ABSTRACTAlthough Thomas Piketty is largely known for his recent empirical contributions to the study of inequality, his work on epistemology has been substantial. It remains relatively unreferenced in the political epistemology literature both because it has been overshadowed by his work on inequality and because it was written for an audience of economists rather than political scientists. Piketty’s work on these themes can be divided into analyses of political belief formation and analyses of the epistemic properties of democratic institutions. Capital (...) in the Twenty-First Century, Piketty’s recent book, also reflects his long-standing interest in epistemological questions. The major epistemic claim of that book is that political knowledge is an endogenous phenomenon: policy generates new knowledge over the course of its administration. One of the benefits of the primary policy proposal of Capital, the global wealth tax, is that it will generate new knowledge about wealth inequality. (shrink)

The inherent complexity of modern financial systems, and their basis in human behavior, make it hard to establish unequivocally the “who, what, where, when, and why” of the global financial crisis. However, after almost a decade, we know enough to discard much of what has, in the meantime, become folk wisdom about the causes of the debacle, including Wall Street bonus culture, bankers’ greed, the moral hazard of “too big to fail,” government intervention (“too much government”) and deregulation (“not enough (...) government”). While each of these factors may have played some role, the crisis can be much more accurately described as one of ignorance than malevolence. The common thread tying the emergence of the bubble to the disastrous consequences of its bursting is the misunderstanding of correlation and causation links in three key domains: economic policy, financial modeling, and the regulatory framework. These misunderstandings helped fuel the housing bubble and introduced fragility into the system, making it vulnerable to the bubble’s subsequent, unavoidable burst. (shrink)

In the ongoing debate about the impact that studies of public ignorance should have on the study of culture, Mark Fenster and Bret Chandler assume that wider political participation must be our goal, because, to them, political ignorance is a culturally imposed, and therefore removable, obstacle—as if, without the baleful influence of culture, political participants would be well informed. Culture is indeed a primary influence on people's political opinions, so political scientists should indeed study the role it plays in the (...) formation of political beliefs. But such studies should begin with ignorance as people's default position, and should refrain from assuming that the source of ignorance is cultural domination or manipulation. (shrink)

Deliberative democracy is unrealistic, but so are rational-choice models of democracy. The elements of reality that rationalistic theories of democracy leave out are the very elements that deliberative democrats would need to subtract if their theory were to be applied to reality. The key problem is not, however, the altruistic orientation that deliberative democrats require; opinion researchers know that voters are already sociotropic, not self-interested. Rather, as Schumpeter saw, the problems lie in understanding politics, government, and economics under modern—and postmodern—conditions. (...) Modernity entails levels of complexity that stymie voters' attempts to be well informed about which political promises will actually solve social problems. Postmodernity adds to complexity an overabundance of fragmented information experienced impatiently and fleetingly by citizens who confuse entertainment with knowledge, and whose political demands are as unrealistic as their personal desire for a unique identity. These factors can be added, one by one, to the minimalist rational-choice model of politics, with each step leading us farther away from deliberative democracy. (shrink)

This paper aims, first of all, at showing that there is a very close correspondence between the series of events of the subprime cycle and the typical process described by the Austrian business cycle theory. It then answers to some of the main criticisms directed against the Austrian explanation of this crisis. It shows, finally, how major aspects of this cycle – housing bubble, governmental policies of credit and housing, financial innovations – can be integrated to or deduced from the (...) Austrian explanatory framework. (shrink)

Deliberative democracy is unrealistic, but so are rational-choice models of democracy. The elements of reality that rationalistic theories of democracy leave out are the very elements that deliberative democrats would need to subtract if their theory were to be applied to reality. The key problem is not, however, the altruistic orientation that deliberative democrats require; opinion researchers know that voters are already sociotropic, not self-interested. Rather, as Schumpeter saw, the problems lie in understanding politics, government, and economics under modern—and postmodern—conditions. (...) Modernity entails levels of complexity that stymie voters' attempts to be well informed about which political promises will actually solve social problems. Postmodernity adds to complexity an overabundance of fragmented information experienced impatiently and fleetingly by citizens who confuse entertainment with knowledge, and whose political demands are as unrealistic as their personal desire for a unique identity. These factors can be added, one by one, to the minimalist rational-choice model of politics, with each step leading us farther away from deliberative democracy. (shrink)

ABSTRACT The illusion of explanatory depth, which has been identified by cognitive psychologists, may play a prominent role in encouraging regulatory action. This special type of overconfidence would logically lead regulators to believe that they are aware of the relevant causes and consequences of the activities they might regulate, and of the unintended side effects of the regulatory actions they are contemplating. So, as with other cognitive biases, the illusion of explanatory depth is likely to lead to mistakes. And unlike (...) the biases that have been the focus of so much behavioral economics, the illusion of explanatory depth is uniquely resistant to correction by those who are aware of it as a general problem and rigorously attempt to keep it under control. (shrink)

In the ongoing debate about the impact that studies of public ignorance should have on the study of culture, Mark Fenster and Bret Chandler assume that wider political participation must be our goal, because, to them, political ignorance is a culturally imposed, and therefore removable, obstacle—as if, without the baleful influence of culture, political participants would be well informed. Culture is indeed a primary influence on people's political opinions, so political scientists should indeed study the role it plays in the (...) formation of political beliefs. But such studies should begin with ignorance as people's default position, and should refrain from assuming that the source of ignorance is cultural domination or manipulation. (shrink)

Contemporary developed western economies are commonly referred to as ?knowledge-based? economies, which compete through drawing on the innovative and creative capacities of their local populations. Economic policy-makers must invest in and conserve the social, cultural and public resources that underpin dynamic and disruptive competitive activities, namely technological innovation and entrepreneurship, which bring new ideas and products to market. But these resources defy orthodox forms of economic knowledge and quantification. Their trajectories and outcomes are intrinsically uncertain. The paper draws on interviews (...) with experts who advise governments on innovation and competitiveness, to understand what expert strategies are used to deal with this epistemological problem. Such experts must project and retain epistemological authority, but without lapsing too far into quantitative, economistic and bureaucratic forms of reason. The paper identifies three ways in which knowledge of the future can be validated, but without disguising uncertainty: it can be presented as practically useful; as aesthetically appealing; and as hinting at some ?ultimate? form of ontological knowledge. (shrink)