Reduction in Economics

Ludwig von Mises’s methodological apriorism is frequently attributed to the broader Austrian School of economics, of which, of course, Mises was a prominent member. However, there is considerable controversy concerning the meaning of Mises’s various attempts to justify his apriorism. There are prima facie inconsistencies within and across Mises’s methodological writings that engender massive confusion in the secondary literature. This confusion is aggravated by the fact that Mises’s apriorism cannot be straightforwardly interpreted as an artifact of his historical milieu. Indeed, (...) the two prevailing families of interpretation both treat Mises’s apriorism as radically anachronistic, albeit in different senses. According to “extreme” interpretations, Mises’s apriorism reflects an epistemology several decades, if not centuries, beyond its expiration date. According to “moderate” interpretations, however, Mises’s apriorism anticipates ideas that would not appear in the epistemological literature for several decades to come. Finally, there is evidence to suggest that Mises’s actual methodological beliefs are not reflected in his writings, that Mises either obfuscated or exaggerated his methodological position, for whatever reasons, making it seem more radical than it was in fact. I conclude that we have no idea what justification Mises actually intended when he asserted the a priori nature of the fundamental propositions of economics. If this is right, then, whatever method(s) they follow, Austrian economists cannot (deliberately) follow Mises’s apriorism. (shrink)

Hayek’s seminal contribution to theoretical neurosciences,The Sensory Order(1952) remains neglected in current efforts at integrating the neurosciences, psychology and economics. I defend the view that Hayek presents the case for an evolutionary alternative to leading paradigms in the field and look at two in more detail: the good-based model in neuroeconomics and the dual systems approach in behavioural economics. In both cases, essential Hayekian insights remain valid in the context of modern neuroscience, allow for taking account of recent research, and (...) sketch a dynamic and selectionist model of choice. (shrink)

Many epistemic anomalies of the neoclassical research programme originate from its ontologically reductionist meta-axioms, which predicate how economic macro-systems are constituted from their micr...

Read Giandomenica Becchio's original paper “The Two Blades of Occam's Razor in Economics: Logical and Heuristic”...

Da Gintis ein leitender Ökonom ist und ich einige seiner früheren Bücher mit Interesse gelesen habe, erwartete ich einige weitere Einblicke in das Verhalten. Leider, macht er die toten Hände der Gruppenauswahl und Phänomenologie in die Herzstücke seiner Verhaltenstheorien, und das macht die Arbeit weitgehend ungültig. Schlimmer noch, da er hier ein so schlechtes Urteilsvermögen an den Tag stellt, stellt er all seine bisherigen Arbeiten in Frage. Der Versuch, die Gruppenauswahl seiner Freunde in Harvard, Nowak und Wilson wiederzubeleben, vor ein (...) paar Jahren war einer der größten Skandale in der Biologie in den letzten zehn Jahren, und ich habe die traurige Geschichte in meinem Artikel "Altruismus, Jesus und das Ende der Welt – wie die Templeton Foundation kaufte eine Harvard-Professur und angegriffen Evolution, Rationalität und Zivilisation -- Eine Rezension von E.O. Wilson 'The Social Conquest of Earth' (2012) und Nowak und Highfield 'SuperCooperators' (2012). Im Gegensatz zu Nowak scheint Gintis nicht durch religiösen Fanatismus motiviert zu sein, sondern durch den starken Wunsch, eine Alternative zu den düsteren Realitäten der menschlichen Natur zu schaffen, die durch das (nahezu universelle) Unverständnis der grundlegenden menschlichen Biologie und des leeren Schiefers von Verhaltenswissenschaftlern, anderen Akademikern und der breiten Öffentlichkeit leicht gemacht wird. Gintis greift zu Recht (wie schon oft zuvor) Ökonomen, Soziologen und andere Verhaltensforscher an, weil sie keinen kohärenten Rahmen haben, um Verhalten zu beschreiben. Natürlich ist das Notwendige, um Das Verhalten zu verstehen, evolutionär. Leider bietet er selbst keine selbst (nach seinen vielen Kritikern und ich stimme zu), und der Versuch, die faule Leiche der Gruppenauswahl auf alle wirtschaftlichen und psychologischen Theorien zu transplantieren, die er in seiner jahrzehntelangen Arbeit erzeugt hat, macht nur sein gesamtes Projekt ungültig. Obwohl Gintis sich tapfer bemüht, die Genetik zu verstehen und zu erklären, wie Wilson und Nowak, ist er weit davon entfernt, ein Experte zu sein, und wie sie blendet ihn die Mathematik nur für die biologischen Unmöglichkeiten, und das ist natürlich die Norm in der Wissenschaft. Wie Wittgenstein auf der ersten Seite von Kultur und Wert bekannte: "Es gibt keine religiöse Konfession, in der der Missbrauch metaphysischer Ausdrücke für so viel Sünde verantwortlich war wie in der Mathematik." Es war immer glasklar, dass ein Gen, das Verhalten verursacht, das seine eigene Frequenz verringert, nicht bestehen kann, aber dies ist der Kern des Begriffs der Gruppenauswahl. Darüber hinaus ist bekannt und oft gezeigt, dass Gruppenauswahl nur auf inklusive Fitness reduziert (Verwandtise), die, wie Dawkins festgestellt hat, ist nur ein weiterer Name für evolution durch natürliche Selektion. Wie Wilson arbeitet Gintis seit etwa 50 Jahren in dieser Arena und hat sie immer noch nicht begriffen, aber nach dem Skandal hat es nur 3 Tage gedauert, bis ich die relevanteste professionelle Arbeit gefunden, gelesen und verstanden habe, wie in meinem Artikel beschrieben. Es ist ein Irrsinn zu erkennen, dass Gintis und Wilson nicht in der Lage waren, dies in fast einem halben Jahrhundert zu erreichen. Ich diskusere die Fehler der Gruppenauswahl und Phänomenologie, die in der Wissenschaft die Norm sind, als Sonderfälle des nahezu universellen Versagens, die menschliche Natur zu verstehen, die Amerika und die Welt zerstören. Wer aus der modernen zweisystems-Sichteinen umfassenden, aktuellen Rahmen für menschliches Verhalten wünscht, kann mein Buch "The Logical Structure of Philosophy, Psychology, Mindand Language in Ludwig Wittgenstein and John Searle' 2nd ed (2019) konsultieren. Wer sich für mehr meiner Schriften interessiert, kann 'Talking Monkeys--Philosophy, Psychology, Science, Religion and Politics on a Doomed Planet--Articles and Reviews 2006-2019 3rd ed (2019) und Suicidal Utopian Delusions in the 21st Century 4th ed (2019) sehen. (shrink)

In markets globalization and increasing competition context, governments of the world’s leading countries are forced to use complex organizational and economic instruments to support the countries’ economy. One of such instruments is creation of Free Economic Zones (FEZ) with favorable conditions for doing business. Over the last decade activation process of Free Economic Zones mechanism disposal for the economy of a particular country development has been possible to observe. If in 1995 there were approximately 500 zones in the world, now (...) there are more than 4,300 zones in more than 130 countries which employ more than 68 thousand workers. In addition, global practice has shown that FEZ activities effective organization is efficient not only in giving impetus to the country’s economy development, but in bringing it into the world leaders as well. (shrink)

The monograph reveals challenging issues of small and medium enterprises development in the European Union and East-Partnership countries. Special attention is paid to a new paradigm of financing investments and fostering innovations at all levels of legal entities including SMEs, enhancing innovative entrepreneurship in conditions of global social and technological challenges as well as determining priority sectors for small and medium enterprises as drivers of economic growth. The authors of the monograph emphasize on such European approaches to financing SMEs as (...) crowd-funding and SME-bonds, analyze experience of applying fiscal instruments to support investment and innovations. The researchers underline the role of social investment as an innovative strategy for European SMEs that could be applied in Ukraine and East-partnership countries, suggest new conceptual approach to the evaluation of innovative business development. They also analyse trends of Ukrainian IT enterprises development in the context of modern information services in a global market. Additional attention is paid to the analysis of SMEs’ entrepreneurial potential in conditions of global social and technological changes, estimation effects of applying electronic governance technologies to provide administrative services by public authorities of various levels of governance. Finally, the researchers disclose economic mentality of legal entities as an informal side of financial assets and substantiate the necessity of creation entrepreneurial universities as drivers of innovative development of economy. The materials of the monograph will be useful to scholars, financial managers of companies, financial analysts, representatives of state bodies who implement the state policy in the field of SMEs development in the East-partnership countries, as well as students of economic universities. (shrink)

In recent years, several authors advocated neuroscience imperialism, an instance of scientific imperialism whereby neuroscience methods and findings are systematically applied to model and explain phenomena investigated by other disciplines. Calls for neuroscience imperialism target a wide range of disciplines, including psychology, economics, and philosophy. To date, however, neuroscience imperialism has not received detailed attention by philosophers, and the debate concerning its identification and normative assessment is relatively underdeveloped. In this paper, I aim to remedy this situation by making some (...) conceptual distinctions about neuroscience imperialism and by providing a normative assessment of prominent calls in its favour. I shall articulate and defend two interrelated claims that, I argue, undermine prominent calls for neuroscience imperialism. First, the proponents of neuroscience imperialism significantly overstate the evidential and explanatory relevance of neuroscience methods and findings for the disciplines they target. And second, prominent calls for neuroscience imperialism point to an untenable reductionist position, which rests on unsupported empirical and normative presuppositions. To substantiate these two claims, I shall draw on two sets of influential calls for neuroscience imperialism, which respectively target the economic modelling of choice and entrenched philosophical conceptions of free agency. (shrink)

This dissertation undertakes a philosophical analysis of “natural capital” and argues that this concept has prompted economists to view Nature in a radically novel manner. Formerly, economists referred to Nature and natural products as a collection of inert materials to be drawn upon in isolation and then rearranged by human agents to produce commodities. More recently, nature is depicted as a collection of active, modifiable, and economically valuable processes, often construed as ecosystems that produce marketable goods and services gratis. Nature (...) is depicted as consisting of various unproduced mechanisms or “natural machines” that are first discovered and then channeled so as to serve human ends. In short, nature as an ideal is a kind of garden that is characterized by natural objects purposefully arranged by intentional human agents. This dissertation first lays out working definitions of the key terms, such as capital and Nature, and then traces the historical roots of natural capital in the writings of eminent classical political economists, such as Adam Smith, John Stuart Mill, and Karl Marx. I then examine the question of substitutes for “critical natural capital”, and argue that the preservation paradox is warranted: no one can restore or preserve a part of Nature without turning it into an artifact. Following the recent work of Debra Satz and Michael Sandel, I finish my dissertation by situating the question of natural capital in the broader context of whether some goods should not be for sale, particularly those I define as Basic Ecological Goods. (shrink)

F.A. Hayek argued that the sciences of complex phenomena, including (perhaps especially) economics, are limited to incomplete “explanations of the principle” and “pattern predictions.” According to Hayek, these disciplines suffer from (what I call) a data problem, i.e., the hopelessness of populating theoretical models with data adequate to full explanations and precise predictions. In Hayek’s terms, explanations in these fields are always a matter of “degree.” However, Hayek’s methodology implies a distinct theory problem: theoretical models of complex phenomena may be (...) underspecified so that, even were all the data available, a full explanation could not be inferred from the model. Where the sciences of complex phenomena are subject to both the data and theory problems, explanations and predictions will be of even lesser “predictive degree.” The paper also considers how to interpret Hayek’s claim that pattern predictions are falsifiable. (shrink)

Neuroeconomics is a research programme founded on the thesis that cognitive and neurobiological data constitute evidence for answering economic questions. I employ confirmation theory in order to reject arguments both for and against neuroeconomics. I also emphasize that some arguments for neuroeconomics will not convince the skeptics because these arguments make a contentious assumption: economics aims for predictions and deep explanations of choices in general. I then argue for neuroeconomics by appealing to a much more restrictive (and thereby skeptic-friendly) characterization (...) of the aims of economics. (shrink)

In recent years, the project of providing microeconomic foundations for macroeconomics has taken on new urgency. Some philosophers and economists have challenged the project, both for the way economists actually approach microfoundations and for more general anti-reductionist reasons. Reductionists and anti-reductionists alike, however, have taken it to be trivial that the macroeconomic facts are exhaustively determined by microeconomic ones. In this paper, I challenge this supposed triviality. I argue that macroeconomic properties do not even globally supervene on microeconomic ones. This (...) is simply a consequence of the difference in the explanatory goals of the respective fields, which implicitly carve out the microeconomic property set in such a way that it underdetermines macroeconomic properties. It means, however, that microeconomics-based foundations for macroeconomics are inadequate in principle. (shrink)

In the recent literature at the interface between economics, biology and neuroscience, several authors argue that by adopting an interdisciplinary approach to the analysis of decision making, economists will be able to construct predictively and explanatorily superior models. However, most economists remain quite reluctant to import biological or neural insights into their account of choice behaviour. In this paper, I reconstruct and critique one of the main arguments by means of which economists attempt to vindicate their conservative position. Furthermore, I (...) develop an alternative defense of the thesis that economists justifiably rely on a methodologically distinctive approach to the modelling of choice behaviour. (shrink)

In The Construction of Social Reality, John Searle develops a theory of institutional facts and objects, of which money, borders and property are presented as prime examples. These objects are the result of us collectively intending certain natural objects to have a certain status, i.e. to ‘count as’ being certain social objects. This view renders such objects irreducible to natural objects. In this paper we propose a radically different approach that is more compatible with standard economic theory. We claim that (...) such institutional objects can be fully understood in terms of actions and incentives, and hence the Searlean apparatus solves a non-existent problem. (shrink)

In this paper, I examine metaphysical aspects in the neuroeconomics debate. I propose that part of the debate can be better understood by supposing two metaphysical stances, mechanistic and functional. I characterize the two stances, and discuss their relations. I consider two models of framing, in order to illustrate how the features of mechanistic and functional stances figure in the practice of the sciences of individual decision making.

Understanding more about how the brain functionsshouldhelp us understand economic behaviour. But some would have us believe that it has done this already, and that insights from neuroscience have already provided insights in economics that we would not otherwise have. Much of this is just academic marketing hype, and to get down to substantive issues we need to identify that fluff for what it is. After we clear away the distractions, what is left? The answer is that a lot is (...) left, but it is still all potential. That is not a bad thing, or a reason to stop the effort, but it does point to the need for a serious reconsideration of what neuroeconomics is and what passes for explanation in this literature. I argue that neuroeconomics can be a valuable field, but not the way it is being developed and “sold” now. The same is true more generally of behavioural economics, which shares many of the methodological flaws of neuroeconomics. (shrink)

The incomparability of alternatives is thought to pose a problem for justified choice, particularly for proponents of comparativism better than,worse than,equally good,roughly equalon a par. namely, rejection of the transitivity of the relation In this paper, I argue that proponents of comparativism need not incur this cost. I defend the possibility of justified choice between incomparable alternatives on grounds that comparativists can accept. The possibility of incomparability has been met with resistance, in part because of the intuitive appeal of comparativism. (...) By defending the possibility of justified choice between incomparable alternatives on grounds that comparativists can accept, this paper supports further inquiry into the subject of incomparability. (shrink)

Mark Blyth's rebuttal to our constructive critique of Polanyi “blithely” takes for granted the accuracy of Polanyi's now‐outdated historiography of capitalism—by means of a loose, overly expansive definition of capitalism that question‐beggingly equates it with modernity. Blyth emphasizes the need to view markets as “socially embedded,” with which we agree—but he appears not to take account of the individual self‐interest that is thus embedded. Similarly, he asserts a priori the role of ideas in history, in parallel to the economists he (...) condemns (unfairly) for reading ideas out of history a priori. All of this poorly serves the cause of extracting Polanyi's welcome emphasis on social embeddedness and on the empirical from the ideological and methodological certitudes and errors in which The Great Transformation placed them. (shrink)

Some social scientists and philosophers (e.g., James Coleman and Jon Elster) claim that all social facts are best explained by means of a micro-explanation. They defend a micro-reductionism in the social sciences: to explain is to provide a mechanism on the individual level. The first aim of this paper is to challenge this view and defend the view that it has to be substituted for an explanatory pluralism with two components: (1) structural explanations of P-, O- and T-contrasts between social (...) facts are more efficient than the competing micro-explanations; and (2) whether a plain social fact (as opposed to a contrast) is best explained in a micro-explanation or a structural explanation depends on the explanatory interest. The second aim of the paper is to show how this explanatory pluralism is compatible with ontological individualism. This paper is motivated by our conviction that explanatory pluralism as defended by Frank Jackson and Philip Pettit is on the right track, but must be further elaborated. We want to supplement their contribution, by (1) introducing the difference between explanations of facts and explanations of contrasts; (2) giving examples from the social sciences, instead of mainly from the natural sciences or common sense knowledge; and (3) emphasizing the pragmatic relevance of explanations on different levels –social, psychological, biological, etc. – which is insufficiently done by Jackson and Pettit. (shrink)

Can teams and other collectivities have preferences of their own, preferences that are not in some way reducible to the personal preferences of their members? In short, are collective preferences possible? In everyday life people speak easily of what we prefer, where what is at issue seems to be a collective preference. This is suggested by the acceptability of such remarks as ‘My ideal walk would be . . . along rougher and less well-marked paths than we prefer as a (...) family’. One can imagine, indeed, that each member of a given family prefers something other than what the family prefers. What, then, do the collective preferences of everyday understanding amount to? (shrink)

Many of the things that we try to explain, in both our common sense and our scientific engagement with the world, are capable of being explained more or less finely: that is, with greater or lesser attention to the detail of the producing mechanism. A natural assumption, pervasive if not always explicit, is that other things being equal, the more finegrained an explanation, the better. Thus, Jon Elster, who also thinks there are instrumental reasons for wanting a more fine-grained explanation, (...) assumes that in any case the mere fact of getting nearer the detail of production makes such an explanation intrinsically superior: “a more detailed explanation is also an end in itself”. Michael Taylor agrees: “A good explanation should be, amongst other things, as fine-grained as possible.”. (shrink)

Let me make it clear from the outset that my main point isnoteither of the following: one, that there should be more women economists and research on “women's issues”, or two, that women as a class do, or should do, economics in a manner different from men. My argument is different and has to do with trying to gain an understanding of how a certain way of thinking about gender and a certain way of thinking about economics have become intertwined (...) through metaphor – with detrimental results – and how a richer conception of human understanding and human identity could broaden and improve the field of economics for both female and male practitioners. (shrink)

Economics as a science of human behavior has been grounded in a remarkably parsimonious postulate: that of the self-interested, isolated individual who chooses freely and rationally between alternative courses of action after computing their prospective costs and benefits. In recent decades, a group of economists has shown considerable industry and ingenuity in applying this way of interpreting the social world to a series of ostensibly noneconomic phenomena, from crime to the family, and from collective action to democracy. The “economic” or (...) “rational-actor” approach has yielded some important insights, but its onward sweep has also revealed some of its intrinsic weaknesses. As a result, it has become possible to mount a critique which, ironically, can be carried all the way back to the heartland of the would-be conquering discipline. That the economic approach presents us with too simpleminded an account of even such fundamental economic processes as consumption and production is the basic thesis of the present paper. (shrink)

methodology both of neoclassical and Austrian economics, as well as other approaches, from New Keynesianism to analytical Marxism. Yet there is considerable controversy as to what the phrase means. Moreover, the methodologies of those to whom the theoretical practice of MI is ascribed differ profoundly on the status of the individual economic agent: economics.

Although power is an ubiquitous phenonomen in human societies, the analytical concept of power remains marginal in economics. In this paper I consider a possible radical reorientation of economics which starts out from the methodological premise that economics, the social sciences in general and biology should be integrated into a coherent ontological framework. The conceptual vehicle for achieving such an integration are “bridging concepts” that allow for related empirical interpretations on different ontological domains, and which serve to formulate hypotheses about (...) cross-domain causalities. I show that the core concept of neoclassical economics, subjective utility, cannot serve as a bridging principle, and I propose to substitute utility for power in terms of its two semantic dimensions, “power to do” and “power over”. Power as a theoretical term to cover the capability of an organism to control its natural and social environment can be easily related to both evolutionary concepts (in particular, adaptation) and economic concepts like social capital and capabilities. An ensuing core argument of the paper is to shift attention away from scarcity as a possible common ground between evolutionary theory and economics, and to turn to communication as a low-cost device of controlling the actions of other actors to ego's advantage. I relate this to Sober and Wilson's revised idea of group selection and demonstrate that the combination between group-internal low-cost signalling and group-external high-cost signalling is a crucial abstract principle of the emergence of complex social power structures. Thus, important similarities between recent evolutionary approaches to signalling, in particular the Zahavis' theory of signal selection, and institutional economics can be uncovered which open fresh sights on the unification of the human sciences. (shrink)