pure economics in order to elaborate a rational reconstruction of an aspect of Sraffa's implicit methodology which has not yet been duly investigated. We refer to the threefold relationship between ?economic reality?, ?the economist/observer? and ?economic theory?. We elucidate the constraints which, for Sraffa, should bind the economists' arbitrariness and we trace the elements of continuity and evolution from the 1925?6 critique of Marshallian economics to Production (...) of Commodities. (shrink)
Although it is laudable that evolutionary economists have a greater concern for ontological issues than many of their brethren, considerations concerning ontology cannot play a decisive role in adjudicating theoretical disputes. Attempts to formulate an appropriate ontology for evolutionary economics, different from the one prevailing in standard economic theory, are better viewed as exercises in conjectural revisionary ontology. Ideally they offer useful heuristics for fruitful further theorizing. Furthermore, issues raised in connection with ontology that previously were treated as if (...) they are one and the same are here categorized into three clusters. The categorization is used to dispel worries that have haunted evolutionary economics right from its inception. It is shown in particular that the belief that there are significant Darwinian evolutionary processes going on in present?day capitalist economies does not imply the denial of genuine agency or the endorsement of dubious doctrines such as biological reductionism. (shrink)
This paper evaluates the rationality of anger in the light of a standard notion of economic rationality. Whether anger is rational or otherwise cannot be answered in general, but will depend on the economic setting. As long as anger can be explained as a preference in a parsimonious and stable utility function, it does not make sense to talk of anger as rational or irrational. The production of anger is subtly mediated by many cognitive factors. These (and the (...) anger?induced cognitive effects and intertemporal inconsistency of preferences) underlie what are the genuine problems that anger creates for rational choice. (shrink)
This essay examines the role of data and program?code archives in making economic research ?replicable.? Replication of published results is recognized as an essential part of the scientific method. Yet, historically, both the ?demand for? and ?supply of? replicable results in economics has been minimal. ?Respect for the scientific method? is not sufficient to motivate either economists or editors of professional journals to ensure the replicability of published results. We enumerate the costs and benefits of mandatory data and code (...) archives, and argue that the benefits far exceed the costs. Progress has been made since the gloomy assessment of Dewald, Thursby and Anderson some 20 years ago in the American Economic Review, but much remains to be done before empirical economics ceases to be a ?dismal science? when judged by the replicability of its published results. (shrink)
Bijural services as factors of production -- Commentary A on Breton and Salmon -- Commentary B on Breton and Salmon -- The challenge of incomplete law and how different legal systems respond -- Commentary C on Pistor and Xu -- Commentary D on Pistor and Xu -- Coevolution as an influence in the development of legal systems -- Commentary E on Breton and Des Ormeaux -- Commentary F on Breton and Des Ormeaux -- The demand for bijurally trained Canadian lawyers (...) -- Commentary G on Davis and Trebilcock -- Commentary H on Davis and Trebilcock. (shrink)
Somewhat surprisingly, evolutionary economists are far from agreeing upon the economic concept of evolution. The debate revolves around the question whether the mechanisms of variation, selection and retention are general principles of evolutionary processes, also valid in economics, or if economic evolution can be described by self-organization. The paper argues that self-organization is a useful concept, but has not yet fulfilled the aspiration to describe economic evolution as an endogenous process. In self-organization models important aspects, like novelty (...) generation or the attribution of its economic quality, are introduced exogenously. In verbal descriptions however, even critics of general evolutionary principles sketch these processes in a way that is perfectly compatible with the universal principles. The paper thus argues that the controversy is mainly based on a misinterpretation of Universal Darwinism and tries to clarify the concept. It concludes that variation, selection and retention are in fact general evolutionary principles; as self-organization maybe is. (shrink)
This article examines shifts in educational and social governance taking place in Queensland, Australia, through Education Queensland's Industry School Engagement Strategy and Gateway Schools program. This significant educational initiative is set within the context of Queensland's social investment agenda first articulated in its education policy framework, Queensland State Education-2010. The article traces the historic extension of this overarching governmental strategy through establishment of the Gateway Schools concept, brokering state-wide industry-school partnerships with key global players in the Queensland economy. Industry sectors (...) that have formed partnerships in Gateway projects include Minerals and Energy, Aerospace, Wine Tourism, Agribusiness, Manufacturing and Engineering, Building and Construction and ICT, with more industries and schools forecast to join the program. It is argued that this ‘post-bureaucratic’ model of schooling represents a new social settlement of neoliberal governance, which seeks to align educational outcomes with economic objectives, thereby framing the conditions for community self-governance in Queensland. (shrink)
This paper discusses and develops an important distinction drawn by Jevons, viz . that between natural and fictitious quantities. This distinction provides a basis for a theory of economic concept formation that aims at picking out families of models that are phenomenally adequate, explanatory and exact simultaneously. Essentially, the theory demands of an economic quantity to be natural that (1) it is explained by a causal model, (2) it is measurable and (3) the measurement procedure is justified. The (...) proposed theory is tested against two case studies, one historical and one contemporary. (shrink)
Anyone who has followed an economic controversy will have encountered the expectation that empirical research could provide an important role in clarifying the issues at stake. However, this hardly ever seems to be the case. Using the example of the debate between human capital and screening theories to explain the correlation between education and earnings, this paper discusses some possible reasons for the lack of impact that empirical research has had in many economic debates. The aspects discussed relate (...) to the way many economists approach empirical work, which may undermine its relevance and impact for economic debates. (shrink)
Bagehot wrote on the methodology of Ricardian political economy some years after the appearance of marginalism. The purpose of this paper is to examine and evaluate his methodological positions. Bagehot made some significant contributions concerning the nature of economic explanation, the relevance of economic assumptions and the limits of the validity of economic theories. His positions were strongly influenced by social anthropology and Darwinian evolutionism. Bagehot's originality lies in his evolutionist view of the Ricardian (...) political economy, a view that led him to limit its validity and to reinforce its realisticness, at a time when economics was about to take an opposite direction. (shrink)
The contribution that neurobiological data provide us to comprehend the psychological aspects of economic decision-making is critically examined. First, different kinds of correspondences between neural events and mental activities are identified. On the basis of the distinctions made, some recent studies are selected, each of which focuses on a different stage of decision-making and employs a different set of neurobiological data. The thorough analysis of each study suggests that neuro-mental correspondences do not have an evidentiary function but rather a (...) heuristic function, since they can point to the presence of specific differences between phenomena considered homogeneous or to the existence of a relationship between two mental activities which, however, have to be tested by psychological investigations. (shrink)
(2013). The Elgar companion to recent economic methodology. Journal of Economic Methodology: Vol. 20, Methodology, Systemic Risk, and the Economics Profession, pp. 81-86. doi: 10.1080/1350178X.2013.774853.
This paper deals with the way metaphors carried over from physical or biological systems condition the analysis of economic systems. The metaphors drawn from Newtonian mechanics, or from conservative fields of force, by neoclassical economists are discussed. Alternative metaphors which involve non-homeostasis and time irreversible processes are then outlined. Particular attention is paid to thermodynamics, evolutionary biology, and non-conservative or hysteretic force fields as sources of such metaphors. It is argued that these metaphors provide illumination to aspects of (...) class='Hi'>economic systems which are not consistent with the homeostatic, time reversible metaphors conventionally employed in economics. (shrink)
In 1940 Schumpeter wrote a paper entitled: ?The Meaning of Rationality in the Social Sciences?, which was intended as a contribution to one of the meetings of a seminar including Talcott Parsons, Wassily Leontief, Paul Sweezy and other Harvard scholars, that he initiated. In this paper Schumpeter develops thoroughly his own conception of rationality in economics. First, this paper is interesting in itself because it relates to contemporary methodological debates on rationality in the social sciences. Second Schumpeter?s conception of rationality (...) is linked to his methodological background (both individualistic and holistic), which is rooted in his economic sociology and explains the relationships he stresses between individual behavior and collective entities. In this contribution we present the arguments developed by Schumpeter in his 1940 paper and analyze the reason why his notion of rationality can be seen as a key component of his conception of economic and institutional change. (shrink)
Grounded theory is examined as a means of undertaking economics research that aims at theoretical development and generalization rather than testing established theories. Grounded theory encompasses a set of procedures for undertaking and analysing case studies--qualitative and quantitative--in a systematic and comparative manner. These procedures are set out, and illustrations of theory developed in close connection with business decision-making and industry competition are drawn from P.W.S. Andrews' post-Marshallian industry studies, Cyert and March's Behavioral Theory of the Firm , and Sutton's (...) analysis of market structures. Conclusions are drawn out regarding the nature of the relationship between testing established theory and making novel knowledge claims, the nature of knowledge held by those involved in economic phenomena, the nature of contexts of discovery and verification, and processes involved in making inferences. (shrink)
Economic page turners like Freakonomics are well written and there is much to be learned from them ? not only about economics, but also about writing techniques. Their authors know how to build up suspense, i.e., they make readers want to know what comes. An uncountable number of pages in books and magazines are filled with advice on writing reportages or suspense novels. While many of the tips are specific to the respective genres, some carry over to economic (...) page turners in an instructive way. After introducing some of these writing tools, I discuss whether these and other aspects of good writing lead to a biased presentation of economic theory and practice. I conclude that whatever the problems with certain economic page turners may be, they are not due to the need to write in an accessible, appealing way. (shrink)
This bookis about the roots of managerial rationality. A theoretical base, founded on the concept of 'memetics' is developed in order to explain human thinking and human reason as products of cultural evolution. Cultural change and development are explained by simple, value-driven memetic mechanisms like 'ritualization' and 'extremization'.
This paper provides a systematic survey of major simplifying assumptions that economists make, and often have to make, in order to obtain a useful theory for policy recommendations in practice. The aim is to consider the whole chain of assumptions with an emphasis on such simplifications that economists sometimes tend to ignore (at worst), or at best often tend not to take very seriously. The paper concludes that the link from fundamental ethics to economic policy recommendations is often very (...) fragile, but that this is neither a convincing argument for economists to ignore normative issues, nor a reason to pretend that policy recommendations can be derived without value judgements. In order to improve the link it is recommended that welfare economists sometimes move beyond reductionist individualism and learn more from other social sciences regarding preference formation, decision behaviour, and the creation of values, institutions and social norms. (shrink)
Understanding is an issue of crucial importance in economic experiments. Different ideas of how to achieve full understanding have resulted in disparate and contradictory recommendations on the correct methods for economic experiments. It is argued that a more systematic approach is necessary based on the linguistic theories of pragmatics put forward by Grice. This provides resources for assessing understanding in practical experiments. JEL classification: B41.
The purpose of the present article is to strengthen the conceptualisation of the principle of selection in theories of economic evolution and to help clarify a number of unsettled issues regarding the meaning of variety and continuity. In order to achieve this, the emerging general mathematical selection theory is introduced to identify the requirements of a general principle of selection and the specification of variety and continuity that follows from it. It is indicated how general selection theory can help (...) advance evolutionary theories of economic change by clarifying the meaning of selection, and the possible role of habits and routines in economic selection. (shrink)
This paper considers the debate surrounding the elucidation of Laka-tosian novel facts in Keynesian macroeconomics. An analysis of this debate highlights how, in the process of using methodologies to appraise economics, economic methodologists have been forced into adopting the methodology of historiographic research programmes (MHRP) as a method of appraising methodologies. It is argued here that the failure to find Lakatosian novel facts in Keynesian macroeconomics has prompted economic methodologists to consider the appropriateness of MHRP as a method (...) of meta-methodological appraisal. This paper suggests that the failure to find Lakatosian novel facts in economics must necessarily lead economic methodologists into a Kuhnian-type investigation of what it is that economists actually do. (shrink)
(2013). The making of the economy: a phenomenology of economic science. Journal of Economic Methodology: Vol. 20, Methodology, Systemic Risk, and the Economics Profession, pp. 86-91. doi: 10.1080/1350178X.2013.774855.
Methodological norms in economic theorizing are interpreted as rational strategies to optimize some epistemic utility functions. A definition of ?empirical verisimilitude? is defended as a plausible interpretation of the epistemic preferences of researchers. Some salient differences between the scientific strategies of physics and of economics are derived from the comparison of the relative costs associated with each strategy. The classical discussion about the ?realism of assumptions? in economics is also considered under the light of the concept of ?empirical verisimilitude?
Aristotle’s economic thinking in the Nicomachean Ethics 5.5 and Politics 1 provides one of the earliest analyses of the economic nature exchange. Establishing the significance of Aristotle in this area has often led modern commentators to equate Aristotle’s descriptive analysis of use and exchange to the definitions of use-value and exchange-value as it is found in Karl Marx. In this article, I show that Aristotle’s understanding of use and exchange is qualitatively different from this interpretation, focusing in particular (...) on the ethical nature of use and how, for Aristotle, exchange is an extension of practical deliberation. (shrink)
"I do solemnly swear" -- Economics in practice : what do economists do? -- Ethical challenges confronting the applied economist -- Historical perspective : "don't predict the interest rate!" -- Interpreting the silence : the economic case against professional economic ethics -- The economic case against professional economic ethics : a rebuttal -- The positive case for professional economic ethics -- Learning from others : ethical thought across the professions -- Economists as social engineers : (...) an ethical evaluation of market liberalization in the south and transition economies -- Global economic crisis and the crisis in economics -- On sleeping too well : in search of professional economic ethics -- Training the "ethical economist" -- The economist's oath. (shrink)
This book is concerned with the role of economic philosophy ("ideas") in the processes of belief-formation and social change. Its aim is to further our understanding of the behavior of the individual economic agent by bringing to light and examining the function of non-rational dispositions and motivations ("passions") in the determination of the agent's beliefs and goals. Drawing on the work of David Hume and Adam Smith, the book spells out the particular ways in which the passions come (...) to affect our ordinary understanding and conduct in practical affairs and the intergenerational and interpersonal transmission of ideas through language. Concern with these problems, it is argued, lies at the heart of an important tradition in the British moral philosophy. This emphasis on the non-rational nature of our belief-fixation mechanisms has important implications: it helps to clarify and qualify the misleading claims often made by utilitarian, Marxist, Keynesian, and neo-liberal economic philosophers, all of whom stress the overriding power of ideas to shape conduct, policy, and institutions. (shrink)
The Philosophy of Economics is the first work to seriously and successfully bridge twentieth-century economics and twentieth-century philosophy. Subroto Roy draws these two disciplines together and examines the basic intellectual roots of economics. This is also the first work by an economist to employ the writings of Wittgenstein and to tackle seriously the import of modern philosophy for economic thought. Unlike others in the field, Roy discusses not only the contributions of Popper, Kuhn, and Lakatos but also those of (...) Frege, Moore, and Wittgenstein, as well as Plato and Aristotle. (shrink)
Markets can often be harsh in compelling people to make unpalatable economic choices any reasonable person would not take under normal conditions. Thus workers laid off in mid-career accept lower paid jobs that are beneath their professional experience for want of better alternatives. Economic migrants leave their families and cross borders (legally or illegally) in search of a livelihood and countless Third World families rely on child labor to supplement meagre household incomes. These are examples of economic (...) compulsion, an all-too-frequent state of affairs in which people are driven to make choices under acute economic duress. These economic ripple effects of market operations have been virtually ignored in ethical discourse because they are generally accepted to be the very mechanisms that shape the market's much-touted allocative efficiency. Albino Barrera argues that Christian thought on economic security offers an effective framework within which to address the consequences of economic compulsion. (shrink)
This book shows through accessible argument and numerous examples how understanding moral philosophy can improve economic analysis, how moral philosophy can benefit from economists' analytical tools, and how economic analysis and moral philosophy together can inform public policy. Part I explores rationality and its connections to morality. It argues that in defending their model of rationality, mainstream economists implicitly espouse contestable moral principles. Part II concerns welfare, utilitarianism and standard welfare economics, while Part III considers important moral notions (...) that are left out of standard welfare economics, such as freedom, rights, equality, and justice. Part III also emphasizes the variety of moral considerations that are relevant to evaluating policies. Part IV then introduces technical work in social choice theory and game theory that is guided by ethical concepts and relevant to moral theorizing. Chapters include recommended readings and the book includes a glossary of relevant terms. (shrink)
Providing another key contribution to the immensely popular field of law and economics, this book, written by the doyen of the history of economic thought in the US, explores the dynamic relationship between economics, law and polity. Combining a selection of old and new essays by Warren J. Samuels that chart a number of key themes, it provides an important commentary on the development of an academic field and demonstrates how policy is structured and manipulated by human social construction. (...) The areas covered include: the role of manufactured belief power the nature and sources of rights the construction of markets by firms and governments and the problem of continuity and change in the form of the question of the selectively defined status quo and its status the absolutist character of government, rights, markets and legal principles and the accepted ideational structure of law. The Legal-Economic Nexus is an essential read both economists and legal professionals as well as those researching the history of economic thought and the social construction of law. (shrink)
Essays on Philosophy, Politics, & Economics offers a critical examination of economic, philosophical, and political notions, with an eye towards working across all three, so that students and scholars from can expand their perspectives as ...
Introduction -- Overview of the contemporary global context : life stories -- Data on poverty, hunger, and inequality in an age of globalization -- The goals and structure of this book -- Development theory and practice : an overview -- Origins of the concept of development -- Modernization theory -- Modernization theory and U.S. aid policy -- The impact of modernizationist development -- Structuralist economic theories -- Dependency theories -- Basic needs approach -- New international economic order -- (...) Alternative development -- The impact of reformist thought on development policy -- Neoliberal resurgence and structural adjustment policies -- Current debates in development studies -- The failures of modernizationist development : a closer look -- The impacts of colonialism and slavery -- Post-WW II development policies and the third world debt crisis -- Consequences of debt and structural adjustment -- Responses to the debt crisis -- United States opposition to social change in the third world -- Summary of major structural influences on the third world -- Catholic social teaching and development -- CST prior to Pope John XXIII -- Early reflections on development : John XXIII and Vatican II -- The pivotal contributions of Paul VI, the Latin American bishops, and justice in the world -- John Paul II : the centrality of solidarity -- The social ethics of Benedict XVI -- Summary of catholic social teaching on development issues -- Catholic social teaching and political economy : neoconservative and radical critiques -- Neoconservative reflections on CST -- Radical reflections on CST -- Evaluation of neoconservative, radical, and CST views -- Grassroots critics of development and neoliberal globalization -- Rejecting the quest for development - Vandana shiva : the violence of development and reductionist science -- Further issues in the development/globalization debates -- Reclaiming the commons : the positive visions of development critics -- Catholic social teaching, the radical tradition, and development critics -- Grassroots action and policy alternatives -- Grassroots organizations in the third world : an overview -- The impact of grassroots organizations -- Development policies : follow the nic model -- Alternative development policies -- Differing visions : alternative development vs. regeneration -- Prospects for the adoption of alternative policies -- Re-envisioning C atholic social teaching -- The contributions of CST to the development debate -- Enhancing Catholic social teaching -- Structural analysis of capitalism -- Women, development, and CST -- CST, modernization, and cultural diversity -- CST and ecology - CST, grassroots movements, and social struggle -- The church and social change -- Social criticism and pioneering creativity : how Christians can constructively address issues of development and globalization -- Education -- Lifestyle choices -- Responsible purchasing -- Responsible investment -- Organizing, activism, and aid provision -- Direct service/solidarity -- Responsible parenting -- Applying CST in the life of the church -- Concluding reflections -- Theological epilogue: The path of discipleship. (shrink)
"Written in a racy, persuasive style, the book impresses the reader as a work of significant scholarship...I encourage students of comparative religions- and especially those of Islamic economics- to read it with great care."&$151; Islamic Studies The worlds of economics and theology rarely intersect. The former appears occupied exclusively with the concrete equations of supply and demand, while the latter revolves largely around the less tangible concerns of the soul and spirit. Intended as an interfaith clarification of the relationship between (...) the material and the spiritual worlds, this volume first inspects secular beliefs about the relationship between economics and ethics. Exploring the differences and similarities between the treatment of economic issues in each of the great monotheistic religions, Rodney Wilson reveals how each tradition considers such subjects as individual wealth, lending, economic regulation, usury, insurance capitalism, socialism, and banking. He concludes with an intriguing epilogue on the rapidly expanding field of business ethics. (shrink)
Moral universalism centrally involves the idea that the moral assessment of persons and their conduct, of social rules and states of affairs, must be based on fundamental principles that do not, explicitly or covertly, discriminate arbitrarily against particular persons or groups. This general idea is explicated in terms of three conditions. It is then applied to the discrepancy between our criteria of national and global economic justice. Most citizens of developed countries are unwilling to require of the global (...) class='Hi'>economic order what they assuredly require of any national economic order, for example, that its rules be under democratic control, that it preclude life-threatening poverty as far as is reasonably possible. Without a plausible justification, such a double standard constitutes covert arbitrary discrimination against the global poor. Key Words: contextualism corruption discrimination Rawls resource exports world poverty. (shrink)
This paper investigates the topic of personal identity in standard neoclassical theory. It looks first at the traditional utility theory of maximizing consumers and then at the extension of that analysis in the time-allocation-household-production model to see how relatively settled ontological commitments in the neoclassical research program undergo modification with its development. David Hume's skeptical treatment of personal identity is employed to assess the traditional view. The time-allocation model is shown to escape some of Hume's problems, but encounters difficulties of (...) its own. Concluding remarks emphasize the importance of ontological analysis in economics, and suggest that identity issues underlie the investigation of causality in that analysis. (shrink)
Economic theories of democratic legitimacy (discussed here as minimalist theories) have criticized deliberative accounts of democratic legitimacy on the grounds that they do not represent a practical possibility and that they create conditions that make actual democracies worse. It is not simply that they represent the wrong ideal. Rather, they are too idealistic – failing to show proper regard for the cognitive and moral limitations of persons and the depth of disagreement in democratic society. This article aims to show (...) (1) that the minimalist criterion of democratic legitimacy is self-defeating and (2) that even if there are minimal cognitive, moral, and social requirements for the possibility of practicable deliberative democracy, these limitations do not necessarily impose insuperable barriers for democratic deliberation as the normative basis of democratic legitimacy. Thus, the limiting facts do not dictate the structure of appropriate normative models of democracy in the way minimalists have supposed. (shrink)
Even if falsificationism in the strict Popper-Lakatos sense may be too harsh for economics, falsifiability and refutability are eminent criteria for theory appraisal. Hausman's (1997) revision of his (1992) methodology of economics does not come sufficiently close to meeting such a methodological requirement and risks allowing the prioritising of irrefutable theories over empirical phenomena. It therefore needs further advancement.
The debate over whether or not economics is value-free has focused on the fact-value distinction: “is” does not imply “ought.” This paper approaches the role of ethics in economics from a Thomistic perspective, focusing not on the content of economic analysis, but on the actions taken by economic researchers. Positive economics, when it satisfies Aristotle's definition of technique, enjoys a certain autonomy from ethics, an autonomy limited by a technique's dependence for guidance and justification on ethical reflection. The (...) modern isolation of technique from ultimate ends entails the risk of mistaking the proximate ends of economics for ultimate ends, especially when applying economic methods in new ways or to new social phenomena. (shrink)
This article seeks to provide a characterization of theory prevalent in economics and found in many areas of social and natural science, particularly those that make increasing use of rational choice perspectives. Four kinds of theoretical project are identified in which empirical evidence plays a relatively small role in theory acceptance. The paper associates the minor role of evidence in theory formation and acceptance to a need to answer counterfactual questions and argues that is not necessarily incompatible with accounts of (...) science that emphasise truth in the development of theory. However, this view of economics does highlight factors that play a central role in theory acceptance which have not featured very strongly, if at all, in the philosophy of science literature. The article goes on to discuss four areas of economics that illustrate the consequences of using theory acceptance procedures which give relatively little weight to empirical testing. Benefits and costs of counterfactual science as it has developed in economics are discussed. It is concluded that there are good reasons why scientists may not use evidence in theory acceptance, even if an unintended consequence has been to strip economics of valuable empirical sensibilities still evident in natural sciences. (shrink)
Are there empirical anomalies upon which Dewey's theory of action sheds better light than existing neoclassical and heterodox approaches? This introduction answers in the affirmative. They are the set of anomalies highlighted by behavioral economics. These anomalies stress the centrality of context. Neoclassical theorists react to the 'context problematic' by claiming that context, after all, is part of either the constraint set or the preference set. Dewey and his collaborator, Bentley, called such standard rationality theories 'interactional.' On the other hand, (...) heterodox economists and mainstream sociologists and anthropologists appropriate the 'context problematic' to buttress their normative views on how constraints such as culture, norms, and budgets mold preferences after their image. Dewey and Bentley called such normative theories 'self-actional.' Both neoclassical theorists and their critics fail to see that context cannot be reduced to the constraint set, preference set, or set of norms. In contrast, Dewey and Bentley offer a fresh way to solve the 'context problematic,' what they call the 'transactional view.'. (shrink)
McCloskey's work on the rhetoric of economics has little to say about Imre Lakatos, and indeed the scientific method prescribed by Lakatos, as it stands, would support McCloskey's claim that philosophers? imperatives bear little relation to what economists actually do. But a Bayesianized version of Lakatos is a different matter, and provides a yardstick against which the various rhetorical devices noted by McCloskey can be measured. We argue that McCloskey's list can be divided into those forms of persuasion which would (...) and would not remain convincing once the reader saw how the persuasion was being worked, and that this distinction corresponds precisely to those forms of persuasion which do and do not represent the ?Bayesianized Lakatos? method. (shrink)
The authors delineate the nature and neglect of integrity capacity and global business citizenship by world business leaders. They discuss how the philosophical analysis of moral and economic complexity enhances judgment integrity capacity and global business citizenship. Finally, the authors recommend positive action steps to improve global business citizenship and leadership integrity capacity through a balanced and inclusive pluralistic economic philosophy.
The concept of merit good is a problematic concept in economic theory. The concept was introduced in 1956 by Richard Musgrave. In 1990, on the occasion of an international conference on the concept of merit good, John Head wrote that the concept of merit good raises methodologically difficult and controversial issues. The concept raises doubt about the ultimate normative authority of the consumer sovereignty principle. I will demonstrate that the concept deserves the attention of the philosophical profession for multiple (...) reasons. (shrink)
In this essay I discuss a powerful challenge to high-liberalism: the challenge presented by neoclassical liberals that the high-liberal assumptions and values imply that the full range of economic liberties are basic rights. If the claim is true, then the high-liberal road from ideals of democracy and democratic citizenship to left-liberal institutions is blocked. Indeed, in that case the high-liberal is committed to an institutional scheme more along the lines of laissez-faire capitalism than property-owning democracy. To present and discuss (...) this challenge, I let John Rawls represent the high-liberal argument that only a narrow range of economic liberties are basic rights and John Tomasi represent the neoclassical liberal argument that the full range of economic liberties are basic rights. I show that Rawls’s argument is inadequate, but also that Tomasi’s argument fails. I thus conclude that high-liberalism is in a precarious situation, but is not yet undone by the neoclassical liberal challenge. (shrink)
Agenda 21 of United Nations demands better situation of ecology, economy, health, etc. in all countries. An evaluation of scientific contributions in international congresses of fundamental anthropological sciences (philosophy, psychology, psychosomatics, physiology, genito-urology, radio-oncology, etc.) demonstratesevidence of large discrepancies in the participation not only of developing and industrial countries, but also between the last ones themselves. Low degree of research and education leads to low degree of economy, health, ecology, etc. [Lit.: Neu, Michailov et al.: Physiology in Agenda 21. (...) Proc. Int. Un. Physiol. Sci. San Francisco, Faseb J. 19/5, A1355, 2005; Agenda 21 in Psychol. 28th Int. Congr. Psychol. Beijing, 1028.62/3028.96, 2004]. CONCEPTION: The science is leading in the social and economic development of humanity, but the misuse of science causes disastrous repercussions (ecological and self-destruction). New models for scientific education, beginning with philosophy, followed by philosophical, pedagogical, medical, theological anthropology, and research are necessary tosupport Agenda 21 and prevent misuse of science. According to proposals on foundation of experimental schools (Immanuel Kant) and international universities (Bertrand Russell) the International Academy of Science/ICSD supports these ideas and initiated the creation of first (interdisciplinary) International Faculties forAnthropology as paradigm for humanization, higher effectiveness and pluralistic internationalization of science, leading to better education ("Erziehung und Ausbildung") and research in all countries, i.e. decrease of the gap between industrial and developing countries. CONCLUSION: Foundation of international institutes for general (philosophy, pedagogy, medicine) as well as for special anthropology (theology, informatics-logic-mathematics, culture, biology, (bio-) physics/chemistry) in context of an integralanthropology via networks of national ones from selected countries of Africa, America, Asia, Australia, Europe can permit the necessary implication of philosophy in education of anthropological sciences as well as research and education (post graduate) by common international research and educational programmes, lecturers, students, etc. in one country. This project needs political and financial support by UNO, European Union, governments, banks, industries to support the education of a homo sanus, humanus et spiritualis for the future humanity. (shrink)
Economics presents the paradox of the entropy of the law of diminishing returns and infinity of the substitution effect. Resolution assumes the substitution effect is greater than diminishing returns. Technology presupposing entropy, introduced is a new paradox of entropic technology generating infinite growth. Resolution assumes serial substitution of technologies, generating an infinite continuum. Physics and economics contest mechanic entropy and organic growth conceptions. A mechanic conception resolves set disjunctives exclusively, every set disjoined from a contiguous set, constituting entropy. An organic (...) conception resolves set disjunctives inclusively, every set conjoined with a contiguous set, constituting growth. Causally each instance of something decreases the preexistent set of all possible instances by one, dying. Functionally each instance of something increases the postexistent set of all possible instances by one, living. Economists have the advantage here. Endlessly divisible, substance is something constituted of nothing, ungoverned by the law of conservation of energy. Physicists implicitly concede this assuming substance emerges from a Big Bang. Alas lunch is not free. Product of an economic growth equation being endless and non-repetitive, calculation is irrational, rendering growth economics irrelevant. Calculation requires marginal analysis, sequences initiating anywhere within a set governed by conservation of energy and entropy converging in parallel upon a common limit, “the unseen hand.” Energy conserved, however, economic growth is bounded. (shrink)
The reader subscription pricing mechanism is the dominant method by which the publication of scholarly journals in economics is funded. This occurs despite the fact that the use of an author charge pricing mechanism, when used in conjunction with a reader charge pricing mechanism, is described in the neoclassical economics literature as a more efficient method for financing journals. The division between the actual financing of economics journals and the theoretical understanding of how journals should be financed highlights deficiencies within (...) the neoclassical economists' understanding of the financing of scholarly journals. In this paper I discuss this divergence in theory and practice in how economists finance their scholarly communication process and the brief attempt by some neoclassical economists to bridge this divide. (shrink)
Economic logic impinges on contemporary political theory through both economic reductionism and economic methodology applied to political decision-making (through game theory). The authors argue that the sort of models used are based on mechanistic and linear methodologies that have now been found wanting in physics. They further argue that complexity based self-organization methods are better suited to model the complexities of economy and polity and their interactions with the overall social system.
I perform an economic and ethical analysis on wealth and income inequality. Economists have performed many statistical studies that reveal a number of, often contradictory, findings in connection with the distribution of wealth and income. Hence, the statistical findings leave us with no better knowledge of the effects that inequality has on economic progress. At the same time, the existing theoretical results have not provided us with a definitive answer concerning the effects of inequality on progress. By gaining (...) knowledge of the nature of inequality, and bringing basic economic principles to bear on the subject, we can come to an understanding of what the causal relationship is between inequality and economic progress. Furthermore, I apply a new theory of ethics – rational egoism – to assess economic inequality. I show that, in the right context, economic inequality is both economically and morally desirable. (shrink)
The importance of business ethics is not contrdicted in any way by Adam Smith’s pointer to the fact that our “regards to our own interests” provide adequate motivation tor exchange. There are many important economic relationships other than exchange, such as the institution of production and arrangements of distribution. Here business ethics can playa major part. Even as far as exchange is concerned, business ethics can be crucially important in terms of organization and behavior, going weil beyond basic motivation.
Can social phenomena be understood by analyzing their parts? Contemporary economic theory often assumes that they can. The methodology of constructing models which trace the behavior of perfectly rational agents in idealized environments rests on the premise that such models, while restricted, help us isolate tendencies, that is, the stable separate effects of economic causes that can be used to explain and predict economic phenomena. In this paper, I question both the claim that models in economics supply (...) claims about tendencies and also the view that economics, when successful, necessarily follows this method. When economics licenses successful policy interventions, as it did in the case of the Federal Communications Commission spectrum auctions, its method is not to study tendencies but rather to study the phenomenon as a whole. Key Words: economic models tendencies economic experiments policy making John Stuart Mill. (shrink)
We briefly review the recent literature on globalization, and present empirical evidence showing that economic globalization has been correlated with higher economic growth and lower poverty rates. We then evaluate the consequences of economic globalization in light of standards of commutative justice as Smith articulated, distributive justice as Rawls presented, and practical justice as Kolm explicated. This essay argues that economic globalization fulfills the requirements of all three species of justice.
In this essay, I use a general argument about the evidential role of data in ongoing inquiry to show that it is fruitful for economic historians and historians of economics to collaborate more frequently. The shared aim of this collaboration should be to learn from past economic experience in order to improve the cutting edge of economic theory. Along the way, I attack a too rigorous distinction between the history of economics and economic history. By drawing (...) on the history of physics, I argue that the history of a discipline can be a source of important evidence in ongoing inquiry. My argument relies on the claim that it is a constitutive element of science that evidence is never discarded forever and is thus historical in nature. In the final section, I offer a case study by explaining a research proposal that turns on a long-running data-set Babylonian whole-sale prices of six commodities noted in pre-Hellenistic and Hellenistic times. To motivate my reading of this data-set, I critically discuss Aristotle's successful attempt to distinguish between astrology and political economy. (shrink)