nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2011‒04‒30
nine papers chosen by
Erik Thomson
University of Manitoba

  1. Wissenschaftlicher Fortschritt in den Wirtschaftswissenschaften: Einige Bemerkungen By Kirchgässner, Gebhard
  2. A 'third culture' in economics? An essay on Smith, Confucius and the rise of China By Herrmann-Pillath, Carsten
  3. Tullock Challenges: Happiness, Revolutions and Democracy By Bruno S. Frey
  4. Institutions, distributed cognition and agency: rule-following as performative action By Herrmann-Pillath, Carsten
  5. Beyond the DSGE Straitjacket By Pesaran, Hashem; Smith, Ron P.
  6. Computations on Simple Games using REL VIEW By Rudolf Berghammer; Agnieszka Rusinowska; Harrie De Swart
  7. Revisiting the Gaia hypothesis: Maximum Entropy, Kauffman's 'Fourth Law' and physiosemeiosis By Herrmann-Pillath, Carsten
  8. Wohlfahrtsgesellschaften als funktionaler Antagonismus von Kapitalismus und Demokratie: Ein immer labilerer Mechanismus? By Schimank, Uwe
  9. Die dunkle Seite der Gerechtigkeit By Dilger, Alexander

  1. By: Kirchgässner, Gebhard
    Abstract: First, the points of view of economists regarding falsificationism, scientific revolutions and scientific research programmes are discussed. Next, hardly debatable scientific progress regarding empirical economic research in recent decades is described. Then it is asked whether there have been scientific revolutions with respect to economic theory or the basic methodology of the economic approach. Taking this term seriously, there have been at best two revolutions since the time of Adam Smith. Today, economists share a common paradigm, which also builds the hard core of their scientific research programme. But while this hard core is hardly questioned, the safety belt is discussed the more. Nevertheless, most today’s economic research can be considered as being ‘normal science’. Even if this kind of research is not without problems, there is no reason to assess it as being of secondary value.
    Keywords: Paradigm, normal science, methodology of scientific research programmes, empirical economic research
    JEL: B10 B41
    Date: 2011–04
  2. By: Herrmann-Pillath, Carsten
    Abstract: China's rise drives a growing impact of China on economics. So far, this mainly works via the force of example, but there is also an emerging role of Chinese thinking in economics. This paper raises the question how far Chinese perspectives can affect certain foundational principles in economics, such as the assumptions on individualism and self-interest allegedly originating in Adam Smith. I embark on sketching a 'third culture' in economics, employing a notion from cross-cultural communication theory, which starts out from the observation that the Chinese model was already influential during the European enlightenment, especially on physiocracy, suggesting a particular conceptualization of the relation between good government and a liberal market economy. I relate this observation with the current revisionist view on China's economic history which has revealed the strong role of markets in the context of informal institutions, and thereby explains the strong performance of the Chinese economy in pre-industrial times. I sketch the cultural legacy of this pattern for traditional Chinese conceptions of social interaction and behavior, which are still strong in rural society until today. These different strands of argument are woven together in a comparison between Confucian thinking and Adam Smith, especially with regard to the 'Theory of Moral Sentiments', which ends up in identifying a number of conceptual family resemblances between the two. I conclude with sketching a 'third culture' in economics in which moral aspects of economic action loom large, as well as contextualized thinking in economic policies. --
    Keywords: Confucianism,Adam Smith,physiocracy,collectivism and individualism,social relations in China,morality,economy of Imperial China
    JEL: B11 B12 Z1
    Date: 2011
  3. By: Bruno S. Frey
    Abstract: Gordon Tullock has been one of the most important founders and contributors to Public Choice. Two innovations are typical "Tullock Challenges". The first relates to method: the measurement of subjective well-being, or happiness. The second relates to digital social networks such as Facebook, Twitter, or to some extent Google. Both innovations lead to strong incentives by the governments to manipulate the policy consequences. In general "What is important, will be manipulated by the government". To restrain government manipulation one has to turn to Constitutional Economics and increase the possibilities for direct popular participation and federalism, or introduce random mechanisms.
    Keywords: Happiness, social networks, constitutional economics, random mechanisms, public choice
    JEL: D72 H10 I31 P16 D02
    Date: 2011–04
  4. By: Herrmann-Pillath, Carsten
    Abstract: Recently, Aoki proposed the concept of substantive institutions which relates outcomes of strategic interaction with public representations of equilibrium states of games. I argue that the Aoki model can be grounded in theories of distributed cognition and performativity, which I put into the context of Searle's philosophical account of institutions. Substantive institutions build on regularized causal interactions between internal neuronal mechanisms and external facts, which are shared in a population of agents. Following Searle's proposal to conceive rule following as a neuronally anchored behavioral disposition, I show that his corresponding notion of collective intentionality can be grounded in recent neuroscience theories about imitation as the primordial process in human learning. I relate this with Searle's concept of status function and the neuronal theory of metaphors, resulting in a precise definition of rule-following as performative action. I present two empirical examples, the institution of money and status hierarchies in markets. --
    Keywords: Aoki's concept of substantive institutions,Searle,collective intentionality,emotions,imitation,performativity,sign systems
    JEL: B52 D02 D87
    Date: 2011
  5. By: Pesaran, Hashem (University of Cambridge); Smith, Ron P. (Birkbeck College, University of London)
    Abstract: Academic macroeconomics and the research department of central banks have come to be dominated by Dynamic, Stochastic, General Equilibrium (DSGE) models based on micro-foundations of optimising representative agents with rational expectations. We argue that the dominance of this particular sort of DSGE and the resistance of some in the profession to alternatives has become a straitjacket that restricts empirical and theoretical experimentation and inhibits innovation and that the profession should embrace a more flexible approach to macroeconometric modelling. We describe one possible approach.
    Keywords: macroeconometric models, DSGE, VARs, long run theory
    JEL: C1 E1
    Date: 2011–04
  6. By: Rudolf Berghammer (Institut für Informatik - Universitat Kiel); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Harrie De Swart (Department of Philosophy - Erasmus University Rotterdam)
    Abstract: Simple games are a powerful tool to analyze decision-making and coalition formation in social and political life. In this paper we present relational models of simple games and develop relational algorithms for solving some game-theoretic basic problems. The algorithms immediately can be transformed into the language of the Computer Algebra system RelView and, therefore, the system can be used to solve the problems and to visualize the results of the computations. As an example, we consider the German parliament after the 2009 election.
    Keywords: Simple games, relation algebra, RelView.
    Date: 2011–03
  7. By: Herrmann-Pillath, Carsten
    Abstract: Recently, Kleidon suggested a restatement of the Gaia hypothesis based on Maximum Entropy approaches to the Earth system. Refuting conceptions of Gaia as a homeostatic system, Gaia is seen as a non-equilibrium thermodynamic system which continuously moves away from equilibrium, driven by maximum entropy production which materializes in hierarchically coupled mechanisms of energetic flows via dissipation and physical work. I propose to relate this view with Kauffman's 'Fourth Law of Thermodynamics', which I interprete as a proposition about the accumulation of information in evolutionary processes. Then, beyond its use in the Kleidon model, the concept of physical work is expanded to including work directed at the capacity to work: I offer a twofold specification of Kauffman's concept of an 'autonomous agent', one as a 'self-referential heat engine', and the other in terms of physiosemeiosis, which is a naturalized application of Peirce's theory of signs emerging from recent biosemiotic research. I argue that the conjunction of these three theoretical sources, Maximum Entropy, Kauffman's Fourth Law, and physiosemeiosis, allows to show that the Kleidon restatement of the Gaia hypothesis is equivalent to the proposition that the biosphere is a system of generating, processing and storing information, thus directly treating information as a physical phenomenon. I substantiate this argument by proposing a more detailed analysis of the notion of hierarchy in the Kleidon model. In this view, there is a fundamental ontological continuity between the biological processes and the human economy, as both are seen as information processing and entropy producing systems. As with other previous transitions in evolution, the human economy leverages the mechanisms by which Gaia moves further away from equilibrium. This implies that information and natural resources or energy are not substitutes, i.e. the knowledge economy continues to build on the same physical principles as the biosphere, with energy and information being two aspects of the same underlying physical process. --
    Keywords: Gaia,non-equilibrium systems,Fourth Law,work,Peirce,triadism,hierarchy,economic growth
    JEL: Q40 Q57
    Date: 2011
  8. By: Schimank, Uwe
    Abstract: Der gesamtgesellschaftliche Prägekraft besitzende grundlegende Ordnungsmechanismus der Wohlfahrtsgesellschaft ist der funktionale Antagonismus von kapitalistischer Wirtschaft auf der einen, demokratischer Politik auf der anderen Seite. Dieser Mechanismus mit seinem gesamtgesellschaftlich gemischten Segen stellte für etwa hundert Jahre die Konstante westlicher Wohlfahrtsgesellschaften dar. Seit einigen Jahrzehnten müssen wir allerdings zunehmend beunruhigt zur Kenntnis nehmen, dass auf diese Konstante kein Verlass mehr sein könnte. Kybernetisch gesprochen: Wohlfahrtsgesellschaften könnten ihre Ultrastabilität einbüßen, also ihre Fähigkeit, auch starke Dysbalancen wieder auszugleichen und zu einem stabilen Ordnungszustand zurückzukehren. Warum könnte es so sein, und was würde es bedeuten? Anstelle gesicherter Auskünfte auf diese Fragen wird eine Forschungsperspektive skizziert, die zu besseren Einschätzungen der Gegenwart und vor allem Zukunft der westlichen Wohlfahrtsgesellschaften führen könnte. Ihre heuristische Leitidee lautet: Heutige Wohlfahrtsgesellschaften werden von multiplen Instabilitäten irritiert, auf die die Akteure oft nur noch mit Coping anstelle von zielorientiertem Gestaltungshandeln reagieren können; und das Wechselspiel solcher Coping-Praktiken verschiedener Akteure führt wiederum eher zu einer Perpetuierung oder gar Intensivierung als zu einer Dämpfung der Instabilitäten. -- The fundamental mechanism that shapes the social order of welfare societies is the functional antagonism between the capitalist economy, on the one hand, and democratic politics on the other. This mechanism, with its mixed blessings, has been an unchanging feature of western welfare societies for around hundred years. However, for decades now we have grown increasingly uneasy observing that this constant can no longer be relied upon. In cybernetic terms, welfare societies might be in danger of losing their ultrastability and therefore their ability to counter disbalances and return to a state of stable order. How could this happen and what does it mean? Instead of giving definitive responses to such questions, I suggest a research program that may better assess the present situation in western welfare societies and, more importantly, possible future developments. Such research would be guided heuristically by the assumption that welfare societies today are being unsettled by a multitude of destabilizing factors to which actors can often only respond with coping strategies rather than with activities guided by clearly defined goals. Far from reducing instabilities, the interaction of the various actors' coping strategies tends to perpetuate or even intensify these pressures.
    Date: 2011
  9. By: Dilger, Alexander
    Abstract: In diesem Beitrag geht es um subjektive Gerechtigkeitsvorstellungen, nicht Gerechtigkeit an sich, da erstere im Gegensatz zu letzterer empirisch feststellbar und handlungswirksam sind. Allerdings müssen ihre Folgen nicht nur gute sein. Gerechtigkeitsvorstellungen können erstens die ökonomische Effizienz gefährden, so dass es allen oder einigen Beteiligten schlechter geht als nötig. Zweitens ist beim Konflikt verschiedener Gerechtigkeitsvorstellungen damit zu rechnen, dass sie wechselseitig ihre Verwirklichung be- oder sogar verhindern. Drittens kann sogar eine von allen Beteiligten akzeptierte Gerechtigkeitsvorstellung sich selbst im Wege stehen, so dass es den Beteiligten nicht nur materiell schlechter geht, sondern auch das angestrebte Gerechtigkeitsziel weniger erreicht wird als ohne diese Vorstellung. Das spricht nicht insgesamt gegen Gerechtigkeitsvorstellungen, jedoch für ihre sorgfältige Prüfung und maßvolle Anwendung ohne Absolutheitsansprüche. -- The focus of this paper is on subjective ideas of justice, not justice in itself, because only the former are empirically ascertainable as well as effective in human actions. However, the re-sults of these ideas do not have to be primarily positive. First, ideas of justice might imperil economic efficiency such that all or some affected persons are worse off than necessary. Second, if there is a conflict of ideas, these different ideas of justice may reciprocally prevent the implementation of each other. Third, even an idea of justice shared by all participants might not only result in a material deterioration but the kind of justice aimed for might be obtained to a lesser degree than without this idea. This is not an argument against ideas of justice alto-gether, yet it is an argument for their careful examination and measured use without claims of absoluteness.
    JEL: D63 A13 B00 C72 C91 D01 I31
    Date: 2011

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