nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2009‒05‒02
thirteen papers chosen by
Erik Thomson
University of Manitoba

  1. History of economics: Learning from the past By Alexander Dow; Sheila Dow
  2. Theories of economic development in the Scottish enlightenment By Alexander Dow; Sheila Dow
  3. Knowledge, Communication and the Scottish Enlightenment By Sheila Dow
  4. A Behavioural Perspective on Keynesian Decision Theory By Martin Jones
  5. Expectation and Uncertainty in the Keynesian Theory By Mário Gómez
  6. Ideology and Intention: Moral Imperatives and the Practice of Economics By David Donald; Alan Hutton
  7. Can economics contribute to moral life? By Piet Keizer
  8. Risk, Uncertainty and Expectation as language game categories: - what we can still learn from Keynes By Mário Gómez
  9. How useful is anthropometric history? By Komlos, John
  10. Measuring intrinsic value – how to stop worrying and love economics By Bakhshi, Hasan; Freeman, Alan; Hitchen, Graham
  11. THE TEXT BOOK BLACK MAGIC, or, how to make the Keynes theory disappear By Roy H Grieve
  12. Imagination, illusion and delusion By Brian Loasby
  13. The Classical approach to distribution and the “natural system” By Bellino, Enrico

  1. By: Alexander Dow (Stirling Centre for Economic Methodology); Sheila Dow (University of Stirling)
    Abstract: The premise on which this paper builds is that modern economists unduly neglect history. The paper aims to support the argument that this is undesirable by looking at past episodes in the development of economic thought where economics has benefited from a historical approach. The first example to be explored is the staples approach of Harold Innis of the University of Toronto. He drew on the history of staples industries in Canada in order to formulate a theory of economic development. The second example is the stages approach as put forward in the Scottish Enlightenment and developed by later writers, whereby different episodes of economic history are categorised according to different stages of economic organisation.
    Keywords: history of economics, methodology of economics
    JEL: B41
    Date: 2009–01
  2. By: Alexander Dow (Stirling Centre for Economic Methodology); Sheila Dow (University of Stirling)
    Abstract: The purpose of this paper is to consider why Scottish Enlightenment thought should have generated a particular theory of economic development. Ideas about economic development in the Scottish Enlightenment period involve a certain circularity. One of the key arguments was that economic development encourages creativity and ideas, which promote productivity growth. The Enlightenment itself, as a set of ideas, can be seen in part as the outcome of earlier economic development in Scotland, particularly in the form of agricultural improvement. This process of innovation or 'art', encouraged by the division of labour, applies particularly to the fourth of the stages of economic development: commercialisation (the stages approach being a characteristic feature of Enlightenment thought). We explore further the argument that the Scottish Enlightenment was as much a product as a cause of economic development. In particular we consider whether the characteristics of prior economic development, and its cultural context, can help us understand the distinctive features of Scottish Enlightenment thought on economic development, with particular emphasis on the role of ideas. In the process, we address the current argument that this thought was directed at the Scottish Highlands, by considering how far ideas in the Scottish Enlightenment more generally were influenced by the cultural environment.
    Keywords: economic development, Scottish enlightenment
    JEL: B41
  3. By: Sheila Dow (University of Stirling)
    Abstract: The purpose of the paper is to consider Adam Smith's ideas on rhetoric in relation to his philosophy and his economics, against the background of the Scottish Enlightenment. For Smith, communication was important partly as a vehicle for persuasion in the absence of scope for argument by demonstrable proof. He distinguished between the derivation of (provisional) knowledge by the Newtonian experimental method, and the communication of that knowledge as if it were based on derivation from first principles. Subsequent misinterpretation of Smith's economics can be understood as stemming from mistaking the rhetoric for the method, and interpreting first principles as axioms.
    Keywords: Adam Smith, Scottish enlightenment, rhetoric
    JEL: B41
  4. By: Martin Jones (University of Dundee)
    Abstract: Keynes's theory of probability has been studied intensively in the past few years with much discussion of its relevance to modern economics. This paper examines Keynes's ideas in light of criticisms made by other authors and comes to the conclusion that Keynes's views on rationality are critically flawed. However, it is asserted that this actually allows more freedom for investigation when it is combined with insights from behavioural economics and gives examples where this could be fruitful. One of the side-effects of this is that there is a narrowing of the gap between Keynesian and mainstream behavioural views on decision-making.
    Keywords: uncertainty, Keynes, behavioral economics
    JEL: B41
  5. By: Mário Gómez
    Abstract: The purpose in this article is to investigate the relationship between probability and logics in order to understand the notion of expectation in Keynes, and to examine the contributions that a set of postkeynesian authors has made to clarify the sense and the meaning of the notion of expectation in the framework of both the theoretical and the economic policy. We will start by integrating Keynes`s work on the theory of the probabilities into the construction of his theoretical corpus. We will emphasise the role of the expectation as the main contribution of Keynes to the economic thought in the theoretical framework of uncertainty. The article is divided in two parts. Firstly,it will examines the contribution of Keynes to the interpretation of the meaning of the expectations in a theoretical framework of Uncertainty. Secondly, it will examine the comments of Shackle and Kregel on the role of expectations in the theory and the economic policy and will consider the appreciations of Minsky on the volatility of the expectations in a framework of finantial instability.
    Keywords: history of the economic ideas in Latin America, economic theory, expectations, theory of expectations.
    JEL: B5 O3 O4
    Date: 2009–03
  6. By: David Donald (Glasgow Caledonian University); Alan Hutton (Glasgow Caledonian University)
    Abstract: Those who practice economics have moral responsibilities in their professional capacity. An alternative economics literature advances the discipline as both a "moral science" (e.g. Boulding, 1969) and "necessarily ideological" (eg. Heilbroner, 1988). We suggest why, in present circumstances, ethics and ideology should - and probably will - be given greater weight in economic practice. In particular we perceive both ecological threats and international tensions as sources of new realignments in economic thought and action. This contention has implications for methods: social economists must be concerned with the manner in which "values are authoritatively allocated" - eschewing what Boulding described as "the immaculate conception of the indifference curve"; and, with even greater generality, they should be aware of the moral and political import of the gestalt which their systemic presentation of the world promotes. In summary they must consider the ways in which their own work creates, reinforces and / or transmits values. Such ethical concerns are intrinsic to the notion of 'a profession'.
    Keywords: ethics, social economics
    JEL: B41
  7. By: Piet Keizer (Utrecht School of Economics)
    Abstract: This paper wants to answer the following question: can economics contribute to a morally decent life? Economics as a science originates from modern moral philosophy. This discipline analyses human nature and its consequences for the way in which social order is maintained. But as economics developed from the morally embedded economic analyses of Adam Smith to the morally neutral neoclassical economics, it became increasingly independent of its moral philosophical roots. The paper shows a way out of this moral indifference. Firstly, it discusses a more realistic economic approach, in which social and psychic processes play a significant role in the shaping of interpretations of the world. Secondly, it places humans in an ecological context. Ecology is about the interrelationship between entities and their environment. In our analysis ecology is about the relationship between humans and non-humans. We can, if morally necessary, consider particular non-humans, such as animals or plants, as independent identities, having value in their own right. In this way a multidisciplinary economic analysis appears to be a more efficient map in the hands of morally motivated people. A last problem analysed by the paper is the question: how do people get morally motivated? They do if they discover which virtues of persons and organisations lead to a maximum of utilities for all and when they place themselves in situations, where moral sentiments are aroused. Then people will listen to a voice inside themselves that says: you ought to develop these virtues.
    Keywords: ethics, economic methodology
    JEL: B41
    Date: 2008–04
  8. By: Mário Gómez
    Abstract: In this paper we will discuss the relation between the rationality of the agents, and the probability context that involves them in the decision process made by Keynes but considering categories such as expectation as language game, in the sense that Roger Koppl understand it as-if rationalizations. In this sense Keynes’s expectations can be understand and see as only a very particular category: cognitive expectation and the uncertain situation as a very specific circumstance in production process. If expectation theory is one of the crucial issues in economic theory, a language game theory of expectation provide a more general case that need to be re-examinate as a stimulating approach
    Keywords: history of the economic ideas in Latin America, economic theory, expectations, theory of expectations.
    JEL: B5 O3 O4
    Date: 2009–03
  9. By: Komlos, John
    Abstract: In his recent presidential address to the American Economic History Association, Paul Hohenberg argued that anthropometric history does not meet his criteria for useful research in the field of economic history. He considers research useful if (a) it "helps shape one of our underlying disciplines"; b) it contributes "to clear—even fresh—thinking about current, policy-related issues or on-going scholarly debates about the historical past"; and c) it "penetrates the fuzzy realm of identity-shaping popular discourse". I argue briefly that only a superficial reading of the literature would lead to the conclusion that anthropometric history has not been useful.
    Keywords: Economic History - General; Economic History - Development of the Discipline: Historiographical; Sources and Methods
    JEL: N00 N01
    Date: 2009–04–20
  10. By: Bakhshi, Hasan; Freeman, Alan; Hitchen, Graham
    Abstract: This paper seeks to transcend entrenched misunderstandings between economists and arts policymakers, leaders and funders. These misunderstandings, which have long dogged discussion on arts funding in the UK, are most evident in the long-running debate about ‘instrumental’ and ‘intrinsic’ approaches to public expenditure on culture and the arts. As a general theory of public choice, economics provides tools for measuring the intrinsic as well as instrumental value of art in a way that is commensurable with other calls on the public purse. The reluctance to use rigorous economic methods has hindered rather than helped the case for the arts. This paper offers a provocative reconsideration of the outdated and poorly-informed prejudices which lie behind this reluctance. This is a prepublication draft. A version has been published electronically by Mission Models Money and can be accessed at e.php?id=34
    Keywords: cultural economics; creative industries; innovation; internet
    JEL: Z1 Z11
    Date: 2009–04
  11. By: Roy H Grieve (Department of Economics, University of Strathclyde)
    Abstract: This paper looks into the question of how it can come about that, not uncommonly, contemporary macro textbooks start their exposition in Keynesian fashion, but end up presenting an essentially classical account. Using a typical textbook for illustration, our diagnosis is that when the AD/AS model is introduced into the discussion, then things go wrong. The AS analysis rehabilitates a pre-Keynesian conception of the working of the labour market, while uncritical and ill-informed use of the AD function effectively ‘tames’ aggregate demand by making it manipulable in such a way as to accord with conditions of labour supply. Not surprisingly, Keynes’s vision of the functioning of the macro system gets lost along the way.
    Keywords: AD/AS Model; Labour Market - Keynesian and Classical Models
    JEL: A22 A23 B22 E12 E13
    Date: 2009–04
  12. By: Brian Loasby (University of Stirling)
    Abstract: This paper is intended to explore the twin propositions that the ability to create new ideas is a crucial factor in human progress, but that there is no reason why what is imagined, either as an explanation of existing phenomena or as an innovation, should be correct or feasible; indeed most products of the imagination are illusions, for some fundamental reasons to be examined almost immediately. Therefore human progress depends on both the encouragement of imagination to generate variety and on efficient selection from the products of imagination. In addition I wish to argue that illusion is not merely the opportunity cost of imagination; some illusions may have important beneficial consequences, rather than, or as well as, the undesirable or even dangerous consequences which are implied in the word 'delusion'.
    Keywords: imagination, illusion, delusion
    JEL: B41
  13. By: Bellino, Enrico
    Abstract: The modern reformulation of Classical analysis of value and distribution built upon Sraffa’s Production of Commodities provides quite a general and open framework to study distributive relationships, that deserves to be still explored. The present work aims to go through these relationships according to the perspective ensuing from the notion of “natural economic system”, developed by Pasinetti. The natural economic system is a sort of ideal configuration, which allows to accomplish the potentialities of the production system concerning growth, employment and the satisfaction of final wants. Actual (capitalist) economies do not normally fulfil the “natural” configuration. But this configuration can be considered a reference point in order to discriminate between the conditions that have to be verified for the system to reproduce itself and grow according to its potentialities, and the conditions that have to be regarded as pertaining to the institutional sphere. On this perspective several indications can be drawn on various aspects. In this work we shall focus on the normative conclusions that can be drawn about income distribution. Firstly a description of the characteristics and the implications of the “natural” configuration of income distribution will be provided: we will focus on natural rates of profit (which are differentiated among sectors), on the natural level of wages and on the natural rate of interest. Secondly we will depict some instruments to orientate the actual set-up of capitalistic economies towards the natural configuration. In particular we will develop a notion of uniform natural profit rate and we will describe the consequent necessary (“natural”) financial system which allows the natural accumulation of capital to be realized in a capitalistic context, where profit rates tend to be uniform.
    Keywords: Average natural profit rate; Classical political economy; Labour theory of value; Natural system; Natural profit rates; Prices; Sraffa framework; Structural change; Surplus approach
    JEL: D46 B51 B12 E12 D33 E23 E11
    Date: 2009–04–28

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