A Reconsideration of the Rationality Postulate: 'Right Hemisphere Thinking' in Economics

A bstract . The cardinal postulate of neoclassical economics is that individuals and entrepreneurs seek to maximize their unique positions in the world. Yet behind this postulate is an even more fundamental premise: that men are rational and can discern their own best interests. From Adam Smith on, it has been accepted that reasonable men act to maximize their own pecuniary advantage and in most economic models even the potential for irrationality is ignored. Nevertheless, it is becoming increasingly obvious from the research conclusions of other disciplines ( psychology, philosophy, political science, and sociology in particular) that the simplistic notion of " economic man ," posited so often in the economics literature, is more fancy than fact. There is an implicit recognition that the neoclassical assumptions may not be correct in the developing area of economic behaviorism. The economic behaviorists, however, adopt a more general definition of rationality, substituting what might be called a "modified rationality postulate" for the global rationality assumed in neoclassical theory. As a result, their conclusions do not differ greatly from those of the neoclassicists. Fortunately, ideas are now crystallizing in psychology which may enable us to shed light on decisions which previously would have had to be classified as non-rational, irrational, or unexplainable. Some of those ideas are explored.     

Against the New Economic Imperialism: Some Reflections

Classical political economy recognised that what needed analysing, explaining, and acting on was an economic system inextricably linked to the wider political and social systems. Smith and Ricardo, as well as Marx, saw class and the distribution of income as key. Neoclassical economics replaced these social and collective categories with the individual consumer and the marginal product of labour as the fundamental analytical categories—the "political" having been discarded. Yet even one of the founders of neoclassical economics, Alfred Marshall, would barely recognise nor accept what is today presented as economic analysis, ignoring as it does the key industrial and organisational detail underlying production. The "new political economy" claims to incorporate insights from other disciplines. But far from enriching economic analysis, these new strands of theory simply impose the assumptions and methods of neoclassical economics. We argue that this new economic imperialism needs to be replaced with a genuinely multidisciplinary and interdisciplinary approach to analysing economic issues.     

Max Weber

A bstract .   This paper argues that Weber's outline and research program is only of limited relevance for present-day economic sociology and heterodox economics because Weber had a rather narrow and static understanding of rationality and the economy. Uncertainty, both as a basic fact of economic life and in the interpretation of what rational action means in specific contexts, is missing in his approach. After a short discussion of the secondary literature on Weber's methodology, the paper focuses on the most important writings of Weber on methods and economics (e.g., his outline and some parts of Economy and Society ). The result of our investigation is that Weber shared a rather narrow, neoclassical understanding of the Austrian variant of economics. His important construction of goal-oriented behavior as the major methodological advice to analyze human action presupposes the idealized assumptions of perfect knowledge. His understanding of the market exchange process, price setting, and the functioning of full competition are rather conventional and elementary. Weber's genius did not materialize in the field of economics, but in his sociology of religion and law and in his sociology of domination.     

Selecting Social Goals: Alternative Concepts of Rationality: Both the Orthodox and the Heterodox Must Be Able to Explain the Origin and Significance of Values

A bstract . The differences between the neoclassical concept of substantive rationality and the recently proposed alternative, procedural rationality, is clarified. It is demonstrated that abandoning neoclassical rationality does not, in itself, provide a rational basis for evaluating alternative institutional or policy goals. Hayek contradiction-resolution model is examined as one way to evaluate such goals. The possibility that ends must be based on explicitly ethical criteria , selected according to the concept of "ontological rationality," is considered. It is argued that economic analysis employing either substantive or procedural rationality of evaluate alternative goals is inadequate since both take institutional and policy ends as givens. Both the orthodoxy and its critics must be able to explain the origins of values , and to provide criteria for evaluating alternative values before any policy proposals can be defended as rational or progressive. Tillich, Galbraith, Hodgson and Dewey are considered.     

Catholic Social Thought and New Institutional Economics: An Assessment of Their Affinities and Areas of Potential Convergence

The potential link between Catholic social teaching (CST) and the theoretical developments associated with new institutional economics (NIE) are explored. The emphasis is on the contributions of two Nobel Prize winners in economics—Douglass C. North and Elinor Ostrom—and on the work of political scientist Vincent Ostrom. By adjusting the neoclassical presumptions dominating modern economic theory to include culture, ideas, and religious beliefs in the analysis of economic behavior, the economic and social theorizing developed by these scholars advances a framework that has significant affinities with CST’s foundational critique of economic concepts and theories and with its normative position regarding the nature and functioning of social and economic systems.     

The Marginalists Who Confronted Land

A bstract .   Although the neoclassical turn in economics demoted land as a factor, important economists of neoclassical thinking, from neoclassical predecessors such Hermann-Heinrich Gossen through figures such as Leon Walras, did view land as a distinct factor of production. Walras, in particular, favored the use of land rent for public revenue. This paper examines the treatment of land by several neoclassical and Austrian economists and shows how, although the neoclassical school today has managed to bury land, some of the key figures who founded these schools did confront land as a factor. The burial of land is thus not inherent in neoclassical economics, but is a historical development that can be reversed.     

The New Microeconomics: A Psychological,Institutional, and Evolutionary Paradigm with Neoclassical Economics as a Special Case

Microeconomics requires a new grounding or formulation that can account for a broader range of socioeconomic behavior than neoclassical economics does. The core of the neoclassical economics research program—the theory of rational choice—has offered insights into the determination of socioeconomic behavior. But other elements need to be integrated into a coherent microeconomic perspective. We introduce such a perspective in which neoclassical economics becomes a special case. This advances our understanding of the determinants of behavior in a coherent and integrated manner. This perspective may form the foundation of an evolutionary and institutional perspective on socioeconomic systems. This has practical value in designing strategy and policy.     

Max Weber and Economic Sociology

A bstract .   Peukert (2004 ) argues that Weber's work is only of limited relevance to present-day economic sociology because it incorporates "a rather narrow and static understanding of rationality and the economy." This article disputes that claim. It is argued that Weber differentiates between economic and sociological perspectives on the economy through incorporating uncertainty into the latter. Hence Weber's economic sociology develops the distinction between "before" and "after" perspectives on action, incorporates expectations, and defines capital with reference to time and uncertainty. Furthermore, Weber's analysis of formal rationality presupposes uncertainty. Weber's economic sociology thus assumes a dynamic economy, where uncertainty is prevalent, and formal rationality can reduce uncertainty. Peukert's analysis thus (a) fails to consider Weber's differentiation between economic and sociological investigations, and (b) does not engage with Weber's knowledge of Austrian economics.     

A Critical Review of Homo Economicus from Five Approaches

Neoclassical economics is based on and structured around the notion of homo economicus. The theory of consumer choice, the theory of the firm, industrial organization, and welfare theorems all require the assumption that agents act in accordance with the scheme of individualistic rational optimization. In this context, our contribution is threefold. First, we delimit the notion of homo economicus according to five characteristics or dimensions. Second, we critically review this anthropological scheme from five distinct approaches, namely, behavioral economics, institutional economics, political economy, economic anthropology, and ecological economics. Third, we conclude that the scheme of homo economicus is clearly inadequate and deficient. However, despite its inadequacies, it remains one of the fundamental pillars of the neoclassical paradigm in economics, which allows us to discuss why we have not yet overcome this paradigm.     

Understanding Economic Man

A bstract .   The deficiencies of economic science are examined against its historical development: the utilitarian concentration upon individual choice conflates preferences and values and the hedonistic calculus is inoperable in the presence of incommensurability. In restricting explanations of behavioral patterns to changes in prices, incomes, and other "economic" variables, neoclassical analysis was destined to draw implausible conclusions. While the uniqueness of man rests in a highly developed self-consciousness, his rationality need not imply conscious reason. Decisions and actions that are made in response to inputs from all of the sensory modalities are led by conventions and traditions that give structure to every response. Biological, psychological, social, and ethical constraints so limit purposeful action, that a complete economist ( pace G. L. S. Shackle) is one who has mastered mathematics, philosophy, psychology, anthropology, history, geography, and political science.     

有限理性论

有限理性的概念是由西蒙教授引入经济学的,是指经济主体通过其实际行为表现出来的理性。现有的一些有限理性理论在一定范围内获得了实验研究结果的支持。通过对有限理性理论最新发展成果的介绍,重点阐述了注意力对概率判断的影响和经济主体做选择的主要方式等几个核心问题。     

From constrained optimization to constrained dynamics: extending analogies between economics and mechanics

Economic equilibrium models have been inspired by analogies to stationary states in classical mechanics. To extend these mathematical analogies from constrained optimization to constrained dynamics, we formalize economic (constraint) forces and economic power in analogy to physical (constraint) forces and the reciprocal value of mass. Agents employ forces to change economic variables according to their desire and their power to assert their interest. These ex-ante forces are completed by constraint forces from unanticipated system constraints to yield the ex-post dynamics. The differential-algebraic equation framework seeks to overcome some restrictions inherent to the optimization approach and to provide an out-of-equilibrium foundation for general equilibrium models. We transform a static Edgeworth box exchange model into a dynamic model with procedural rationality (gradient climbing) and slow price adaptation, and discuss advantages, caveats, and possible extensions of the modeling framework.

     

Uncertainty and Economic Sociology:

A BSTRACT . The paper discusses the role of uncertainty in economic sociology, aiming to clarify some controversial issues in the related literature. Initially, some conceptual remarks are made about the relation between economic sociology, neoclassical economics, and rational choice theory. Next, in light of the existing literature on uncertainty and economic sociology, we distinguish between complexity and different types of uncertainty. We also identify different versions of the maximization hypothesis and examine their relations to the different types of uncertainty. Then we defend a concept of fundamental uncertainty that emphasizes the role of institutions. A theory that combines fundamental uncertainty and institutions should emphasize not only the existence of behavior in accordance with institutions, but also the possibility of creative, bold, unconventional behavior, discussed next, as people may use the knowledge provided by institutions to go against the tide. Finally, we suggest that the primary distinction should be that between approaches to economic issues, not between disciplines.     

Economic Sociology vs. Real Life: The Case of Grocery Shopping

Economic sociology improves on neoclassical economics but underanalyzes the economic activity of the consumer, leaving the assumption of consumer sovereignty unchallenged. We believe economic sociology marginalizes consumer activity because it is written from the standpoint of privileged men. Using institutional ethnography, we examine economic activity beginning from a standpoint of the person who grocery shops for a family. Starting from this standpoint exposes the gendered character of both the economy and economic sociology's conventional approach to analyzing it.     

Economic Rationality Meets Celebrity Urbanology: Exploring Edward Glaeser's City

This article presents a critique of the popular and public‐policy work of Harvard economist Edward Glaeser, which has been constructed at the nexus of neoclassical economic rationality and celebrity urbanology. Widely recognized as one of the world's leading urbanists, Glaeser has combined a high‐flying academic career with public‐policy engagement and extensive work as a newspaper columnist and media commentator, enabled by a longstanding affiliation with the Manhattan Institute, a leading conservative think tank. The critique is pointed, but seeks to exceed argumentum ad hominem by calling attention to sociopolitical and institutional factors that have facilitated the accelerated diffusion and enlarged dominion of this model (and mode) of microeconomically rationalized urbanism, including the production of new forms of intellectual marketing, the construction of colonizing variants of urban‐economic expertise, and the ongoing rearticulation and creeping consolidation of market‐centric policy norms. The article argues that a distinctive form of urban‐economic orthodoxy is under construction, based on a potent fusion of scientific reasoning and pop presentation, combining ideologically disciplined applications of neoclassical economics with dissemination in the register of the ‘freakonomics' franchise. Edward Glaeser's intellectual accomplishments have been significant, but the ‘Glaeser effect' is more than a story of individual scholarly endeavor, calling for more than a merely ‘internal' critique. Its conformity to Manhattan Institute principles testifies to a telling consistency of ideological purpose, contributing as it does to a sustained effort to rationalize and normalize lean and limited modes of neoliberal urban governance, fortified by microeconomic reason.     

Buy low,sell high: Price gaps and neoclassical theory

This paper considers the simple neoclassical economics of price gaps in the absence of income effects. Our guiding principle is that price gaps reflect a fundamental economic principle: buy low and sell high. It is demonstrated that neoclassical theory makes clear and economically testable predictions about these price gaps.     

The Neoclassical Model Enriched by the Structure of Control:

A bstract Traditional neoclassical theory treats the economic sphere as if it can be detached from its surrounding social and political environment. It assumes connections between the social/political spheres and the economic sphere are weak, and no change of significance occurs in the social and political environment during the period considered Social and political conditions are treated as "given" and, more often than not, the conditions of this given environment are neither specified nor studied A broader economics is needed
The Virginia School has represented a connection between political control and distributive outcomes with its rent-seeking analysis The flaw in their argument, that exposes their ideological bent, is their failure to extend the analysis to the distributive impact of control in the social sphere. This piece is an attempt to make that extension, and to demonstrate that a specific historical case, women s experience in World War II , cannot be fully understood without bringing that social dimension into the analysis     

Intangible Flow Theory

The intangible flow theory explains that flows of economic material elements (such as physical goods; or cash) are consummated by human related intangible flows (such as work flows; service flows; information flows; or communicational flows) that cannot be precisely appraised at an actual or approximate value, and have properties precluding them from being classified as assets or capitals. Thus, although mathematical/quantitative research methodologies are very relevant for science, they are insufficient to study economy and society. Due to its prejudice against non‐mathematical/quantitative scientific reasoning, neoclassical economics could not be technologically prepared to reach the intangible flow dynamics of economic phenomena. Furthermore, the neoclassical solution to call people human capital or assets, besides being ethically very questionable, offers performative non‐scientific metaphors that intervene in the production of the reality they claim to represent; and sabotages the study of well delimited research questions by scientific approaches outside the realm of neoclassical economics.     

审计人员行为的经济学假设分析

从审计的发展历史来看,审计学无疑是受着经济学发展的影响。经济学的一些基本理论都对审计有着指导作用。经济学的经济假设也是如此,整个经济学的大厦都是建立在几个基本的经济假设基础上的。本文拟从经济学的三大经典假设:有限理性的经济人假设、信息的不完备与不对称假设、机会主义行为假设来对审计人员的行为作一个经济分析。在本文最后进行了简短的小结,并且有针对性地对基于三个经济学假设的审计行为规范提出了三项政策建议。     

现代物流产业概念内涵和外延的理论研究

以经济学的市场划分、新兴古典经济学分工演进理论和三次产业分类理论为基础,以联合国标准产业分类法和我国《国民经济行业分类》的行业定义、划分原则和规定为标准,同时兼顾现代产业发展趋势-产业融合的特点。依据物流产品特性界定我国现代物流产业狭义和广义概念。