While markets are all around us, not all markets are the same. Markets come in a variety of colors based on the legality of activities in the specific market. As such, there is no market economy per se, but instead various shades of markets. The different shades of markets that are evidenced in practice directly depend on the institutional environment that makes certain activities legal or illegal. Shifts in the institutional environment are a result of entrepreneurial activity over the rules (...) of the game. The rules of the game and resulting shade of the market in turn impact entrepreneurs acting within those rules and hence economic development or the lack thereof.L’économie de marché est en réalité une économie des marchés. La variété des marchés s’explique par la légalité des activités sur chacun d’entre eux. Ainsi il n’existe pas une économie de marché en soi, mais plutôt plusieurs formes de marché. Ces formes manifestes de marché sont fonction de l’environnement institutionnel qui rend certaines activités légales ou illégales. Les changements de l’environnement institutionnel sont le résultat de l’activité entrepreneuriale en dehors des règles du jeu. Les règles du jeu ainsi que la forme du marché qui leur est associée influencent à leur tour les actions entrepreneuriales et donc le développement économique. (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F. A. Hayek's realistic economic theory has been replaced by the formalistic use of equlibrium models that bear little resemblance to reality.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)

F. A. Hayek's realistic economic theory has been replaced by the formalistic use of equlibrium models that bear little resemblance to reality.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 volume critically explore and extend Hayek's Nobel Prize-winning work on knowledge and social interconnectedness from the disciplines of law, economics, philosophy, anthropology, political science, and history. Hayek's insights about knowledge become even more important once it is recognized that nothing in the social world occurs in isolation. There is no such thing as a distinct economic, political, or social sphere--they are inextricably intertwined. Given the range of both Hayek's work and the contributing authors' perspectives, the range of topics covered (...) in this volume is extraordinarily wide, running the gamut from immigration, to white supremacy, to ancient agricultural practices, to the nature of what it means to be free. (shrink)

Following the October Revolution of 1917 the Bolsheviks embarked upon a series of initiatives in order to bring about a socialist economic order. Traditional accounts of these events?"War Communism?; and the New Economic Policy?are deficient in two respects. First, they do not consider the policy implications of early twentieth?century Marxism. Second, they do not appreciate the economic coordination problems such policies would, and did, encounter. As a result, the standard account of early Soviet socialism is distorted. This paper attempts to (...) rectify these deficiencies by discussing the Bolshevisks? own assessments of their purposes and exploring the consequences of their policies in the period 1918?1921. (shrink)

The Austrian School of Economics is an intellectual tradition in economics and political economy dating back to Carl Menger in the late-19th century. Menger stressed the subjective nature of value in the individual decision calculus. Individual choices are indeed made on the margin, but the evaluations of rank ordering of ends sought in the act of choice are subjective to individual chooser. For Menger, the economic calculus was about scarce means being deployed to pursue an individual's highest valued ends. The (...) act of choice is guided by subjective assessments of the individual, and is open ended as the individual is constantly discovering what ends to pursue, and learning the most effective way to use the means available to satisfy those ends. This school of economic thinking spread outside of Austria to the rest of Europe and the United States in the early-20th century and continued to develop and gain followers, establishing itself as a major stream of heterodox economics. The Oxford Handbook of Austrian Economics provides an overview of this school and its theories. The various contributions discussed in this book all reflect a tension between the Austrian School's orthodox argumentative structure and its addressing of a heterodox problem situations. The Austrian economists from the founders to today seek to derive the invisible hand theorem from the rational choice postulate via institutional analysis in a persistent and consistent manner. Scholars and students working in the field of History of Economic Thought, those following heterodox approaches, and those both familiar with the Austrian School or looking to learn more will find much to learn in this comprehensive volume. (shrink)

Hayek argued that the central question of economics is the coordination problem: How does the spontaneous interaction of many purposeful individuals, each having dispersed bits of subjective knowledge, generate an order in which the actors' subjective data are coordinated in a way that enables them to dovetail their plans and activities successfully? In attempting to solve this problem, Hayek outlined an approach to economic theorizing that takes seriously the limited, subjective nature of human knowledge. Despite purporting to have appropriated Hayek's (...) thought by acknowledging the information-transmitting role of prices, mainstream economists have missed Hayek's point. The predominant tool of formal economics—equilibrium analysis—begins by assuming the data held by actors to have been pre-reconciled, and so evades the problem to be solved. Even the more advanced tools for modeling knowledge in economic analysis, such as the economics of information, assume away either the subjectivism of knowledge and expectations (rendering the coordination of beliefs and plans a trivial matter) or the frictions and “imperfections” of reality (rendering the coordination problem indeterminate). (shrink)

Socialism is strictly “impossible.” Its impracticability is not, as Bryan Caplan has suggested, a “quantitative” matter, nor does he show that real‐world socialism's incentive problems outweighed its informational ones. Caplan's criticism of Ludwig von Mises's critique of the “possibility” of socialism fails to appreciate what he meant by “socialism” and misunderstands Mises's argument about economic calculation. History, too, suggests that socialism's informational deficiency was the most significant problem facing those who tried to implement socialism.

Do markets generate a “just” wage? The answer to this question will depend upon the particular theory of the market that the political economist employs. When comparing actual labor markets with the neoclassical theory of competitive equilibrium as its normative benchmark, Joseph Heath argues that factor pricing is orthogonal to normative issues such as distributive justice. We argue that Heath’s conclusion, though not invalid, follows from a similar normative benchmark of equilibrium, one that evaluates factor pricing without taking into account (...) the institutional conditions within which factor prices emerge. Though indeed classical political economists and early neoclassical economists failed to deliver an explicit theory of distributive justice, what Heath overlooks is that implicit to their understanding of the market process was an institutional theory of distributive justice. (shrink)

Socialism is strictly “impossible.” Its impracticability is not, as Bryan Caplan has suggested, a “quantitative” matter, nor does he show that real‐world socialism's incentive problems outweighed its informational ones. Caplan's criticism of Ludwig von Mises's critique of the “possibility” of socialism fails to appreciate what he meant by “socialism” and misunderstands Mises's argument about economic calculation. History, too, suggests that socialism's informational deficiency was the most significant problem facing those who tried to implement socialism.

Economic formalism crowds out the analysis of change and adjustments to change under capitalism. The style of analytical narrative that was practiced by the first generation of neoclassical economists, in contrast, is more productive of genuine economic understanding. Despite Daniel Haus‐man's challenging argument to the contrary, I maintain that Joseph Stiglitz's work is formalist at its core. While I agree with Robert Heilbroner's critique of contemporary economics, there is a limited sense in which nonformalist economics can rely on universalistic assumptions. (...) And Thomas Mayer has provided useful guidelines for focusing nonformalist analysis on real‐world economic problems. (shrink)

This book review of How Bad Writing Destroyed the World: Ayn Rand and the Literary Origins of the Financial Crisis by Adam Weiner finds that the author's indictment of Rand and the alleged effects that her ideas had on generating the 2008 financial crisis exhibits no knowledge of the relevant scientific or historical literature on economic policy.

ECONOMICS AND INSTITUTIONS: A MANIFESTO FOR MODERN INSTITUTIONAL ECONOMICS by Geoffrey Hodgson Philadelphia: University of Pennsylvania Press, 1988. 365pp., $39.95 Traditional institutional economics argued that the methodological individualism of both classical and neoclassical economics was grounded in a false conception of human nature and a pre?scientific understanding of economic life. Geoffrey Hodgson has provided a restatement of this position and extended the institutionalist critique to modern developments within economics at both a positive and normative level. In the course of doing (...) so, Hodgson both draws on and differs from developments within modem Austrian economics. It is argued that Hodgson misunderstands key aspects of the Austrian project and as a result his indiscriminate criticisms of methodological individualism and classical liberalism are not convincing. (shrink)

The paper distinguishes two types of entrepreneurial activity in terms of their institutionally relevant contexts. Type 1 entrepreneurship refers to catallactic activity in which coordinating mechanisms, operating via the exchange of property rights, generates market prices. We identify Type 2 entrepreneurship with noncatallactic processes.The paper argues that scientific activity, despite exhibiting characteristics congenial to the economic way of thinking, cannot be generally studied as a catallactic process under prevailing institutional arrangements. Recent changes in the institutional context of science, however, suggest (...) a widening scope for treating science as a market activity.Cet article fait la distinction entre deux types d’activité entrepreneuriale suivant les contextes institutionnels où ils apparaissent. Le premier type d’activité entrepreneuriale s’inscrit dans un cadre catallactique où les mécanismes de coordination opérant à travers l’échange des droits de propriété génèrent les prix marchands. Le second type d’activité entrepreneuriale que nous identifions relève de processus non catallactiques. L’article soutient que, même si elle présente des caractéristiques qui pourraient relever de la pensée économique, l’activité scientifique telle qu’elle est pratiquée dans les conditions institutionnelles actuelles, ne peut en général pas être étudiée comme un processus catallactique.Cependant, les changements récents dans le contexte institutionnel de la science suggèrent la possibilité grandissante d’envisager la science comme une activité marchande. (shrink)

ABSTRACTSchumpeter’s theory of socialism pivots on his response to Ludwig von Mises’s claim that rational economic calculation is “impossible” in a socialist economy. Mises held that because socialism eliminates market prices for the means of production, it is impossible under socialism to know the relative scarcities of productive inputs, and thus to determine rationally which of any number of technologically feasible production projects to pursue. Schumpeter appears to assume away Mises’s epistemic concerns about socialism by contending that it is theoretically (...) possible to determine which goods should be produced in a socialist economy if all the relevant data are known—which begs the question Mises had asked. Did Schumpeter really commit such an elementary error of interpretation? Or was the appearance of doing so part of his attempt to communicate to the reader of Capitalism, Socialism and Democracy a host of reservations about the likely consequences of socialism in practice, even as he ostentatiously praised its feasibility in principle? (shrink)

Abstract:This essay argues that liberty generates progress via the generalized increasing returns to commercial activity. These increasing returns to expanding commercial activity follow from the gradual, cumulative process of institutionalizing particular liberties. As a society adopts an institutional framework from accumulated liberties, there is greater scope for productive specialization and social cooperation under the division of labor. Greater scope for market exchange also delivers social norms and commercial values that tolerate experimentation and innovation. Taken together, the accumulation and institutionalization of (...) liberties gives rise to generalized increasing returns to commercial activity. It is through this cumulative process that the creative powers of a free civilization are unleashed, delivering societies from poverty and subjugation. (shrink)

Boettke and Butkevich argue that a vibrant society is an entrepreneurial society. Entrepreneur- ial effectiveness is a function of the free movement of economic actions – their alertness to opportunities for mutual gain, and their sense of when and where to enter and exit a market. Boettke and Butkevich focus not so much on the behavior of entrepreneurship, but the institutional conditions within which entrepreneurship takes place. They argue that policies which hinder the above ground legitimate expression of (...) entrepreneurial discovery must be eliminated for the further development of the Russian economy towards a market system and away from the current “virtual economy”. Institutions of governance must be established which reduce political uncertainty and encourage individuals to be willing to bet on their ideas and find the financing to bring those bets to life.Boettke et Butkevich suggèrent que l’activité entrepreneuriale est la force motrice d’une société. L’efficacité de l’activité entrepreneuriale dépend de la libre circulation des acteurs économiques – leur vigilance à l’égard des opportunités de gains mutuels, et leur jugement concernant les moment et lieu opportuns pour entrer sur un marché ou en sortir. Les auteurs mettent l’accent, pas tant sur le comportement des entrepreneurs, que sur les aménagements institutionnels à l’intérieur desquels l’activité entrepreneuriale a lieu. Ils considèrent que les politiques qui font obstacle aux manifestations légitimes de découverte entrepreneuriale doivent être éliminées pour accompagner le développement de l’économie russe vers une économie de marché, distincte de l’actuelle “économie virtuelle”. Des institutions de gouvernance qui réduisent l’incertitude politique doivent être établies. Ces institutions devraient aussi encourager les individus à parier sur leurs idées et à trouver des sources de financement pour instaurer ces idées. (shrink)

les détails relatifs à l’ordre spontané en attirant notre attention sur la réflexion sous-jacente qui se manifeste à travers tout ce processus évolutionnaire, ainsi que sur la nature de cet ordre spontané qui présente une dépendance de sentier. Le fait que la “magie” de l’ordre spontané ait été considérée comme un fait acquis a engendré une sorte de sous-investissement dans les recherches visant à approfondir la connaissance de ce qui anime les institutions émergentes “de l’action humaine mais non d’un dessein (...) humain”. Reconnaissant cet état de fait, Samuels a tenté de se “salir les mains” en se penchant de plus près sur le miracle de l’ordre spontané. Dans cet article, les auteurs font une analyse descriptive de la thèse de Samuels mais prennent aussi le temps de reconnaître que son travail se présente comme une formation hybride de l’oeuvre contractualiste de Buchanan et de l’oeuvre de Hayek dans le domaine de l’évolution sociale.Warren Samuels’ continues trying to “work out” the details of the spontaneous order by drawing our attention to the underlying deliberation present throughout this entire evolutionary process, as well as the path dependent nature of the spontaneous order. The taking for granted of the “magical” features of the spontaneous order has caused an under-investment in research attempting to get inside to examine what really drives the institutions emerging from “human action, but not of human design.” Recognizing this, Samuels has attempted to get his hands dirty by looking much closer at the miracle of the spontaneous order. In this piece the authors offer a descriptive analysis of Samuels’ thesis, while also taking the time to recognize Samuels’ work in political economy as a hybridization of Buchanan’s contractarian work and Hayek’s work in social evolution. (shrink)

Peter Boettke's Why Perestroika Failed offers an overly mechanistic explanation for the collapse of the Soviet economy, derived from Mises's theory of the economic impossibility of socialism. Arguing that the economic system was doomed to fail does not explain why it fell precisely when it did. Thus, Boettke underestimates the extent to which elements of the Communist nomenklatura themselves came to realize that their interests could be served by ditching the command economy. Such an emphasis on the (...) role of human agents is surely compatible with a Hayekian approach. (shrink)

When do two sentences say the same thing, that is, express the same content? We defend two-component (2C) semantics: the view that propositional contents comprise (at least) two irreducibly distinct constituents, (1) truth-conditions, and (2) subject-matter. We contrast 2C with one-component (1C) semantics, focusing on the view that subject-matter is reducible to truth- conditions. We identify exponents of this view and argue in favor of 2C. An appendix proposes a general formal template for propositional 2C semantics.

Berkeley’s likeness principle is the claim that “an idea can be like nothing but an idea”. The likeness principle is intended to undermine representationalism: the view (that Berkeley attributes to thinkers like Descartes and Locke) that all human knowledge is mediated by ideas in the mind which represent material objects. Yet, Berkeley appears to leave the likeness principle unargued for. This has led to several attempts to explain why Berkeley accepts it. In contrast to ‘metaphysical’ and ‘epistemological’ interpretations available in (...) the literature, in this paper I defend a ‘conceptual’ interpretation. I argue that Berkeley accepts the likeness principle on the basis of (i) his commitment to the transparency of ideas, and (ii) his account of resemblance which he sets out in his works on vision. Thus, I provide an explanation for Berkeley’s reasons for accepting the likeness principle which, appropriately, focuses on his views concerning ideas and likeness. (shrink)

Margaret Macdonald was at the institutional heart of analytic philosophy in Britain in the mid-twentieth century. Yet, her views on the nature of philosophical theories diverge quite considerably from those of many of her contemporaries. In this paper, I focus on her 1953 article ‘Linguistic Philosophy and Perception’, a provocative paper in which Macdonald argues that the value of philosophical theories is more akin to that of poetry or art than science or mathematics. I do so for two reasons. First, (...) because it reveals just how far Macdonald’s meta- philosophical views diverged from those of many of her contemporaries. Second, because the discussion in LPP pre-empts recent literature on the nature of philosophical inquiry and the efficacy of philosophical arguments. Indeed, Macdonald’s paper is just as likely to provoke discussion today as it was in the 1950s. (shrink)

This paper provides a philosophical evaluation of the concept of handedness prevalent but largely unspoken in the scientific literature. This literature defines handedness as the preference or ability to use one hand rather than the other across a range of common activities. Using the philosophical discipline of phenomenology, I articulate and critique this conceptualization of handedness. Phenomenology shows defining a concept of handedness by focusing on hand use leads to a right hand biased concept. I argue further that a phenomenological (...) model based in spatial orientation rather than hand use provides a more inclusive concept of handedness. (shrink)

Since its original publication in 1975, this groundbreaking work has awakened millions of people to the existence of "speciesism"—our systematic disregard of nonhuman animals—inspiring a worldwide movement to transform our attitudes to animals and eliminate the cruelty we inflict on them. In Animal Liberation, author Peter Singer exposes the chilling realities of today’s "factory farms" and product-testing procedures—destroying the spurious justifications behind them, and offering alternatives to what has become a profound environmental and social as well as moral issue. (...) An important and persuasive appeal to conscience, fairness, decency, and justice, it is essential reading for the supporter and the skeptic alike. (shrink)

It is argued that causal understanding originates in experiences of acting on objects. Such experiences have consistent features that can be used as clues to causal identification and judgment. These are singular clues, meaning that they can be detected in single instances. A catalog of 14 singular clues is proposed. The clues function as heuristics for generating causal judgments under uncertainty and are a pervasive source of bias in causal judgment. More sophisticated clues such as mechanism clues and repeated interventions (...) are derived from the 14. Research on the use of empirical information and conditional probabilities to identify causes has used scenarios in which several of the clues are present, and the use of empirical association information for causal judgment depends on the presence of singular clues. It is the singular clues and their origin that are basic to causal understanding, not multiple instance clues such as empirical association, contingency, and conditional probabilities. (shrink)

In this important new book in the IPPP series, a group of leading thinkers in psychiatry, psychology, and philosophy offer alternative perspectives that address both the scientific and clinical aspects of psychiatric validation, emphasizing throughout their philosophical and historical considerations.

Prospect Theory: For Risk and Ambiguity, provides a comprehensive and accessible textbook treatment of the way decisions are made both when we have the statistical probabilities associated with uncertain future events and when we lack them. The book presents models, primarily prospect theory, that are both tractable and psychologically realistic. A method of presentation is chosen that makes the empirical meaning of each theoretical model completely transparent. Prospect theory has many applications in a wide variety of disciplines. The material in (...) the book has been carefully organized to allow readers to select pathways through the book relevant to their own interests. With numerous exercises and worked examples, the book is ideally suited to the needs of students taking courses in decision theory in economics, mathematics, finance, psychology, management science, health, computer science, Bayesian statistics, and engineering. (shrink)

William Molyneux was born in Dublin, studied in Trinity College Dublin, and was a founding member of the Dublin Philosophical Society (DPS), Ireland’s counterpart to the Royal Society in London. He was a central figure in the Irish intellectual milieu during the Early Modern period and – along with George Berkeley and Edmund Burke – is one of the best-known thinkers to have come out of that context and out of Irish thought more generally. In 1688, when Molyneux wrote the (...) letter to Locke in which he posed the now famous question about a man born blind made to see, he was an active member of the DPS and was on familiar terms with several other key figures in Irish philosophy at the time. For the most part, Irish thinkers in the seventeenth and eighteenth centuries answered “no” to Molyneux’s question of whether a blind man made to see could distinguish, by sight alone, between a cube and a sphere. (shrink)

This book examines the complex and varied ways in which fictions relate to the real world, and offers a precise account of how imaginative works of literature can use fictional content to explore matters of universal human interest. While rejecting the traditional view that literature is important for the truths that it imparts, the authors also reject attempts to cut literature off altogether from real human concerns. Their detailed account of fictionality, mimesis, and cognitive value, founded on the methods of (...) analytical philosophy, restores to literature its distinctive status among cultural practices. The authors also explore metaphysical and skeptical views, prevalent in modern thought, according to which the world itself is a kind of fiction, and truth no more than a social construct. They identify different conceptions of fiction in science, logic, epistemology, and make-believe, and thereby challenge the idea that discourse per se is fictional and that different modes of discourse are at root indistinguishable. They offer rigorous analyses of the roles of narrative, imagination, metaphor, and "making" in human thought processes. Both in their methods and in their conclusions, Lamarque and Olsen aim to restore rigor and clarity to debates about the values of literature, and to provide new, philosophically sound foundations for a genuine change of direction in literary theorizing. (shrink)

P.F. Strawson's essay traces some formal characteristics of logic and grammar to their roots in general features of thought and experience.