Adam Smith's moral foundations of self-interest and ethical social order

This article draws on textual evidence from The Theory of Moral Sentiments and The Wealth of Nations to address mistaken interpretations of Adam Smith's fundamental concept of self-interest as greed that has been said to have had a corrosive influence on markets, commercial behaviour, and widening inequality. To the contrary, Smith's complex set of human motivations, including self-interest, his economic system that is based on free markets, and institutional frameworks governing productive property rights and the rule of law are argued to increase aggregate wealth, improve the position of those least well off, and maintain ethical social order.     

Henry George: The Economist as Moralist*

Abstract . Henry George derived his economic theory from his personal experience. He had the good fortune to be living in California during his formative years; there the economic events which transpired during the settlement of the North American continent—the passing of the frontier and its consequences—occurred within a time span of a few years and the telescoping of history gave him the framework for an original economic system, as well as a utopian vision of a free society. Much attention has properly been paid to George's economic ideas but he was also a moralist, one accepted by some philosophers as among the greatest. This aspect of his work, and particularly his value theory, have been neglected.     

Franz Oppenheimer's (1864–1943) Social Economic Approach to Health

The idea of scholarly synthesis was central to the founders of the American Journal of Economics and Sociology. Franz Oppenheimer (1864–1943) in fact impersonated the idea of scholarly synthesis. Being the son of a Reformist rabbi—these religious roots provided the impulse for his work—he started out as a physician in the industrial suburbs of Berlin; his diagnosis was that he faced social and not medical disease, which consequently brought him to the study of economics. But unlike many mainstream economists today, he insisted on the necessary cooperation between economists and sociologists, ideally in one person. His chair in Frankfurt, showing his own handwriting, was denominated for economic theory and sociology. In this article, I show his contributions with respect to economic aspects of health. These are not well known. Part of the reason is that the field of health economics as it is taught now is very narrow. Therefore, Oppenheimer's health economic contributions tend to be overlooked.     

Karol Wojtyła’s Katolicka Etyka Społeczna as Precursor and Hermeneutic Key to Pope John Paul II’s Economic Teaching

The highly anticipated publication of Karol Wojtyła’s Katolicka etyka społeczna (KES) in 2018 provides a novel and important basis for understanding the economic thinking of Pope John Paul II. The text is comprised of Wojtyła’s extensive lecture notes from the 1950s on the topic of Catholic social teaching and spans almost 500 pages. KES illustrates the future pope’s deep concern for economic justice as a young priest and his ambivalence towards capitalism, which persisted throughout his papacy. Given the size of KES, this article selectively focuses on Wojtyła’s treatment of topics of continuing relevance: the right of the Church to pronounce on economic matters; private property and the “social mortgage” on it; inequality, the just distribution of resources, and the “option for the poor”; the moral assessment of capitalism and Marxism; the dignity of labor and workers’ rights; and the role of conflict in promoting the common good. I contend that KES is consonant with the later papal teaching of John Paul II on economic justice and that it provides a hermeneutic key to understanding it. Furthermore, I argue that the “radicalism” of Karol Wojtyła on matters of economic justice in KES coheres with papal social teaching from Pope Paul VI through that of Pope Francis.     

Henry George and the Classical Scientific Research Program: George's Modification of It and His Real Significance for Future Generations

Abstract . Henry George's revision of classical economics was based on a new “hard core” assumption linking efficiency, equity, and social welfare to a revised concept of property rights in land. However, rather than create new core supporting “protective belt” theories, George either accepted or, when necessary, modified existing classical theories especially those which threatened his new hard core, for example, classical “wages-fund” theory. Consequently, George's adaptation of the Ricardian “stationary state” model was less accurate than mainstream classical economics in its predictions concerning the behavior of the distributive shares of income over time, and the effects of technological change on economic growth and economic welfare. Without its own protective belt, George's classicism became a special case of classical economics whose value, nevertheless, existed in its effective criticism of classical property rights theory.     

Economy as a Social System: Niklas Luhmann's Contribution and its Significance for Economics

Niklas Luhmann's (1927–1998) ambitious research project was aimed not only at describing society as a global social system, but it also analyzed various subsystems (including an economic one). The article assesses Luhmann's vision of the economy, summarized mainly in his Wirtschaft der Gesellschaft, wherein he addresses basic economic notions: the economic system, money, prices, rationality, and the market. I then interpret his ideas in the context of modern discussions in economics (intersubjective structures, complex systems, and evolutionary modeling). I also propose some heuristics implied by Luhmann's economic ontology, which are potentially interesting for methodological and theoretical strategies of modern economics.     

The First U.S. Food Stamp Program: An Example of Rent Seeking and Avoiding

Abstract . Rent seeking involves the wasteful expenses incurred to secure, acquire, or maintain a monopoly position. Rent avoiding involves the expenditures undertaken to avoid the imposition of rent-seeking costs. Each represents a social cost of Tullock rectangle loss in addition to the dead-weight or Harberger triangle loss that combined to form the Harberger-Tullock trapezoid social cost. The first Food Stamp Program in the United States came about through the rent-seeking and/or rent-avoiding efforts of farmers, grocers, bankers, and other economic agents and did not lead to the promotion of social welfare. The evidence of these self-interested efforts was gleaned from articles in the New York Times and government documents. The first Food Stamp Program also fits the economic theory of regulation developed by Stigler, Jordan, Peltzman and others, and it involved imposed costs on economic agents as the program evolved.     

Max Weber's Authority Models and the Theory of X-Inefficiency: The Economic Sociologist's Analysis Adds More Structure to Leibenstein's Critique of Rationality

Abstract . Harvey leibenstein's theory of X-efficiency holds that behavioral considerations, such as motivation of workers or the quality of managerial decisions, are the major restraints on the productivity of modern organizations. It envisions economic behaviors which are not fully rational; that is, behaviors which fall far short of the maximization postulate so central to neo-classical microeconomics. The theory is significant for it, contrary to the prevailing view, seeks to explain suboptimality primarily as a function of factors internal to the Jirm rather than those that are objectively external, such as the market structure in which the firm finds itself. The X-efficiency framework is enhanced by the application of several salient concepts in the economic thought of Max Weber. He, in contrast to most of his contemporaries, engaged in economic analysis, but he never accepted the maximization postulate. He considered such formal economic rationality to be a very rare, almost an exceptional case of economic behavior the norm was something substantially less rational. Weber therefore categorized economic activity by its degree of rationality and linked such activity to types of authority exercised in its pursuit.     

Unity in the Social Thought of Adolph Lowe: A Review of "Essays in Political Economics: Public Control in a Democratic Society"

Abstract . From the economist Adolph Lowe's voluminous-writings, Allen Oakleyh has selected eight essays which present the gist of Lowe's thought. It unifies his structural analyses and his instrumental analyses into the system Lowe calls “Political Economics.” This pre-orders desired ends or effects and then determines or applies goal-adequate means to achieve these ends. Lowe's Essays in Political Economics sketches the economic paradigm by which he expands the evolutionary way of thinking from the subject —economic behavior— to the object, the socioeconomic world. He argues that instability is fundamental, basic and inherent in contemporary industrial capitalism as it has evolved physically, technologically and socially and stability can be restored by an approach which reverses the continuum to end-means. He holds that if the world evolves, and it does, so must the goal-adequate methods and instrumentalities to deal with it.     

von Neumann/Morgenstrn Decision Making and Harsanyi's Theory of Justice: After Rawls and Nozick If It Risks Personal Freedom and Individual Liberty,Can It Be Really Just?

Abstract . John C. Harsanyi has developed a theory of justice based on the von Neumann-Morgenstern (vN-M) theory of decision making under uncertainty. Instead of applying the vN-M theory strictly, however, Harsanyi proposes to modify his approach so as to exclude decisions which seem to be the result of rashness, strong excitement and other circumstances which might hinder rational choice. The result is a theory of justice which is internally inconsistent and potentially hostile to liberty and individual freedom.     

Pope Francis on Overcoming Exclusion: A Theological Vision with Economic and Social Implications

The ethical imperative to overcome exclusion is a key component of the social teachings and advocacy efforts of Pope Francis. At the very core of the pastoral and social vision he proposes is a drive to resist the global trend toward growing inequality and to encourage greater solidarity, which includes extending economic opportunities much more broadly. Even more vehemently than his papal predecessors, Francis insists on prioritizing the concrete well‐being of people facing hardship and oppression, so that nobody is relegated to the category of “the throwaway.” While the theme of mercy (a “soft” virtue, inasmuch as it involves voluntary action to overcome indifference and suffering) is prominent in many of his ethical appeals, Francis notably displays a distinctive structural analysis (a “hard” diagnostic tool) when addressing injustices in the global economy. The plights of victims of human trafficking, of global climate change, of restricted work opportunities due to globalization, and other causes of human suffering are best analyzed with ample attention to structures that require transformation. While economists and sociologists may be less interested in the underlying moral anthropology and spirituality that grounds the social teachings of Francis, it is undeniable that a coherent social vision undergirds the insistence of the Jesuit pope on greater social inclusion—a vision that applies to the full range of economic, environmental, and social issues. These concerns are on especially full display in two major teaching documents of Francis: his 2013 exhortation “The Joy of the Gospel” and his 2015 encyclical Laudato Si’. In each, the pope employs an astute structural lens that reveals injustices and allows him to propose strategies to overcome inequality and exclusion.     

The CAPITAL in Social Capital: An Austrian Perspective

In recent decades economists started discovering the importance of the social dimension of economic interactions. Contemporary economics has borrowed several sociological concepts for its own use, among the most important being the concept of social capital. However, this transfer within disciplines did not occur without a loss—the nature of social capital in economics remains confused and obscure. The purpose of this article is to clarify it, specify the possibilities for its use, and discuss their limits. It is argued that economics once also possessed a view of human beings that was more “socialized” than the modern neoclassical Homo oeconomicus, and that this more “socialized” view still exists in the Austrian school of economics. Because this tradition of economic thought has also developed an elaborate capital theory, it can serve as an ideal source where we can look for inspiration in the current social capital debate. First, social capital is (re)defined along these lines as an individual's asset connected with recognized reciprocity (as opposed to interactions usually classified as “altruistic”). Then major critical claims about the relation between social and physical capital are answered and the connection between social capital, trust, and social norms is described.     

Interpenetration Versus Embeddedness

A bstract .   The economy and economics are important fields in Talcott Parsons's work. Parsons's contributions on this subject were, however, mostly critically received in the new economic sociology. In this article, main points of criticism of Parsons's economic sociology will be discussed and the question asked whether the importance of Parsons's works in economic sociology was adequately treated. It will be demonstrated that the critical assessments was based for the most part on theoretical conceptions Parsons developed during his structural-functionalist period. Hence the assessments neglected to discuss the theory of expressive-symbolic communication of affect that Parsons developed in his later systems-functionalist period. However, precisely these later theoretical developments correlate directly with the concept of social embeddedness as a key concept in the new economic sociology. A stronger linking with this development in Parsons's theory could bring economic sociology closer to finding a foundation in action theory, which has been missing up to the present.     

A Natural Science Version of Socioeconomic Evolution: Copeland's Essays Are His First Sustained Attempt to Apply His Approach to Economic History

A bstract . Morris A. Copeland advanced a theory 50 years ago based on the idea, widely accepted in the social sciences at that time, that the society and its economy and polity are products of socioeconotnic evoltttion. Hence, he reasoned, any theoretical economic statement is temporally and culturally relative. Therefore, he held, the concern of economics as a science is with the way economic activity is now organized as well as how it originated and developed over time in specific cultures. After applying it with history-making results to the contemporary economy, he now, in his new book of Essays , applies his approach to economic history, achieving an important methodological contribution.     

Henry George and the Classical Scientific Research Program: The Economics of Republican Millennialism

Abstract . Henry George's classicism was evident in his acceptance of “hard core” assumptions inherent in classical economic analysis, notably that rational self-interested behavior exercise in competitive markets maximized economic welfare. However, George's “stage theory,” the “Law of Human Progress,” led him to reject the classical nexus between social and economic welfare. The emergence of an exchange economy improved efficiency and economic welfare, but institutional changes lagged behind, particularly the redefinition of property rights. Consequently, economic growth based on land as a private rather than public good widened the gap between economic efficiency and social welfare. Hence George's paradox of poverty amidst progress. George resolved the equity efficiency conflict by treating land as a public good. Then, the sale of monopoly rights to land through the “single tax” on land rents captured the difference between the private and social costs of land use.     

An Expansion of the Neoclassical Horizon in Economics: The Rent–Seeking Research Program Brings in the Nuances of Social and Political Control

Abstract . The terms of discourse in the Neoclassical school of economic theory have constrained its ability to develop the connections between the economic and the social and political spheres. Building on the logic of the rent–seeking research program a systematic connection is developed. A taxonomy of distribution is presented in which rent and profit ate identified as distributions to control over productive factors. The structure of control embodied in social and political institutions largely determines who controls these productive factors and therefore who receives the distributions to control: profit and rent. The distinction between profit and rent relates to opportunity cost. Profit is a distribution to control equal to opportunity cost and is therefore allocatively necessary. Rent is a return above and beyond opportunity cost and is not allocatively necessary. By clarifying the role of rent and profit in Neoclassical theory the interconnection between the social, political, and economic spheres is systematically integrated into the theory.     

The Relation of ‘Human Capital’ Preservation to Health Costs*

Abstract . The concept of 'human capital' has evolved in economics as a way of measuring the value society places on an individual. This value, it is argued, constitutes a real but seldom discussed limit on how much money either an individual or society will pay for the health costs of an individual. Conversely, it can be argued that the capacity of the health system to preserve ‘human capital', as created by nature and nurture and by ‘investments’ in education and training, is an economic justification for health costs, just as military costs are justified for the defense of the population. In the latter instance, the greatest public health benefit for the dollar would be obtained by Pareto optimal expenditures. Similarly a microeconomic model for the clinical process involved in diagnosing, treating and rehabilitating the diseased individual is suggested that relates the time consumed by the elements of the clinical process to the probabilities of maximizing the preservation of the greatest number of functional man-days obtainable for an aging individual's cohort. For the model to work there would have to be an economic incentive for the health provider to engage in objective-oriented, interdisciplinary, cost-effective actions in the clinical process that would minimize the diseased individual's downtime and maximize his functional longevity in an operations research framework.     

Why Everyone Should Read George's 'Progress and Poverty': On the Classic's Centenary, the Specialists Find This 19th Century Best Seller Still Very Timely

Abstract . When one urges that everyone read a classic, Progress and Poverty, now on the centenary of its publication, it is not only because in a democracy the voting citizen decides basic questions of economic policy, but because it appeals to the moral sense of economics students as well as other social scientists. Is it not important that legislation affecting living standards and culture be just, as well as scientifically sound? And that economists, along with other social scientists, master communication technique as Henry George did, so that they can share the fruits of their investigations? Part of the ability to get something done about what is perceived as a problem must rest on the ability to communicate, As Joseph Schumpeter showed, George's proposal that the economic rent of land be collected in lieu of taxes that burden labor and capital was economically sound and his criticism of a tax system that penalizes industry and thrift and rewards speculation is now “obvious wisdom,”     

Patterns of intention: Oberkampf and Knoll as Schumpeterian entrepreneurs

ABSTRACT

Presented here is an analysis of Schumpeter’s interest in political economy, as it relates to his use of history to investigate economic change and capitalism. This aspect of Schumpeter’s work – referring to style and involving a range of moral and aesthetic considerations – is largely neglected in entrepreneurship studies despite his influence on the discipline. This paper argues these considerations are essential to understand Schumpeter’s entrepreneur and the role of creative destruction in rejuvenating capitalism. However, his theory also involves political inclinations and choices, such as elitism and a fear of declinism, both of which are more typical to conservative not destructive worldviews. To illustrate my argument I examine and describe two cases, those of Oberkampf and Knoll, the latter a rough contemporary of Schumpeter. The findings point to the central role of political economy in past and present debates about the political role of entrepreneurship in society, suggesting a need for further attention to the zeitgeist (spirit of the time) in future research.     

Solving the “Lachmann Problem”: Orientation,Individualism, and the Causal Explanation of Socioeconomic Order

This article examines the question of whether social institutions should be treated as possessing the sui generis causal power to influence people's actions. It does so by means of a case study of the work of the Austrian economist Ludwig Lachmann. Lachmann's account of how social institutions facilitate intentional human agency in the face of uncertainty contains significant ambiguities and tensions, stemming from his reluctance to acknowledge the causal efficacy of social institutions. The conceptual resources required to overcome these problems are to be found in realist social philosophy and social theory. The proposed resolution comes at a price, however, for it calls into question Lachmann's self‐avowed commitment to methodological individualism.