Economic Theory and Rationality: A Wittgensteinian interpretation

In this paper we invoke Wittgenstein's later philosophy to facilitate a number of methodological reflections on Paul Davidson's concept of transmutability. We argue that, while Davidson addresses the economic implications arising from his distinction between immutable and transmutable theories of external economic reality, he does not explore the more fundamental methodological implications of the concepts contained in his distinction, particularly that of transmutability. Transmutability is more fundamental and pervasive than Davidson had anticipated and presents a number of challenges to economic methodology and economic theorizing. Methodologically, the challenges require the consideration of new philosophical perspectives along with the fundamental reconsideration of widely accepted and influential modes of reasoning in economics. We respond to these challenges by invoking Wittgenstein's later philosophy to challenge the dominance of J. S. Mill's rationale for the immutability of economic laws; to motivate the empirical study of complex transformative processes; and to undermine the reductionist neoclassical theory of rationality.     

Can We Meaningfully Speak of Changes in Price under the Regime of Changes in Techniques?

Abstract

This paper presents a simulation exercise on Sraffa's system under various types of technical changes to show that the direction of changes in prices of commodities is contingent on the choice of the numeraire. Thus, such a comparison of prices in two systems turns out to be meaningless. This result points to the arbitrary nature of the neoclassical supply functions, as they inevitably compare prices across several Sraffa systems on the basis of an arbitrarily chosen numeraire. We anticipated such a result from our reading of Sraffa as part of his ‘prelude to a critique of economic theory’.     

The neglect of replacement investment in keynesian economics

Abstract

This article describes Keynes's early analysis of replacement investment and his subsequent neglect of the subject, especially by his followers. It goes on to explain how this deficiency helped to mislead later economists who attempted to use Keynes as a guide for economic policy and theory and the consequences of the errors of these economists.     

Richard H. Thaler: A Nobel Prize for Behavioural Economics

ABSTRACT

This paper provides an overview of Richard Thaler’s career and the contributions to behavioural economics that earned him the 2017 Nobel Memorial Prize in Economic Sciences. It focuses on his role in exposing and making sense of empirical anomalies in orthodox economics, his analysis of mental accounting, and his work with Cass Sunstein on the notion of libertarian paternalism and the ‘nudge’-based behavioural approach to economic policy. It then considers his contributions critically and explores how, unlike previous behavioural economics, Thaler succeeded in getting his new approach to behavioural economics accepted by mainstream economists.     

Adam Smith on the subordination of wage-earners in the commercial society

Abstract

Adam Smith's discourse on wage labour is both original for its time and complex. While Smith indisputably considered the substitution of serfdom by wage labour as an improvement in both opulence and independence, we argue that he nevertheless saw the wage relationship as one founded on subordination. We then cast light on the material factors and symbolic mechanisms which, in his writings, explain how and why the worker agrees to this subordination. Finally, we endeavour to show that Smith's praise for the system of natural liberty as well as his repeated criticisms of merchants and capital owners aimed to transcend this issue.     

Harald B. Malmgren's Analysis of the Firm: lessons for modern theorists?

This paper analyses Harald B. Malmgren's neglected 1961 paper ‘Information, expectations, and the theory of the firm’, which provided the first extensive elaboration of Coase's 1937 analysis in ‘The nature of the firm’. Malmgren's primary sources of inspiration were Coase, Hayek, Richardson and Penrose. Combining these sources in a creative way allowed Malmgren to anticipate themes that have only recently been addressed in the theory of economic organization. However, there is still much to be learned from Malmgren's discussion, particularly the way in which he combined contractual and knowledge-based approaches to the firm. Moreover, Malmgren suggested that it is possible to construct an opportunism-independent approach to economic organization.     

Thoreau's economic philosophy

Abstract

This paper provides an encompassing portrayal of Thoreau's economic thought. It is analyzed against the background of the history of economic thought and the economic thinking of his time. Thoreau's economic thought is an extensive examination of the ideas of classical political economy, and particularly of Jean-Baptiste Say, and it is a fundamental critique thereof. Thoreau recognizes that some aspects and foundations of the modern conception of the economy lead to an alienation of the human being from itself as well as to an alienation from nature. I demonstrate that this critique is a result of Thoreau's specific approach to the economy, which, based on his particular understanding of the human being and his philosophy of nature, seeks the meaning of the economy for human life and for nature. In this philosophical approach, which I characterize as an economic philosophy, Thoreau's deeper defiance of classical political economy and his original place within the history of economic thought are grounded. It leads Thoreau to an alternative conception of an economy of moderation, which is identified and described in detail. I conclude with considerations on the potential meaning of Thoreau's thought for current economic research.     

On the importance of institutions and forms of organisation in Piero Sraffa's economics: the case of business cycles,money, and economic policy

Abstract

This paper is based on an investigation of the Sraffa Archives and tries to characterise Piero Sraffa's approach to business cycles and economic policy. It includes two parts. The first part of the paper shows the importance of economic institutions and social conventions in Sraffa's contribution to economics and their relation with social conflicts. The second part of the paper shows how this importance permits to understand better business cycles and economic policy but also indirectly contributes to a re-interpretation of Sraffa's contribution to economics.     

The Economist Watcher: Economic Contributions of David Colander

ABSTRACT

This article gives an appraisal of the work of David Colander. After a brief biographical summary, we look at his work in methodology and the role that institutions and ‘vision’ play in his economic analysis. A crucial part of his work in this area is viewing not only the economy but also the economic profession as an adaptive complex system. This leads us to his major contributions to macroeconomics and economic education. We conclude with an overall assessment of his contributions to economics.     

Pigou on philosophy and religion

Abstract

This article discusses a group of essays on ethical issues written by Pigou between 1900 and 1908. It is argued that they contain the foundations of his economic philosophy. Pigou's research on the meaning and content of the good merged into his definition of welfare, and his interest in religion as a subjective experience resurfaced in the subjective framework of his economics. A methodological pragmatism informed his economics as well as his ethics; moreover, the endorsement of interpersonal comparisons of the good in the ethical texts was consistent with Pigou's adoption of utility comparisons in welfare economics. Pigou's philosophical pessimism was reflected in his analysis of the economic evils of society, eventually leading to his advocacy of governmental intervention to foster economic welfare. The article contends that Pigou's philosophy derived not only from Sidgwick, as commonly believed, but also from G.E. Moore's Principia Ethica.     

The Economic Contributions of Amartya Sen

This paper examines the major economic contributions of Amartya Sen. Sen's contributions fall into three main areas: a philosophical critique of traditional economic assumptions, an attempt to build a more realistic economic science based on the notion of entitlements and human capabilities, and a long series of practical contributions to welfare economics that follow from the capabilities approach - how to measure poverty and inequality better, how to understand famine and hunger, the importance of gender in economic development, and the differences between economic development and economic growth. The paper concludes with a brief assessment of the significance of Sen's work.     

The Economic Contributions of James J. Heckman and Daniel L. McFadden

This paper analyzes the economic contributions of Daniel L. McFadden and James J. Heckman, who were awarded the Nobel Prize in economic science in 2000. McFadden's analytical work on discrete choices and related theory brings economic tools to bear on policy questions that previously had not been empirically investigated. The multinomial logit and similar models developed by McFadden enable researchers to empirically model factors that affect individual choices (e.g. of travel mode, occupation or employment, and residential location) with discrete outcomes. Heckman's research on selective samples demonstrates the difficulty of achieving generalizable results in analyses of choice-based behavior. In addition, his work on the evaluation of social programs has challenged conventional beliefs about the infallibility of experimental evaluation results and explored the limits and potential of non-experimental methodologies in a range of social science applications.     

Scitovsky's The Joyless Economy and the economics of happiness

Abstract

Scitovsky's The Joyless Economy is especially well-known in recent economic studies on happiness. However, his insightful contributions have not been taken up as they deserve, mainly because they were, and still are, too original. By reconstructing Scitovsky's analysis on the basis of all his relevant writings, this article integrates his most original concepts, such as novelty, consumption skill, endogenous preferences, pleasurable uncertainty, into conventional economics; it compares Scitovsky's analysis to the economic thought of his time and to current consumer theory and it reveals his contributions to happiness economics, such as an original interpretation of the Easterlin paradox.     

The Economic Writings of William Thomas Thornton: A review article

The Economic Writings of William Thomas Thornton makes available numerous out-of-print books and articles by an important economist whose work has, until recently, been neglected by historians of economic thought. The collection, which is by no means complete, helps cement Thornton's reputation and restores his rightful place in the history of economics. This article discusses the collection's main strengths and weaknesses, and draws particular attention to the contemporary relevance of Thornton's work in the light of recent controversies surrounding his place in the annals of economic science, and to certain aspects of his successful East India Company career.     

“From warfare to welfare”: Contextualising Arrow and Schelling's models of racial inequalities (1968–1972)*

ABSTRACT

This paper focuses on Arrow and Schelling's contributions to the study of racial inequality in the late 1960s. We start from the authors’ account of the origin of their work. Then, we locate the “material origin” of the models at the RAND Corporation in the late 1960s and show how it relates to the transfer of the RAND tool-box to the study of welfare issues. Finally, we describe how Arrow's and Schelling's modelling strategies relate to their conception of “science for action,” inherited from their “warfare” work.     

Foucault,Weber and the history of the economic subject

Abstract

The present paper begins with a presentation of Foucault's lectures on economic issues. Departing from his previous views on government, Foucault offered a new approach to eighteenth-century liberalism and neo-liberalism, interpreting these political theories in terms of what he called biopolitics. Then the paper endeavours to demonstrate that the line of reasoning pursued by Foucault coincides with that found in Weber's sociology of religion. In as much as Weber studies the relation between the religious and the economic, the paper draws a parallel between the Weberian concept of ‘life conduct’ and the concept of ‘technique of the self’ advanced by Foucault in order to study the moral foundation of the economic agent.     

Economic theorist and ‘entrepreneur of popularisation’: Schumpeter as Finance Minister and journalist

Abstract

Modern theory of popularisation suggests that the production and the popularisation of scientific knowledge are interlinked and interactive processes. This perspective offers new insights into Joseph A. Schumpeter's main work in public finance, The Crisis of the Tax State, and into his later endeavours as Finance Minister and journalist to popularise two central economic ideas of this work, the once-and-for-all capital levy and the reform of the tax system. We demonstrate that Schumpeter's Crisis contains popularising features and was written with a popularising intention. Furthermore, we show that in his journalistic works popularisation went hand in hand with the development of innovative economic ideas.     

Wicksteed,Robbins and the Emergence of Mainstream Economic Methodology

Phillip Wicksteed's ideas played an important role in the history of economic methodology, first, because his views represent the starting point of the deliberate attempt to expel hedonism from marginalist economic analysis, and secondly because his ideas influenced his prominent disciple Lionel Robbins. The current mainstream view of an allegedly value-free economic science can be traced to Robbins. The paper examines Wicksteed's conception of economic science and the role of hedonism. His views on the nature and the role of economic man, and his analysis of egoism and of altruistic behaviour are also discussed. The paper assesses Wicksteed's influence, via Robbins, on the formation of mainstream methodological views.     

Sraffa and von Neumann

This paper discusses the relationship between Piero Sraffa's 1960 book and John von Neumann's 1937 paper on economic growth in the light of some of the material contained in Sraffa's unpublished papers and correspondence. It is argued that the two contributions share a similar outlook and exhibit conceptual parallels; in fact, they can both be said to belong to the 'classical' approach to the theory of value and distribution. The latter is characterized, among other things, by an asymmetric treatment of the distributive variables, the rate of return on capital and the real wage rate. Sraffa's papers show that when he came across the von Neumann model in the mid-1940s his own analysis was already quite advanced, including his analysis of joint production. The paper also contains an exchange of letters between John Richard Hicks and Sraffa on some of the issues dealt with in the latter's book.