Economics today cannot predict the likely outcome of specific events any better than it could in the time of Adam Smith. This is Alexander Rosenberg's controversial challenge to the scientific status of economics. Rosenberg explains that the defining characteristic of any science is predictive improvability--the capacity to create more precise forecasts by evaluating the success of earlier predictions--and he forcefully argues that because economics has not been able to increase its predictive power for over two centuries, it (...) is not a science. (shrink)
There is an increasingly widespread belief, both within and outside the discipline, that modern economics is irrelevant to the understanding of the real world. Economics and Reality traces this irrelevance to the failure of economists to match their methods with their subject, showing that formal, mathematical models are unsuitable to the social realities economists purport to address. Tony Lawson examines the various ways in which mainstream economics is rooted in positivist philosophy and examines the problems this causes. (...) It focuses on human agency, social structure and their interaction and explores how the understanding of this social phenomena can be used to transform the nature of economic practice. Economics and Reality concludes by showing how this newly transformed economics might set about shaping economic policy. (shrink)
The economics profession has become a favourite punching bag in the aftermath of the global financial crisis. Economists are widely reviled and their influence derided by the general public. Yet their services have never been in greater demand. To unravel the paradox, we need to understand both the strengths and weaknesses of economics. This book offers both a defence and critique of economics. Economists' way of thinking about social phenomena has great advantages. But the flexible, contextual nature (...) of economics is also its Achilles' heel in the hands of clumsy practitioners. (shrink)
Austrian economics starts out from the thesis that the objects of economic science differ from those of the natural sciences because of the centrality of the economic agent. This allows a certain a priori or essentialistic aspect to economic science of a sort which parallels the a priori dimension of psychology defended by Brentano and his student Edmund Husserl. We outline these parallels, and show how the theory of a priori dependence relations outlined in Husserl’s Logical Investigations can throw (...) light on the Austrian account of entrepreneurship. (shrink)
The experimental approach in economics is a driving force behind some of the most exciting developments in the field. The 'experimental revolution' was based on a series of bold philosophical premises which have remained until now mostly unexplored. This book provides the first comprehensive analysis and critical discussion of the methodology of experimental economics, written by a philosopher of science with expertise in the field. It outlines the fundamental principles of experimental inference in order to investigate their power, (...) scope and limitations. The author demonstrates that experimental economists have a lot to gain by discussing openly the philosophical principles that guide their work, and that philosophers of science have a lot to learn from their ingenious techniques devised by experimenters in order to tackle difficult scientific problems. (shrink)
The authors explore the history of experiments in economics, provide examples of different types of experiments and show that the growing use of experimental methods is transforming economics into an empirical science.
The principal findings of experimental economics are that impersonal exchange in markets converges in repeated interaction to the equilibrium states implied by economic theory, under information conditions far weaker than specified in the theory. In personal, social, and economic exchange, as studied in two-person games, cooperation exceeds the prediction of traditional game theory. This book relates these two findings to field studies and applications and integrates them with the main themes of the Scottish Enlightenment and with the thoughts of (...) F. A. Hayek. (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)
Introduction -- The commercialisation of science and the construction of the knowledge-based bio-economy -- The KBBE reality--the case of agriculture -- Intellectual property rights and the global commodification of knowledge -- Privatizing Chinese science : national development vs. neoliberal financialization -- Critical realism and the importance of ontological attention -- Critical realism and beyond in economics -- The realist transcendental argument.
The paper seeks to offer  an explication of a concept of economics imperialism, focusing on its epistemic aspects; and  criteria for its normative assessment. In regard to , the defining notion is that of explanatory unification across disciplinary boundaries. As to , three kinds of constraints are proposed. An ontological constraint requires an increased degree of ontological unification in contrast to mere derivational unification. An axiological constraint derives from variation in the perceived relative significance of the facts (...) explained. An epistemological constraint requires strong fallibilism acknowledging a particularly severe epistemic uncertainty and proscribing against over-confident arrogance. (shrink)
The primary aim of the text is to introduce the reader to the relationship between economics and ethics and to the application of economic ethics in the evaluation of the market. The reader will gain insight into: * The ethical and methodological strategy of economics and criticism of the core assumptions that underpin the economic defense of free market operation. * The characteristics of different ethical theories (utilitarianism, duty and rights ethics, justice and virtue ethics) that can be (...) used to evaluate the free market. * How to apply economics in conjunction with ethical theories to evaluate economic trends and policies that promote the free operation of the market and are subject to public debate. These insights will help to develop the reasoning and analytical skills needed to criticize economic analysis as well as to apply ethical concepts to moral issues in economic policy. (shrink)
In response to criticism of empirical or “positive” approaches to corporate social responsibility, we defend the importance of these approaches for any CSR theory that seeks to have practical impact. Although we acknowledge limitations to positive approaches, we unpack the neglected but crucial relationships between positive knowledge on the one hand and normative knowledge on the other in the implementation of CSR principles. Using the structure of a practical syllogism, we construct a model that displays the key role of empirical (...) knowledge in fulfilling a firm’s responsibility to society, paying special attention to the implications of the “ought implies can” dictum. We also defend the importance of one particular class of empirical claims; namely, claims from the field of economics. Even positive economic theory, which is often criticized for endorsing profits rather than values, can cooperate in intriguing ways with non-economic concepts in the implementation of CSR goals. (shrink)
Law, Economics, and Morality examines the possibility of combining economic methodology and deontological morality through explicit and direct incorporation of moral constraints into economic models. Economic analysis of law is a powerful analytical methodology. However, as a purely consequentialist approach, which determines the desirability of acts and rules solely by assessing the goodness of their outcomes, standard cost-benefit analysis is normatively objectionable. Moderate deontology prioritizes such values as autonomy, basic liberties, truth-telling, and promise-keeping over the promotion of good outcomes. (...) It holds that there are constraints on promoting the good. Such constraints may be overridden only if enough good is at stake. While moderate deontology conforms to prevailing moral intuitions and legal doctrines, it is arguably lacking in methodological rigor and precision. Eyal Zamir and Barak Medina argue that the normative flaws of economic analysis can be rectified without relinquishing its methodological advantages and that moral constraints can be formalized so as to make their analysis more rigorous. They discuss various substantive and methodological choices involved in modeling deontological constraints. Zamir and Medina propose to determine the permissibility of any act or rule infringing a deontological constraint by means of mathematical threshold functions. Law, Economics, and Morality presents the general structure of threshold functions, analyzes their elements and addresses possible objections to this proposal. It then illustrates the implementation of constrained CBA in several legal fields, including contract law, freedom of speech, antidiscrimination law, the fight against terrorism, and legal paternalism. (shrink)
Hermeneutics has become a major topic of debate throughout the scholarly community. What has been called the "interpretive turn" has led to interesting new approaches in both the human and social sciences, and has helped to transform divided disciplines by bringing them closer together. Yet one of the largest and most important social sciences economics has so far been almost completely left out of the transformation. Economics and Hermeneutics takes a significant step towards filling this gap by introducing (...) scholars on both sides of the divide to ways that hermeneutics might help economists address some of their most important problems. Among the topics addressed are entrepreneurship, price theory, rational expectations, monetary theory, welfare economics, and economic policy. The approaches to economics represented include the Austrian school, McCloskey's "rhetoric" approach, Marxian critical theory and institutionalism. (shrink)
Many economic problems are also ethical problems: should we value economic equality? how much should we care about preserving the environment? how should medical resources be divided between saving life and enhancing life? This book examines some of the practical issues that lie between economics and ethics, and shows how utility theory can contribute to ethics. John Broome's work has, unusually, combined sophisticated economic and philosophical expertise, and Ethics Out of Economics brings together some of his most important (...) essays, augmented with an updated introduction. The first group of essays deals with the relation between preference and value, the second with various questions about the formal structure of good, and the concluding section with the value of life. This work is of interest and importance for both economists and philosophers, and shows powerfully how economic methods can contribute to moral philosophy. (shrink)
This essay discusses the place of business principles and of moral sentiments in economic success, and examines the role of cultures in influencing norms of business behavior. Two presumptions held in standard economic analysis are disputed: the rudimentary nature of business principles (essentially restricted, directly or indirectly, to profit maximization), and the allegedly narrow reach of moral sentiments (often treated to be irrelevant to business and economics). In contrast, the author argues for the need to recognize the complex structure (...) of business principles and the extensive reach of moral sentiments by using theoretical considerations, a thorough analysis of Adam Smith’s work, and a careful interpretation of Japan’s remarkable economic success. Referring to the economic corruption in Italy and the “grabbing culture” in Russia, he further shows how deeply the presence or absence of particular features of business ethics can influence the operation of the economy, and even the nature of the society and itspolitics. Being an Indian himself, he warns against grand generalizations like the superiority of “Asian values” over traditional Western morals. To conclude, it is diversity—over space, over time, and between groups —that makes the study of business principles and moral sentiments a rich source of understanding and explanation. (shrink)
Identity Economics provides an important and compelling new way to understand human behavior, revealing how our identities--and not just economic incentives--influence our decisions. In 1995, economist Rachel Kranton wrote future Nobel Prize-winner George Akerlof a letter insisting that his most recent paper was wrong. Identity, she argued, was the missing element that would help to explain why people--facing the same economic circumstances--would make different choices. This was the beginning of a fourteen-year collaboration--and of Identity Economics. The authors explain (...) how our conception of who we are and who we want to be may shape our economic lives more than any other factor, affecting how hard we work, and how we learn, spend, and save. Identity economics is a new way to understand people's decisions--at work, at school, and at home. With it, we can better appreciate why incentives like stock options work or don't; why some schools succeed and others don't; why some cities and towns don't invest in their futures--and much, much more. Identity Economics bridges a critical gap in the social sciences. It brings identity and norms to economics. People's notions of what is proper, and what is forbidden, and for whom, are fundamental to how hard they work, and how they learn, spend, and save. Thus people's identity--their conception of who they are, and of who they choose to be--may be the most important factor affecting their economic lives. And the limits placed by society on people's identity can also be crucial determinants of their economic well-being. (shrink)
A number of business ethics theorist have highlighted the potential for economics to contribute to the advancement of business ethics. In response, this article emphasizes the insights of a particular area of economics that could provide such expansion and development. Subjectivist economics may yet provide an effective analytical framework through which to investigate and evaluate business decision making, and hence the ethics of business. Integrating the concepts of uncertainty, time and imagination, subjectivist economic theory contributes to a (...) greater appreciation of economic choice and behaviour. While such notions are often effectively omitted from modern economic analysis to aid formal representation, business ethicists could utilize such concepts more effectively than their colleagues in economic theory. Significantly, the well-known economists who have championed the insights of subjectivist economics have themselves recommended its extension to an analysis of ethics. (shrink)
First published in 1986 and reprinted in 2010 in the Routledge Revivals series, this book presents the first detailed confrontation between the Austrian school of economics and Austrian philosophy, especially the philosophy of the Brentano school. It contains a study of the roots of Austrian economics in the liberal political theory of the nineteenth-century Hapsburg empire, and a study of the relations between the general theory of value underlying Austrian economics and the new economic approach to human (...) behaviour propounded by Gary Becker and others in Chicago. In addition, it considers the connections between Austrian methodology and contemporary debates in the philosophy of the social sciences. (shrink)
This article focuses on an area of study that may be called folk economics and that is currently not on the social science agenda. Folk economics has as its task to analyze and explain how people view the economy and how it works; what categories they use in doing so; and what effect this has on the economy and society. Existing studies in economics and sociology that are relevant to this type of study are presented and discussed. (...) A theoretical framework for analyzing folk economic issues is suggested, centered on the distinction between episteme and doxa or between scientific knowledge, on the one hand, and everyday knowledge, on the other. This is then applied to an exploratory case study of the role that folk economics played in Trump’s presidential campaign. It is shown that Trump and his voters thought in a parallel way on key economic issues, especially protectionism. (shrink)
Philosophy of Economics: A Contemporary Introduction is the first systematic textbook in the philosophy of economics. It introduces the epistemological, metaphysical and ethical problems that arise in economics, and presents detailed discussions of the solutions that have been offered. Throughout, philosophical issues are illustrated by and analysed in the context of concrete cases drawn from contemporary economics, the history of economic ideas, and actual economic events. This demonstrates the relevance of philosophy of economics both for (...) the science of economics and for the economy. This text will provide an excellent introduction to the philosophy of economics for students and interested general readers alike. (shrink)
The literature of an economics of science exists in a dismal no-(wo)man's-land located somewhere between economics, history, philosophy, policy, sociology and science. Perhaps it would have continued in this tenuous quasi-existence indefinitely, were it not for a series of trends that now seem to be encouraging the institution of a subfield within the profession of economics devoted to the topic. However, many of the economists who have begun to proclaim the existence of the new subfield have generally (...) done so by starting from scratch, striving to think through the relevant problem settings and proposed solutions with little attention paid to the alternative communities mentioned above, building ?models? of science generally unrecognizable to those outside of mainstream economics. The goal of this paper is to provide the requisite materials for advancing the emerging field of economics of science by discussing the various approaches in a systematic, comparative and integrative manner. (shrink)
This paper contributes to the conceptualisation of responsible innovation by proposing an evolutionary economic approach that focuses on the role of consumers in the innovation process. After a discussion of the philosophical foundations and ethical implications of this approach, which bears an explanatory potential that has not been adequately considered in previous discussions of responsible innovation, we present a first step towards capturing the important but often neglected role of consumers in innovation processes : We propose an agent-based model that (...) incorporates a multidimensional space of characteristics in which new products or services are represented by more than the mere aspect of price and quality. Instead, innovations are denoted by a large set of characteristics, including also negative or harmful ones. The model is used to illustrate that consumers’ heterogeneity and bounded rationality – even if considered in a simple manner – indeed play a crucial role in the creation and diffusion of responsible innovation which can and should be used for further work in this field and for possible extensions of the model. (shrink)
Arising out of the author's lifetime fascination with the links between the formal language of mathematical models and natural language, this short book comprises five essays investigating both the economics of language and the language of economics. Ariel Rubinstein touches the structure imposed on binary relations in daily language, the evolutionary development of the meaning of words, game-theoretical considerations of pragmatics, the language of economic agents and the rhetoric of game theory. These short essays are full of challenging (...) ideas for social scientists that should help to encourage a fundamental rethinking of many of the underlying assumptions in economic theory and game theory. As a postscript two economists, Tilman Borgers and Bart Lipman, and a logician, Johan van Benthem offer comments. (shrink)
Economies are complicated systems encompassing micro behaviors, interaction patterns, and global regularities. Whether partial or general in scope, studies of economic systems must consider how to handle difficult real-world aspects such as asymmetric information, imperfect competition, strategic interaction, collective learning, and the possibility of multiple equilibria. Recent advances in analytical and computational tools are permitting new approaches to the quantitative study of these aspects. One such approach is Agent-based Computational Economics (ACE), the computational study of economic processes modeled as (...) dynamic systems of interacting agents. This chapter explores the potential advantages and disadvantages of ACE for the study of economic systems. General points are concretely illustrated using an ACE model of a two-sector decentralized market economy. Six issues are highlighted: Constructive understanding of production, pricing, and trade processes; the essential primacy of survival; strategic rivalry and market power; behavioral uncertainty and learning; the role of conventions and organizations; and the complex interactions among structural attributes, institutional arrangements, and behavioral dispositions. (shrink)
This book explores aspects of science from an economic point of view. The author begins with economic models of misconduct in science, moving on to discuss other important issues, including market failure and the market place of ideas.
This intriguing new book examines and analyses the role of critical realism in economics and specifically how this line of thought can be applied to the real world. With contributions from such varying commentators as Sheila Dow, Wendy Olsen and Fred Lee, this new book is unique in its approach and will be of great interest to both economic methodologists and those involved in applied economic studies.
Editor's Introduction -/- Since the mid-1970s an ever-expanding group of economists has been attempting to apply the tools of economic analysis to the question:how should health care resources best be distributed? Although health economists have suggested a variety of answers to this question, the quality adjusted life year (QALY) (developed primarily at York University, UK) has received by far the most attention, from academics and practitioners alike. -/- Alan Williams is one of the foremost advocates of the QALY, and has (...) granted permission toHealth Care Analysis to reproduce the following challenging summary of his position. This summary is discussed by three commentators, each of whom-in different ways-highlight the complexity of the health care realities with which economic theorists are grappling. -/- This paper was first published as Discussion Paper 121 by the Centre for Health Economics, University of York, York Health Economics Consortium and the NHS Centre for Reviews and Dissemination, and is reproduced by permission of the author. (shrink)
What is the correct concept behind measures of inflation? Does money cause business activity or is it the other way around? Shall we stimulate growth by raising aggregate demand or rather by lowering taxes and thereby providing incentives to produce? Policy-relevant questions such as these are of immediate and obvious importance to the welfare of societies. The standard approach in dealing with them is to build a model, based on economic theory, answer the question for the model world and then (...) apply the results to economic phenomena outside. Data come in, if at all, only in testing a limited number of the model's consequences. Despite some critical voices, economic methodology too has by and large subscribed to a "theory first" approach to applied economics. Error in Economics systematically develops an alternative to the theory-based orthodoxy. It places the methodical study of evidence at the centre of the scientific enterprise and thus provides a foundation for a methodology of evidence-based economics. But the book does not stop at the truism that claims should be based on the best available evidence. Rather, detailed studies in the areas of measurement, causal inference and policy analysis show what it means for a claim to be evidence-based in the context of a concrete case. The examples discussed concern topics as diverse as consumer price indices, radio spectrum auctions, the transmission mechanism, natural experiments on minimum wages and the evaluation of counterfactuals for policy. Error in Economics is essential reading for economic methodologists, philosophers of science and anyone interested in how claims about socio-economic matters are validated. (shrink)
Contrary to what is claimed by Gul and Pesendorfer (2008), in this paper I argue that neuroscience and economics can meet in ways that speak to the interests of economists. As Bernheim (2009) argues, economists seem to be primarily interested in novel models that link ?traditional? environmental variables (such as prices and taxes) to choice behavior in a more accurate way than existing models. Neuroscience might be helpful here, since especially computational neuroscience is also in the business of mapping (...) environmental variables on to behavior. Given that experimental findings seem to show that choice behavior displays great context-sensitivity, I discuss two tentative ways in which neuroscience might be helpful. Neuroscience might be able to identify a multitude of environmental variables and the choice algorithms in the brain that they activate. Going this way might lead to novel models that differ markedly from standard economic models. Alternatively, neuroscience might be able to provide more theoretical guidance as to how individuals model the situations they are in. In principle, this route might leave standard economic models largely intact while improving their predictive record. (shrink)
Present-day economic thinking assumes that individuals always pursue their narrow self-interest or private economic incentives, and hence ignores the influence of ethical motives, such as sympathy and public interest, on human action. This paper focuses on the divergence between economic incentives and ethical motives for action in contemporary life and business. The paper underscores the nature of interrelationships among economics, ethics and business ethics, and highlights the relevance of ancient ethical principles, such as ethics of interdependence and ethics of (...) prudence or self-development, to the development of present-day business ethics. The paper also emphasises the importance of the convergence between economic incentives and ethical motives for action, while stressing the need for a deeper appreciation of business ethics in today's rapidly globalising world. (shrink)
A decade after the financial crisis, there is a growing consensus that the neoclassical approach to economics has failed, and that new approaches are needed. This paper argues that economics has been trying to solve the wrong problem. Economics sees itself as the science of scarcity, but instead it should be the science of money. Just as physicists' ideas about quantum matter were formed by studying the exchange of particles at the subatomic level, so economics should (...) begin by analysing the properties of money-based transactions, which like quantum entities have a fundamentally dualistic nature. By building on ideas from quantum money, quantum finance and quantum social science, this paper shows that the economy is an archetypal example of a quantum social system, complete with its own versions of measurement uncertainty, entanglement, and so on. This leads to a proposal for a quantum economics, which is to neoclassical economics what quantum physics is to classical physics. (shrink)
This paper presents a systematic discussion, mainly for non-economists, on economic approaches to the concept of sustainable development. As a first step, the concept of sustainability is extensively discussed. As a second step, the argument that it is not possible to consider sustainability only from an economic or ecological point of view is defended; issues such as economic-ecological integration, inter-generational and intra-generational equity are considered of fundamental importance. Two different economic approaches to environmental issues, i.e. neo-classical environmental economics and (...) ecological economics, are compared. Some key differences such as weak versus strong sustainability, commensurability versus incommensurability and ethical neutrality versus different values acceptance are pointed out. (shrink)
In Ethics, Economics, and Politics Ian Little returns to offer a new defence of a rule-based utilitarianism as a basis for assessing the role of the State. Lucidly and elegantly he explains how the three disiplines of philosophy, economics and politics can be integrated to provide guidance on issues of public policy.
Alexander Rosenberg (1983) has argued, contrary to his previous work in the philosophy of economics, that economics is not science, and it is merely mathematics. The following paper argues that Rosenberg fails to demonstrate either of these two claims. The questions of the predictive weakness of modern economics and the cognitive standing of abstract economic theory are discussed in detail.
Behaviourism is the view that preferences, beliefs, and other mental states in social-scientific theories are nothing but constructs re-describing people's behaviour. Mentalism is the view that they capture real phenomena, on a par with the unobservables in science, such as electrons and electromagnetic fields. While behaviourism has gone out of fashion in psychology, it remains influential in economics, especially in ‘revealed preference’ theory. We defend mentalism in economics, construed as a positive science, and show that it fits best (...) scientific practice. We distinguish mentalism from, and reject, the radical neuroeconomic view that behaviour should be explained in terms of brain processes, as distinct from mental states. (shrink)
Neither environmental economics nor environmental philosophy have adequately examined the moral implications of imposing environmental degradation and ecosystem instability upon our descendants. A neglected aspect of these problems is the supposed extent of the burden that the current generation is placing on future generations. The standard economic position on discounting implies an ethicaljudgment concerning future generations. If intergenerational obligations exist, then two types of intergenerational transfer must be considered: basic distributional transfers and compensatory transfers. Basic transfers have been the (...) central intergenerational concern of both environmental economics and philosophy, but compensatory transfers emphasize obligations of a kind often disregarded. (shrink)
An agent-centered, goal-directed, resource-bound logic of human reasoning would do well to note that individual cognitive agency is typified by the comparative scantness of available cognitive resourcess ignorance-preserving character. My principal purpose here is to tie abduction’s scarce-resource adjustment capacity to its ignorance preservation.