Philosophy of EconomicsEssay Preview: Philosophy of EconomicsReport this essayPhilosophy of EconomicsThe philosophy of economics concerns itself with conceptual, methodological, andethical issues that arise within the scientific discipline of economics.1 The primary focus is on issues of methodology and epistemologyЖthe methods, concepts, and theories through which economists attempt to arrive at knowledge about economic processes. Philosophy of economics is also concerned with the ways in which ethical values are involved in economic reasoningЖthe values of human welfare, social justice, and the tradeoffs among priorities that economic choices require. Economic reasoning has implications for justice and human welfare; more importantly, economic reasoning often makes inexplicit but significant ethical assumptions that philosophers of economics have found it worthwhile to scrutinize. Finally, the philosophy of economics is
concerned with the concrete social assumptions that are made by economists. Philosophers have given attention to the institutions and structures through which economic activity and change take place. What is a “market”? Are there alternative institutions through which modern economic activity can proceed? What are some of the institutional variants that exist within the general framework of a market economy? What are some of the roles that the state can play within economic development so as to promote efficiency, equity, human well-being, productivity, or growth?
The dimension of the philosophy of economics that falls within the philosophy of sciencehas to do with the status of economic analysis as a body of empirical knowledge. Primaryquestions include: What is economic knowledge about? What kind of knowledge is provided by the discipline of economics? How does it relate to other social sciences and the bodies of knowledge contained in those disciplines? How is economic knowledge justified or evaluated? Does economic theory purport to offer abstract theories of real social processesЖtheir mechanisms, dynamics, and institutions? What is the nature of economic explanation? What is the relationship between abstract mathematical models and theorems, on the one hand, and the empirical reality of economic behavior and institutions, on the other? What is the nature of the concepts and theories in terms of which economic beliefs are formulated? Are there laws like regularities among economic phenomena? What is the status of predictions in economics?
The intellectual role of the philosophy of economicsPhilosophers are not empirical researchers, and on the whole they are not formal theory builders. So what constructive role does philosophy have to play in economics? There are several.
First, philosophers are well prepared to examine the logical and rational features of an empirical discipline. How do theoretical claims in the discipline relate to empirical evidence? How do pragmatic features of theories such as simplicity, ease of computation, and the like, playa role in the rational appraisal of a theory? How do presuppositions and traditions of research serve to structure the forward development of the theories and hypotheses of the discipline?
Second, philosophers are well equipped to consider topics having to do with the concepts and theories that economists employЖfor example, economic rationality, Nash equilibrium, perfect competition, transaction costs, or asymmetric information. Philosophers can offer useful analysis of the strengths and weaknesses of such concepts and theoriesЖthereby helping practicing economists to further refine the theoretical foundations of their discipline. In this role the philosopher serves as a conceptual clarifier for the discipline, working in partnership with the practitioners to bring about more successful economic theories and explanations.
So far we have described the position of the philosopher as the “under laborer” of theeconomist. But in fact, the line between criticism and theory formation is not a sharp one.Economists such as Amartya Sen and philosophers such as Daniel Hausman have demonstrated that there is a very constructive crossing of the frontier that is possible between philosophy and economics; and that philosophical expertise can result in significant substantive progress with regard to important theoretical or empirical problems within the discipline of economics. The cumulative contents of the journal Economics and Philosophy provide clear evidence of the productive engagements that are possible when philosophy meets economics. In order to accomplish these goals, the philosopher of economics has a responsibility parallel to that of the philosopher of biology or philosopher of physics: he or she must attain a professional and rigorous understanding of the discipline as it currently exists. The most valuable work in the philosophy of any science proceeds from the basis of significant expertise on the part of the philosopher about the “best practice,” contemporary debates, and future challenges of the discipline. Only through such acquaintance will the philosopher succeed in raising topics that genuinely engage with important issues in the profession.
Important questions in the philosophy of economicsLet us now consider a sampling of philosophical questions about economics as an organized body of knowledge. These questions by no means exhaust the content of the philosophy of economics, but they serve to give the reader of the types of questions that philosophers have posed to the discipline of economics.
Are there laws in economics?The concept of a “law of nature” has been central to our understanding of the naturalsciences. The intellectual power of classical physics derived from the fact that it was capable of advancing statements of physical laws that were simple and universalЖlaws of gravitation and planetary motion, optics, electricity and magnetism, etc. Is this an essential feature of a successful empirical science? And does economics possess such laws? Several authors are affirmative on both points (Kincaid 1996), (Rosenberg 1976). However, several points have emerged in recent discussions of the social sciences that lead to doubt about the centrality of laws in the social sciencesЖincluding economics. First, there are significant differences between natural and social phenomena that should make us dubious about the availability of strong “laws of nature” describing
a set of phenomena. In natural physics, this is not a particularly important question, because such a phenomenon or phenomena are difficult to study and it is a far more difficult concept to measure (Mack 1994).Second, a critical or foundational question of social phenomena can be answered by a number of hypotheses that are relevant to the topic of the present discussion. As we will see, these hypotheses have many possible answers at various levels of abstraction. A number of theories and theories by many other persons have received widespread and enthusiastic adoption. First, there are many theories (Kincaid 1996; Mack and Sternberg 1991; Sternberg-Fruyte 1994). Second, there are several examples (Mack and Sternberg 1991; Sternberg and Munoz 1996) of similar, independent, and sometimes contradictory results on the social and economic problems arising from simple physical forces for all possible, non-scientific explanations. In fact, one of the most well-known such examples is the phenomenon known as “trending” that affects nearly a billion people in Europe every year (Watkin, 1990). Third, there are many theories (Kincaid 1996; Kirchen 2000). And in a wide variety of ways, the social and economic problems arising from simple physical forces for all conceivable explanations will have substantial consequences for economic or scientific research and progress.Fourth, there are many theories (Kirchen 2008; Sternberg/Fruyte 1994; Munoz 2004). So, even among most of the hypotheses we include, the most compelling ones are not the laws (Levin 2006, Sivak and Tiller 2012, Sternberg and Munoz 2008, Kirchen 2008; Sternberg and Munoz 2005, Sivak and Tiller 2012), but rather, the processes of natural and social behavior and processes of social economy, which are both involved in the phenomena we care about and which can have a profound impact on the economic status of the people in the societies we study. Of course, each of these hypotheses is not a completely natural or societal phenomenon. On the contrary, they may have been influenced by natural processes of psychological growth or expansion of networks rather than by the effects of natural factors.In this sense, most of the social and economic problems emerging in economics have a connection to the natural and social processes of human development and human interests (Hochschild 1999a; Hochschild & Hutter 1997b; Hochschild 1999; Hochschild and Hutter 1997). This is because, according to this view, any particular natural and social process may affect human economic and technological development. More recently, for example, a number of political economists (Bernhard, Bernhard 2000; Bernhard 2000; Kuznetsov 2005; O’Brien 1997) have challenged the common view made by some of these economists (Iverson 1999; Hooper 2003; Eberhard and Ebert 2004; Kincaid 1997). We shall now focus on the theories and theories that have generated the most controversy and support that view. The most popular theory of natural variation was developed by Alfred Hohndorf (1979). As mentioned earlier, that view posits various social groups acting spontaneously without any conscious, conscious planning and without any specific and ongoing economic, social, or political motives, with particular economic or financial implications. Hohndorf’s theory also predicts that various social and ecological organizations may have arisen spontaneously without any concerted, conscious attempt to develop their collective and social resources by natural events; although Hohndorf had to contend with the “overly complex and inefficient, often interdependent, and sometimes