Polarities between Naturalism and Non-Naturalism in Contemporary Economics: An Overview

We provide a dynamic model of banking competition, in which bounded rationality of some competitors explains how the credit cycle is intensified. We model the economic cycle following Tobias F. Rötheli (2012b), who argues that boundedly rational banks, in their Bayesian learning, overestimate the probability of success during booms and underestimate it during recessions. We obtain three main results. First, the model suggests that pessimism/underconfidence is not a powerful driver of credit cycles. Instead, it supports the conclusion that it is euphoria during large upswings that leads to the next crunch. Second, the dynamization of the model provides further insight into the way boundedly rational competition intensifies the credit cycle. Third, it additionally predicts that the effects of behavioral biases are more pervasive when the quality of the niche markets is lower.     

An Economist's Comment on Philosophico-Economic Relationships

In this journal, Welch and Mueller (WM) (2001) demonstrated a classificatory method for conceptualizing relationships between religion and economics. No judgement can be drawn from WM as to which of their four classifications might be a, or the, correct one. They conclude that the relationships are “both complex and controversial”, and that before any assessment can be apprehended adequately of how the two fields interact, “the permutations and subcategories implied by the system” used need to be identified and explored more thoroughly. This paper pursues that path, but argues that a more determinate verdict than WM's is possible. Here, an alternative interpretation of the relationship between religion and economics is investigated, in which WM's categories are assessed. In the alternative, WM's four classes are not taken to possess equal intellectual merit, as they appear to be. Using more current and comprehensive definitions of religion than WM's, a case is constructed that three of their four categories possess greater intellectual value than the remaining one. These three are here collapsed into one new mega-category regarded as that most validly describing the relationship between religion and economics.     

The relevance of christian fictive domestic economy

The theologian, Bruce Malina, argued in this journal (1997) that the Bible is not relevant to economics in the contemporary world. This paper contends the contrary. A body of economists and social theologians hold that a set of consistent socio-economic principles and ethics underlying the long history of the Biblical texts can be applied to the modern world, and are so intended to apply. An assumption of this group is that the Bible depicts the word of God interpreted and ultimately written down by people in their day and age. It is the socio-economic warrants in principle contained in this material that are relevant today. The argument here has two aspects. One questions Malina, concluding that he does not sustain his conclusions. The second aspect is to illustrate something of the methodology and conclusions of the economist/social theologian group that asserts the relevance of Biblical principle to contemporary society.     

Naturalised epistemology and economics

The relevance to economics of naturalised epistemology (alsoknown as the naturalistic turn) from philosophy of science hasrecently been argued by economic methodologists, especiallyby D. Wade Hands (Reflection Without Rules: Economic Methodologyand Contemporary Science Theory, Cambridge, Cambridge UniversityPress, 2001). This concept is held by Hands to constitute partof the ‘new economic methodology’ that consistsof the ‘interpenetration of economics and science theory’.Contrary to Hands's case, naturalised epistemology is shownhere not to represent a qualitatively new concept, to possesslittle coherent meaning, and to be incapable of charting aninnovative way forward for economics. Although there are moreissues concerning naturalism bearing on economics than are notedby Hands, three specific limitations of naturalised epistemologyare discussed. These and other limitations are related to theeconomics examples Hands proposes suggesting the usefulnessof naturalised epistemology for economics.     

The status of economics as a naturalistic social science

Naturalistic social science is held frequently to be the mosteffective means of discovering social reality (e.g., Kincaid,H. 1996. Philosophical Foundations of the Social Sciences: AnalyzingControversies in Social Research, Cambridge, Cambridge UniversityPress; McIntyre, L. 1996. Laws and Explanation in the SocialSciences, Boulder, CO, Westview). This paper evaluates economicsas such a science. From Kincaid (1996), criteria for naturalismin social science are identified. The focus here is whetherrational, objective empirical methods exist for choosing economictheories; whether fair, cross and independent tests exist fortheories, assumptions and methodological norms; and whethereconomic theories chosen in these ways have public policy relevance.Examples from economics are related to each of these naturalisticcriteria. These encompass the relevance of econometrics to testingeconomic theories, the complications the non-natural-kind qualityof economic variables impose on testing, and the question ofwhether naturalistic methods reveal economic reality. The paperconcludes that the practice of economics does not, and is notable to, rely on naturalistic methods.     

Work Ownership Implications of Recent Papal Social Thought

This paper examines a particular employment inference of recent Papal social thought, for a Western developed economy context. The Papal documents studied are Centesimus Annus (1991), Sollicitudo Rei Socialis (1987), and Laborem Exercens (1981). The first and shortest section of the paper outlines a number of principles from the encyclicals aiming to guide employment organisation and policy relevant to Western and all economies. To permit their full consideration, an illustration is given how implications affecting forms of employment organization might be drawn from just one of the principles--the right to private property ownership. Private property ownership rights are argued to be constrained in specific ways, to relate instrinsically to employment organization, and to underpin other principles emphasized in the encyclicals, such as the priority of labor over capital. A selection of recent non-official-Church Catholic Social Thought is compared with the approach here. Since the encyclicals deal with issues only at the level of principle, the paper notes cases where attempts have been made to apply some of the employment organizational implications in practice.