The use of unrealistic assumptions in Economics is usually defended not only for pragmatic reasons, but also because of the intrinsic difficulties in determining the degree of realism of assumptions. Additionally, the criterion used for evaluating economic models is associated with their ability to provide accurate predictions. This mode of thought involves –at least implicitly– a commitment to the existence of unvarying invariant factors or regularities. Contrary to this, the present paper presents a critique to the use of invariant knowledge (...) in economics. One reason for this analysis lies in the fact that economic phenomena are not compatible with the logic of invariance, but with the logic of "possibility trees" or "open-ended results". The other reason is that the use of invariant knowledge may entail both external validity problems and negative exposures to a "black swan". Alternatively, an approach where models are understood as possible scenarios is proposed. It is argued that the realism of assumptions is crucial here, since it helps to ascertain the degree of resemblance between the different models and the target system. (shrink)

The dominant view among macroeconomists is that macroeconomics reduces to microeconomics, both in the sense that all macroeconomic phenomena arise out of microeconomic phenomena and in the sense that macroeconomic theory—to the extent that it is correct—can be derived from microeconomic theory. More than that, the dominant view believes that macroeconomics should in practice use the reduced microeconomic theory: this is the program of microfoundations for macroeconomics to which the vast majority of macroeconomists adhere. The "microfoundational" models that they actually (...) employ are, however, characterized by another feature: they are highly idealized, even when they are applied as direct characterizations of actual data, which itself consists of macroeconomic aggregates. This paper explores the interrelationship between reductionism and idealization in the microfoundational program and the role of idealization in empirical modeling. (shrink)

One calls a lot of things propositions. If one sees this, then one can discard the idea Russell and Frege had that logic is a science of certain objects – propositions, functions, the logical constants – and that logic is like a natural science such as zoology and talks about these objects as zoology talks of animals. Like a natural science, it could supposedly discover certain relations. For example, Keynes claimed to discover a probability relation which was like implication, yet (...) not quite implication. But logic is a calculus, not a natural science, and in it one can make inventions but not discoveries.Giving grounds, however, justifying the evidence, comes to an end; – but the end is not certain propositions' striking us immediately as true, i.e. it is not a kind ofseeingon our part; it is ouracting, which lies at the bottom of the language-game. (shrink)

Bunge (2000) distinguishes two main methodological approaches of holism and individualism, and associates with them policy prescriptions of centralism and laissez-faire. He identifies systemism as a superior approach to both the study and management of society. The present paper, seeking to correct and develop this line of thought, suggests a more complex relation between policy and methodology. There are two possible methodological underpinnings for laissez-faire: while writers such as Friedman and Lucas fit Bunge’s pattern, more sophisticated advocates of laissez-faire, such (...) as Smith and Hayek, base their policy prescription in a methodology quite divergent from the individualism Bunge describes. (shrink)

One of the most actively discussed aspects of Keynes's thought during the last decade has been his concern with uncertainty and probability theory. As the concerns of current macroeconomic theorists have turned increasingly to the effects of expectations and uncertainty, interest has grown in the fact that Keynes was the author of A Treatise on Probability and that uncertainty plays a prominent role in Chapter 12 of The General Theory as well as in three 1937 papers in which he summarized (...) The General Theory's main point. Not surprisingly, though, there has been very little agreement in this recent discussion about exactly what the significance of Keynes's early work in probability was to his later work as an economist, or about what the roles of uncertainty and expectations are in The General Theory. (shrink)

Uncertainty plays an important role in The General Theory, particularly in the theory of interest rates. Keynes did not provide a theory of uncertainty, but he did make some enlightening remarks about the direction he thought such a theory should take. I argue that some modern innovations in the theory of probability allow us to build a theory which captures these Keynesian insights. If this is the right theory, however, uncertainty cannot carry its weight in Keynes’s arguments. This does not (...) mean that the conclusions of these arguments are necessarily mistaken; in their best formulation they may succeed with merely an appeal to risk. (shrink)

Abstracts of each chapter may be found by typing in your browser search bar, "Jeremy Horne, Managing Complexity Through Social Intelligence: Foundations of the Modern Organic Corporatist State", going to the Springer Publishing website and reading the abstracts for each chapter.

In this paper I challenge the pernicious aspects of Milton Friedman's methodological outlook that continues to hold sway over mainstream neoclassical economists. I do this by showing how Friedman's own methodological dicta could have been used against him when he famously advanced the expectations critique of the Phillips curve at his presidential address to the American Economic Association. I use this case study to further suggest that psychological and neurophysiological data should not be deemed irrelevant to economic science.

A question that recent research on the global pandemic raises is: how do the assumptions underlying epidemiological models and economic models differ? Epidemiological models we now know have become quite sophisticated (see Avery et al., 2020). Debate among economic methodologists regarding the nature of modeling has generated a considerable literature as well (Reiss, 2012; Hands, 2013). Yet these two literatures are largely non-communicating. Perhaps this is because economics has produced relatively little research on pandemics (though see Boianovsky and Erreygers, 2021). (...) Yet it might still be asked, what might economic models be missing that epidemiological models capture? And might there be some sort of methodological bias in mainstream economics that plays a role in this? One way, then, one might begin to answer these questions is by identifying the main phenomenon in question, namely, in the case of the pandemic, a particular type of process, and ask what the nature of this type of process is. Then we may ask whether there is something about this type of phenomenon that places it out of bounds for current economic methodology. Thus, what sort of phenomenon is a pandemic? (shrink)

Everyday life reasoning and argumentation is defeasible and uncertain. I present a probability logic framework to rationally reconstruct everyday life reasoning and argumentation. Coherence in the sense of de Finetti is used as the basic rationality norm. I discuss two basic classes of approaches to construct measures of argument strength. The first class imposes a probabilistic relation between the premises and the conclusion. The second class imposes a deductive relation. I argue for the second class, as the first class is (...) problematic if the arguments involve conditionals. I present a measure of argument strength that allows for dealing explicitly with uncertain conditionals in the premise set. (shrink)

The main goal of this thesis is to provide a clear basis for the analysis of alternative currencies, such as Bitcoin, LETS, Local currencies, the WIR or Carbon currencies. It attempts to determine whether alternative currencies might constitute just and workable alternatives, either in the form of small-scale experiments or in the form of more radical reforms. The first chapter proposes a new way to classify currencies. The second examines the case in favour of monetary plurality. The third analyses the (...) claims in favour of restricting the use of money locally, within a community, or to certain goods. The fourth studies the link between money and the market. Finally, a post-scriptum focuses on Bitcoin and cryptocurrencies. This thesis highlights that these currencies are drivers of several potential conflicts. Their widespread use might conflict with the adequate management of monetary policy, with social justice, and with liberal values. These conflicts are potential, for they would come into existence only if alternative currencies increased in scope. However, there is no reason to disregard potential conflicts when the case in their favour relies mostly on their potential benefits. (shrink)

Many anthropologists interpret neoliberalism as a radical break from and dangerous rupture in post-war societies that featured Keynesian economic policies and welfare provision. The allure of a mythic welfare state has boosted John Maynard Keynes’s popularity to many who embrace certain facets of socialism. Many critical social scientists have embraced Keynesianism in ways that overlook how the US used Keynesian policies to reengineer and redeploy state power. Keynes’s liberal synthesis inspired managers in the US Treasury Department to understand depression-era problems (...) of unemployment and poverty in ways that were consonant with the expansion of corporate power. For understanding Keynesianism, as it actually existed during the Cold War, we must analyse how the US Treasury and State Departments used Keynesian principles to rebuild the social reproductive capacities necessary for capitalist accumulation both domestically and in Western Europe. I focus on how the architects of postwar capitalism used full employment policies, labour laws and welfare provision to renovate the nexus of political practices and institutional structures in ways that formed a benevolent and caring image of ‘the state’ and the myth of a class compromise. Through these reforms, governmental planners and administrators used the ‘state idea’ to reorganize capital accumulation as if the post-war economy would represent ordinary people’s best interests. In the process, these sophisticated practices of power became reified as the ‘welfare state’ and the ‘Keynesian compromise’ in ways that endow these institutions and policies with a character divorced from practices of power. The post-war state embodied a dialectic of repression and reform that combined criminalizing dissent with full employment policies and welfare provision. Taking these aspects of power into account, we can see post-war Keynesianism in ways that inspire a robust and far-reaching criticism of the contemporary predicament of economic uncertainty, political instability and environmental degradation. (shrink)

Over the past three decades, Vietnam has transitioned from an agrarian-based, centrally planned economy to a mixed economy with emerging market status. Additionally, projections indicate that Vietnam will be one of the world’s largest economies by 2050 if growth is sustained at present rates. The evolution of the financial sector, which began with the Doi Moi reforms in the mid-1980s, has been central to facilitating this growth. As the economy has expanded, Vietnam has maintained a gradualist approach to developing market-based (...) mechanisms of resource allocation. However, financial markets are still in an embryonic stage and substantial reform is required if the economy is to meet the expected rates of development. Against this backdrop, this dissertation critically evaluates trends and dynamics in Vietnam’s journey of financial development over the past three decades, with a particular emphasis on the experiences of small and medium-sized enterprises (SMEs). Drawing on quantitative analysis, secondary data and interviews conducted with a range of firms and stakeholders, I argue that financial development in Vietnam has had positive effects in terms of increasing access to funding for SMEs. As the financial system has developed, allocative efficiency has improved to the benefit of SMEs. However, some informants criticised the progress made to date, arguing that a funding mismatch still exists. Specifically, weak corporate governance, state-owned enterprises and a lack of derivatives have prevented effective capital market development. Given Vietnam’s high level of political corruption, this paper concludes that policy makers must place more attention on the political-economic structures of Vietnam if achieving middle-income status is to occur. Specifically, a tighter and more controlled effort to dismantle corporate bureaucracy and nepotism would allow better access to funding for Vietnamese SMEs. (shrink)

In the wake of the global financial crisis of 2008, the greatest economic disaster since the Great Depression, the cover story of the July 18th 2009 issue of The Economist, entitled “What went wrong with economics,” opened with an unequivocally incriminating statement: “Of all the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself.” In the months surrounding this indictment, many influential economists, including several Nobel laureates, were drawn to the same embarrassing (...) conclusion. Despite the existence of a handful of Cassandras, economists, as a group, had failed to foresee the crash. This short essay reviews the criticisms addressed to modern economic theory in the immediate aftermath of the crash. Overall, the main issues raised by critics were that (a) economists versed in the dominant models in macroeconomics and finance have been blinded to the possibility that we live in an uncertain and complex world; and (b) that the content of current economics education has sidelined many of the relevant insights to be found in the history of the discipline. This has led the critics to call for changes in the institutional structure of discipline, with a particular emphasis on the promotion of interdisciplinarity, and theoretical and methodological pluralism. (shrink)

Willingness and readiness of people to do their jobs are among the key factors of a successful enterprise. In XXI century intellectual human labour is gaining unprecedented value and is being developed actively. The demand for intellectual labour calls forth an increasing number of jobs and professions that require an extensive preparation, a large number of working places, high level of integration of joint human efforts, growth of social welfare. These trends are becoming ever more pervasive and are spreading widely (...) in service industries, and that explains the rapid development of the latter when compared to the traditional areas of human activity. In its turn, it heightens the need for staff in service companies, supported by significant personnel turnover and a certain shortage of skilled professionals. These circumstances determine the need for developing a new concept of fostering staff motivation at the enterprises in the sphere of services. In order to reach the stated purpose while conducting our research into tourism and hospitality industry, as well as retail chains, we have examined the problems that arise in the process of staff motivation, and studied the foreign practice of motivating staff in hotels. The obtained analysis results enabled us to work out practical recommendations on improvement of the mechanism of tangible and intangible rewards in service companies, which are based on external and internal motivational factors. Additional attention in the article is paid to the statement that financial incentives should be based on key performance indicators (KPI). We give a detailed consideration to the classification of internal motivation incentives of the staff according to the terms of their realization, and give a schematic representation of the performance dynamics of the internal motivation model in service businesses. (shrink)

There has been considerable recent discussion of the social effects of “liberalism,” which are said to include a growth in out-of-wedlock childbirth, repudiation of traditions, a rise in populism, increased reliance on technocracy, inequality, environmental degradation, sexual promiscuity, deterioration of civic associations, a diminution of civic virtue, political correctness on university campuses, and a general sense of alienation. There is good reason for skepticism about these claims. Liberalism is not a person, and it is not an agent in history. Claims (...) about the supposedly adverse social effects of liberalism are best taken not as causal claims at all, but as normative objections that should be defended on their merits. These propositions are elaborated with reference to three subordinate propositions: liberalism, as such, does not lack the resources to defend traditions; liberalism, as such, hardly rejects the idea of “constraint,” though the domains in which liberals accept constraints differ from those of antiliberals, and vary over time; liberalism, as such, does not dishonor the idea of “honor.” There is a general point here about the difficulty of demonstrating, and the potential recklessness of claiming, that one or another “ism” is causally associated with concrete social developments. (shrink)

This essay attempts to provide a preliminary outline of a theory of identity. The first section addresses what the sociologist Niklas Luhmann has called ‘the problem of identity’, or, in other words, the mind–society (rather than the mind–body) problem: In how far can the internal (psychological) self and the external (social) persona be integrated into a unit? The second section of the essay briefly defines a basic vocabulary of a theory of identity. ‘Identity’ is understood as the existentially necessary formation (...) of a coherence between the ‘self’ (the ‘I’ as it is experienced in thoughts and feelings), its body and its social ‘persona’ (the individual person with its social attributes). Three different major paradigms of identity formation are distinguished from one another: a sincere identity is constructed through a firm commitment of the self to its social roles; an authentic identity is constructed through the creation of a social persona on the basis of one’s unique and original self; a ‘profilic’ identity, as we call it, is shaped by successfully presenting a personal profile under conditions of second-order observation as they prevail, for instance, in the social media, but also in other contemporary social systems. In the third section of the essay, we present a sketch of the historical sequence of these three paradigms of identity. Although these paradigms are not mutually exclusive and can coexist, it seems that sincerity flourished in pre-modern society, while authenticity came to prominence along with the functional differentiation of modern society and is now, along with the increased significance of second-order observation, gradually overshadowed by the influence of profilicity. (shrink)

Barbara Fried described John Rawls’s response to libertarianism as “the unwritten theory of justice.” This paper argues that while there is no need for a new theory of justice to address the libertarian challenge, there is a need for an additional chapter. Taking up Fried’s suggestion that the Rawlsian response would benefit from a revised list of primary goods, I propose to add employment to the list, thus leading to adoption of a full employment principle in the original position that (...) ensures that anyone who wants to work will be able to do so. I argue that although Rawls famously proposed government as employer of last resort, he never integrated that comment into his theory, which lacks a full employment principle and says nothing about the injustice of involuntary unemployment in its ideal theory. I first refute the received view of Rawls’s treatment of employment as required by its importance for citizens’ self-respect, then show that in fact, the full employment assumption is the result of the role of general equilibrium theory in Rawls’s model of a well-ordered society, and indicate why developments in economic theory and economic policy support the proposed revision. (shrink)

While the volume of material inspired by Rawls’s reinvigoration of the discipline back in 1971 has still not begun to subside, its significance has been in serious decline for quite some time. New and important work is appearing less and less frequently, while the scope of the work that is appearing is getting smaller and more internal and its practical applications more difficult to discern. The discipline has reached a point of intellectual stagnation, even as real-world events suggest that the (...) need for what political philosophy can provide could not be more critical. What follows then is a set of statements about how I believe that we, as political philosophers, should approach what we do. It contains my view as to what political philosophy should be about, how political philosophy should be done, and how courses in political philosophy should be taught, interlaced with commentary on the current state of the profession. (shrink)

This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifi cally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfi lms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this (...) publication does not imply, even in the absence of a specifi c statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. (shrink)

Although Minsky’s interpretation of Keynes’s macroeconomics and essential message clashes with authoritative alternative interpretations, it has become increasingly influential during the years following the Global Financial Crisis, even in mainstream circles. This paper offers a critical evaluation of Minsky’s Financial Instability Hypothesis from the perspective of the alternative Austro-Wicksellian paradigm. Although some of the similarities and/or analogies between Minsky’s approach and that of the Austrian School suggest a more than merely superficial affinity between the two theoretical frameworks and although some (...) scope for cross-fertilization between both approaches can be found, both theoretically and empirically, at a fundamental conceptual level both theories remain incompatible and difficult if not impossible to reconcile, in particular in terms of fundamental causality and in terms of policy conclusions and prescriptions. Despite the fact that Minsky’s policy conclusions are multifaceted and somewhat eclectic, they manifest a lack of familiarity with the conclusions of the Austrian analysis of the problems of central planning by Big Players such as Big Bank and Big Government. Both approaches also offer contrasting interpretations of the historical experience of the Global Financial Crisis. (shrink)

Two experiments with undergraduates as subjects were carried out with the aim of replicating and extending previous results showing that the implication of the behavioral life-cycle hypothesis (H. M. Shefrin & R. H. Thaler, 1988) that people classify assets in different mental accounts (current income, current assets, and future income) may explain how consumption choices are influenced by temporary income changes. In both experiments subjects made fictitious choices between paying for a good in cash or according to a more expensive (...) installment plan after they had received an income which was either less, the same, or larger than usual. In Experiment 1 subjects were supposed to have savings so that the total assets were equal, whereas in Experiment 2 the total assets varied. The results of both experiments supported the role of mental accounts in demonstrating that subjects were unwilling to pay in cash after an income decrease even though they had access to saved money. Thus, in effect they chose to pay more for the good than they had to. Indicating a need for further refinement of the concept of mental account, choices to pay in cash after an income decrease tended to be more frequent when the consumption and savings motives were compatible than when they were incompatible. Furthermore, increasing the total assets made subjects more willing to pay in cash after an income decrease. (shrink)

The present article is a continuation of the debate two sets of authors have been engaging in regarding one type of maturity mismatching: borrowing short and lending long. All four authors had agreed that this practice can set up the Austrian Business Cycle; the present author denies that BSLL would be a legitimate commercial interaction in the free society; Bagus and Howden continue to maintain that it would be licit. Our main criticism of Bagus and Howden is a reductio ad (...) absurdum: that this opens them up to the charge of embracing the doctrine of market failure; this is something highly problematic for the two of them, since all four contributors to this debate are well-known supporters of laissez faire capitalism. (shrink)

The paper starts by distinguishing between two kinds of economic practice: theoretical economic practice (TEP) (model and theory building) and direct economic practice (DEP) (the practical operation upon real economies). Most of the epistemological and philosophical considerations have been directed to the first type of practice, one of whose main goals is the discovery of particular sorts of economic laws, mechanisms and other regularities which throw light on relevant economic patterns. We do not deny that in some restricted domains these (...) kinds of regularities may be found. Rather, we claim that the realm of economics is best understood as consisting of processes whose regular structure (if they have one at all) is not guaranteed beforehand but may be crucially influenced and successfully enforced by what we call DEP. We claim that (a) some economic processes are a particular type of social process that will be referred to as Expectations-Based Processes (EBP). Characteristically, an EBP shows a connection between the information that individuals receive from the relevant economic context, the expectations they form, and the actions they perform; (b) in those cases in which EBP exhibit a regular behaviour, they depend on agents' expectations and, crucially, we argue, on interventions upon them. Authorities as well as other economic actors may intervene to change agents' expectations (and therefore, their decisions), contributing to shape EBP and helping to produce the patterns that lead to some targeted economic phenomena. These features of EBP show that they are not shielded from external influences and they do not run autonomously once triggered. Therefore they cannot be conceived as mechanisms or as economic machines. Rather they are open-ended processes that require continuous prodding on the part of policy makers to keep them running in the intended way. (shrink)

The thesis is a philosophical analysis of the consumption based capital asset pricing model, investigating in particular its epistemological and methodological foundations. Financial markets are integral parts of advanced and developing economies. They matter because they channel unspent household income into banks’ savings accounts and assets such as bonds and stocks. Financial economists have traditionally taken interest in the pricing mechanism that underlies this capital allocation. The consumption based capital asset pricing model is a prominent effort to describe, explain and (...) predict such prices. It tells a story of investors’ trade-off between consumption now and later and which portfolio of assets to hold. The CCAPM based narrative intuitively makes sense, and the chosen methodology involving theoretical assumption, mathematical models and empirical tests follows the professions’ standards of good scientific practise. But does CCAPM’s research programme provide knowledge for use? My thesis seeks to answer this question in a novel way. Instead of embarking on yet another asset pricing research project, I let Philosophy of Science inform my analysis. Following a “primer” introducing essential CCAPM topics and notations, I discuss, in turn, its theoretical foundation, mathematical model, and empirical test results from a philosophy of science perspective. I find that a few fundamental principles and several auxiliary assumptions combine to develop a simplified, partial and idealized theory of investors, financial markets and assets. The model reflects and represents this theory but also makes narrow claims that are distances away from the real situations they target. Unsurprisingly, ideal model assertions fail standard statistical tests of significance. I conclude that mathematical deductive modelling rooted in orthodox, a priori based fundamental principles create ideal and fictional settings that limit their scope and portability. The development of even more granular models within this orthodox paradigm that searches for “event regularities” will not render the desired knowledge for use. The real situations are possibly too complex to be captured in simplified assumptions, ideal theories and mathematical structures. Novel methodological and ontological approaches to asset pricing are in demand. Hence, claims about tendencies in the real data might replace the current focus on point-forecasts. (shrink)

In this contribution, I comment on Raffaella Campaner’s defense of explanatory pluralism in psychiatry (in this volume). In her paper, Campaner focuses primarily on explanatory pluralism in contrast to explanatory reductionism. Furthermore, she distinguishes between pluralists who consider pluralism to be a temporary state on the one hand and pluralists who consider it to be a persisting state on the other hand. I suggest that it would be helpful to distinguish more than those two versions of pluralism – different understandings (...) of explanatory pluralism both within philosophy of science and psychiatry – namely moderate/temporary pluralism, anything goes pluralism, isolationist pluralism, integrative pluralism and interactive pluralism. Next, I discuss the pros and cons of these different understandings of explanatory pluralism. Finally, I raise the question of how to implement or operationalize explanatory pluralism in scientific practice; how to structure the “genuine dialogue” or shape “the pluralistic attitude” Campaner is referring to. As tentative answers, I explore a question-based framework for explanatory pluralism as well as social-epistemological procedures for interaction among competing approaches and explanations. (shrink)

Why was Ivan Pavlevich Pavlov so widely celebrated in the decades after 1900? As his story of the 'freedom reflex' illustrates, Pavlov often overstated his observations. By calling all innate behaviour a reflex and all learned behaviour a conditional reflex, he meant to eliminate consciousness and volition from science. Pavlov's universal reflex explanation became the prototype for behaviourism.

In the wake of the financial crisis of 2008, many economists have blamed economics for having failed to warn us. Paul Krugman, for example, in a well-known New York Times Magazine article, suggests that Classical economists were blinded by the beauty of mathematics, and that Keynesian economics is the path of the future. This paper argues that the evolution of economic thinking is much more nuanced than Krugman portrays it, and that instead of embracing what has become known as Keynesian (...) economics, macroeconomists should rather re-embrace the broader Classical economic tradition, of which Keynes was an important part. (shrink)

ABSTRACTThis article discusses the concept of integrity. Often, integrity is used as a characteristic of individuals showing a high fidelity to generally praised norms. Here, a more independent meaning is suggested so that the concept implies a clear distance to integration instead of mixing up the two concepts. Integrity implies integration within the individual of beliefs, statements, and action. To what degree can society and companies accommodate a pluralism created by individuals with integrity? Here, it is argued that integrity is (...) a useful virtue and that a more integrity‐friendly environment in companies would be beneficial by stimulating the empowered employee to make improved contributions. The concept is central for business ethics and crucial for the company's choice of such policies. A priority of integrity also affects organizational theory and the practical organizing of the company. Integrity is also vital for society at large for both citizens and companies, providing an ideological support for pluralism and a check on demands for conformism. The article also discusses how a virtue such as integrity can function as guidance for the individual operating in a complex world. (shrink)

The present essay addresses the epistemic difficulties involved in achieving consensus with respect to the Hayek–Keynes debate. It is argued that the empirical implications of the relevant theories are such that, regardless of what is observed, both theories can be interpreted as true, or at least, as not falsified. The essay explicates the respects in which the empirical evidence underdetermines the choice between the relevant theories. In particular, it is argued both that there are convenient responses that protect each theory (...) from what appears to be threatening evidence and that, for particular kinds of evidence, the two theories are empirically equivalent. Larry Laudan's suggestion that ampliative methodological criteria can resolve an underdetermined choice between multiple scientific theories is considered and rejected as a possible means to rational consensus. (shrink)

Economies are complicated systems encompassing micro behaviors, interaction patterns, and global regularities. Whether partial or general in scope, studies of economic systems must consider how to handle difficult real-world aspects such as asymmetric information, imperfect competition, strategic interaction, collective learning, and the possibility of multiple equilibria. Recent advances in analytical and computational tools are permitting new approaches to the quantitative study of these aspects. One such approach is Agent-based Computational Economics (ACE), the computational study of economic processes modeled as dynamic (...) systems of interacting agents. This chapter explores the potential advantages and disadvantages of ACE for the study of economic systems. General points are concretely illustrated using an ACE model of a two-sector decentralized market economy. Six issues are highlighted: Constructive understanding of production, pricing, and trade processes; the essential primacy of survival; strategic rivalry and market power; behavioral uncertainty and learning; the role of conventions and organizations; and the complex interactions among structural attributes, institutional arrangements, and behavioral dispositions. (shrink)

I lay out the framework for my theory of sensory imagination in “Imagining as a guide to possibility.” Sensory imagining involves mental imagery , and crucially, in describing the content of imagining, I distinguish between qualitative content and assigned content. Qualitative content derives from the mental image itself; for visual imaginings, it is what is “pictured.” For example, visually imagine the Philadelphia Eagles defeating the Pittsburgh Steelers to win their first Super Bowl. You picture the greenness of the field and (...) the football’s brown oblong shape. Some of what you imagine isn’t explicitly pictured, however. That it is Sunday, that it is the Super Bowl: these facts are assigned. (shrink)

The financial crisis that began in the US real-estate market in 2007 and culminated in a global economic slump showed bluntly how wrong financial risk models can be. This state of affairs has triggered a number of reactions and observations at the level of the specification and use of models and at a more conceptual/fundamental level. This article focuses on the epistemic features of such models – namely the nature, source, conditions of validity, structure and limits of the knowledge that (...) ‘well-specified’ models generate – so as to assess models in a balanced way, giving due weight to the fundamental determinants of their output and warning against overestimation of their possibilities; clarify the conditions under which models can be validly applied to economic and social relationships; render intelligible why the degree of accuracy that successful models would require is intrinsically unattainable; better understand models’ failure as evidenced by the crisis; and comment on the policy steps being undertaken to prevent similar financial crisis in the future. The analysis applies the principal tenets of critical realism to the daily preoccupations of risk management professionals and financial regulators alike. It is not intended as an intervention into critical realism. It draws on the works of Tony Lawson and Roy Bhaskar, and revisits relevant aspects of John Maynard Keynes’s work, connecting dots amongst them and marrying economic and philosophical analysis with day-to-day financial risk management and regulatory issues. Content Type Journal Article Category Article Pages 462-486 DOI 10.1558/jcr.v11i4.462 Authors Mattia L. Rattaggi, UBS/Cambridge Social Ontology Group Journal Journal of Critical Realism Online ISSN 1572-5138 Print ISSN 1476-7430 Journal Volume Volume 11 Journal Issue Volume 11, Number 4 / 2012. (shrink)

In my view, we need a sociological analysis to show how the crisis stemmed from a certain set-up of the so-called global society. Such a set-up is the product of a long historical development, which goes beyond the financial crisis? outbreak in 2008. The question I ask is the following: from a sociological standpoint, why did this crisis break out? And what remedies can be put in place? The measures adopted these days cannot solve the crisis, but, for a number (...) of reasons, they can at most provide temporary stoppers and remedies. (shrink)

In Anti-Oedipus, Deleuze and Guattari claim that a general theory of society must be a generalised theory of flows. This is hardly a straightforward claim, and this paper attempts to examine the grounds for it. Why should socio-political theory be based on a theory of flows rather than, say, a theory of the social contract, or a theory of the State, or the questions of legitimation or revolution, or numerous other possible candidates? The concept of flow (and the related notions (...) of code and stock), I argue, is derived from contemporary economic theory, and most notably John Maynard Keynes. Deleuze and Guattari remained Marxists, not only because they held that contemporary political philosophy must inevitably be centred on the analysis of capitalism, but also because they held, following Marx himself, that the Marxist analysis of capital must constantly be transformed and adapted to new conditions. Thus, while certain aspects of Marx's analysis disappear from Capitalism and Schizophrenia, they are supplemented by the addition of new concepts adequate to the contemporary state of capitalism. The paper concludes, then, with an analysis of the role played by the concepts of flow, code and stock in Deleuze and Guattari's political philosophy. (shrink)

F. A. Hayek's realistic economic theory has been replaced by the formalistic use of equlibrium models that bear little resemblance to reality. These models are as serviceable to the right as to the left: they allow the economist either to condemn capitalism for failing to measure up to the model of perfect competition, or to praise capitalism as a utopia of perfect knowledge and rational expectations. Hayek, by contrast, used equilibrium to show that while capitalism is not perfect, it contains (...) error‐correcting institutions that bring it closer to perfection than is intuitively apparent. (shrink)

This dissertation looks at a set of interconnected questions concerning the foundations of probability, and gives a series of interconnected answers. At its core is a piece of old-fashioned philosophical analysis, working out what probability is. Or equivalently, investigating the semantic question of what is the meaning of ‘probability’? Like Keynes and Carnap, I say that probability is degree of reasonable belief. This immediately raises an epistemological question, which degrees count as reasonable? To solve that in its full generality would (...) mean the end of human inquiry, so that won’t be attempted here. Rather I will follow tradition and merely investigate which sets of partial beliefs are coherent. -/- The standard answer to this question, what is commonly called the Bayesian answer, says that degrees of belief are coherent iff they form a probability function. I disagree with the way this is usually justified, but subject to an important qualification I accept the answer. The important qualification is that degrees of belief may be imprecise, or vague. Part one of the dissertation, chapters 1 to 6, looks largely at the consequences of this qualification for the semantic and epistemological questions already mentioned. It turns out that when we allow degrees of belief to be imprecise, we can discharge potentially fatal objections to some philosophically attractive theses. Two of these, that probability is degree of reasonable belief and that the probability calculus provides coherence constraints on partial beliefs, have been mentioned. Others include the claim, defended in chapter 4, that chance is probability given total history. -/- As well as these semantic and epistemological questions, studies of the foundations of probability usually include a detailed discussion of decision theory. For reasons set out in chapter 2, I deny we can gain epistemological insights from decision theory. Nevertheless, it is an interesting field to study on its own, and it might be expected that there would be decision theoretic consequences of allowing imprecise degrees of belief. As I show in part two, this expectation seems to be mistaken. Chapter 9 shows that there aren’t interesting consequences of this theory for decision theory proper, and chapters 10 and 11 show that Keynes’s attempt to use imprecision in degrees of belief to derive a distinctive theory of interest rates is unsound. -/- Chapters 7 and 8 provide a link between these two parts. In chapter 7 I look at some previous philosophical investigations into the effects of imprecision. In chapter 8 I develop what I take to be the best competitor to the theory defended here – a constructivist theory of probability. On this view degrees of belief are precise, but the relevant coherence constraint is a constructivist probability calculus. This view is, I think, mistaken, but the calculus has some intrinsic interest, and there are at least enough arguments for it to warrant a chapter-length examination. (shrink)

Does the very existence of money depend in any sense on our “recognition” of it? According to certain functionalist views, no such attitudes are necessary. This paper argues to the contrary for recognition dependence, of a minimal sort. What’s needed in a population is (1) the functional know-how of money use, (2) an ideational structure founded upon people’s thinking about what others are thinking, and (3) wide enough acceptance of a payment or settlement obligation (as expressed, e.g., when someone asks (...) a vendor “So what do I owe ya?”). (shrink)

In the globalizing world foreign language learning is becoming more and more important. This case leads to new developments in language learning research. The purpose of this study is to depict whether the second language learning would occur better in the childhood or later. In other words to investigate the question of in which period of bilingualism it will be better. In order to answer this question, important sources in the linguistic field, related to the topic, were highlighted. The important (...) researches and theories mentioned in the literature have been examined, evaluated, information about the first and second language learning has been given and the subject has been discussed from the scientific point of view. In this context, it has been understood that many reasons exist affecting the level of proficiency of preand post- 12 year's language learning (in mono-, bi-, tri-, quadra- or multi-, lingualism) such as age, brain function, individual differences, ambience differences; social, political, economic background and how to regard the language. The idea that bilingualism after the critical period (around the age of 12) could not be as that of the childhood has been gained weight, due to the system differences between two languages, especially the difficulties in intoning and pronouncing. (shrink)

As the world economy has for better or worse become more and more dependent on the financial markets, a rethinking of the role of finance in both theory and practice is necessary. I argue that such a rethinking requires a new look at the theories of finance that is philosophical in kind. In effect, as Martha Nussbaum claims, if the absence of philosophy in economics is arguably one of the main reasons for the flaws in certain economic theories, the absence (...) of philosophy in finance is one the main reasons for the flaws in our theories on financial systems. In this paper I discuss the mutual relations and benefits between finance and philosophy. First, I examine the contribution that philosophy can offer to finance by analyzing a few critical issues in financial ontology, financial methodology and financial mathematics. I argue that philosophy is essential to enabling finance to achieve the goals for which it was designed, not only because it is a valuable external addition, but also internally, since philosophy is the proper tool for bringing about new theories and approaches. Then, I examine the contribution that finance can offer to philosophy by analyzing the relationship between theory and practice, data and hypothesis, and prediction, description and control in the context of financial systems. I argue that finance can help us to rethink some philosophical tenets on these issues. (shrink)

Since its inception in the late 1970s, behavioural economics has gone from being an outlier to a widely recognized yet still contested subset of the economic sciences. One of the basic arguments in behavioural economics is that a more realistic psychology ought to inform economic theories. While the history of behavioural economics is often portrayed and articulated as spanning no more than a few decades, the practice of utilizing ideas from psychology to rethink theories of economics is over a century (...) old. In the first three decades of the 20th century, several mostly American economists made efforts to refine fundamental economic assumptions by introducing ideas from psychology into economic thinking. In an echo of contemporary discussions in behavioural economics, the ambition of these psychology-keen economists was to strengthen the empirical accuracy of the fundamental assumptions of economic theory. In this article, we trace, examine, and discuss arguments for and against complementing economic theorizing with insights from psychology, as found in economic literature published between 1900 and 1930. The historical analysis sheds light on issues and challenges associated with the endeavour to improve one discipline’s theories by introducing ideas from another, and we argue that these are issues and challenges that behavioural economists continue to face today. (shrink)

The search for a social goodness function in economic systems is reviewed, especially in light of the fact that the economy is a subsystem of a biosphere that has its own rules for determining success, or at least for limiting feasibility. The frequent perversity of reductionist quantitative success indicators in economics (profit, quotas, GDP) is mainly attributed to the preanalytic vision of the economy as an isolated circular flow, and of homo economicus as an atomistic individual isolated from community, both (...) social and biological. Specific examples of such perversity are considered. (shrink)

The authoranalyzes the types of metaphors that are used to describe the Internetin issues of Wired magazine from before and after the dot-com collapse to understand the perceptions and expectations of some of the actors involved in the shaping of the Internet. In addition, the metaphors deployed in economics and geophysiology are used to demonstrate how metaphors can influence public debate, policy, and theory. The author argues that metaphors do not simply have a descriptive function but that they also carry (...) normative connotations. Language, alongside social practices and material objects, is an important tool in attempts to construct the future. Six overlapping metaphorical themes are identified: revolution, evolution, salvation, progress, universalism, and the “American dream.” A critical analysis of these metaphors, informed by a critique of the metaphors used in economics and geophysiology, leads the author to challenge the universalist claims made by some Internet enthusiasts for the inclusive potential of the Internet. (shrink)