nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2023‒08‒14
eight papers chosen by
Erik Thomson
University of Manitoba

  1. Hugo Grotius on Usury By André Lapidus
  2. The Economics of Wellbeing and Psychology: An Historical and Methodological Viewpoint By Drakopoulos, Stavros A.
  3. The Renaissance of Ordoliberalism in the 1970s and 1980s By Tim Krieger; Daniel Nientiedt
  4. The Marginal Revolution in the light of Foucault's typology of epistemes By Clémence Thebaut
  5. 10$ a ton of carbon ? The Stern-Nordhaus Controversy : Methodological and Ethical Issues By Mathieu Guigourez
  6. An Approach Towards Integrating Preference Formation Into Economic Theory By Marek Jenöffy-Lochau
  7. Laws of Economics under Socialism By Gindler, Allen
  8. Ethics and technique in welfare economics: How welfarism evolves in the making By Antoinette Baujard

  1. By: André Lapidus (PHARE - Philosophie, Histoire et Analyse des Représentations Économiques - UP1 - Université Paris 1 Panthéon-Sorbonne)
    Abstract: This paper explores the way the Scholastic argument against usury, which culminated in the 13th century with Thomas Aquinas's question on interest loans in the Summa Theologiae, found an end with Hugo Grotius's introduction of economic issues, in De Jure Belli ac Pacis (1625). Whereas Grotius inherited at least part of his predecessors' repugnance of interest lending, he found in his questioning of categories from Roman law the source of both a criticism of the main features of the Scholastic argument and an alternative analysis of interest loans in which the income received by the lender is explained and legitimate.
    Keywords: Grotius, Usury, Interest, Contract, Money loan
    Date: 2023–12
  2. By: Drakopoulos, Stavros A.
    Abstract: Job satisfaction and life satisfaction research (economics of wellbeing) is an established and booming research field. However, until the late 1970s, the study of the impact of economic variables on subjective wellbeing was considered to be outside the domain of economics. The main reason was the methodological hostility of orthodox economists towards incorporating "subjective" and "psychological" variables. The legacy of economics as a positive social science that dealt with observed or revealed behavior only, was a major obstacle for economists to study subjective wellbeing. The main exception was the pioneering work of Richard Easterlin in 1974, who attempted to account for the discrepancy between income increases and overall life satisfaction. Opening up the communication of economists with psychologists in happiness research, Easterlin relied on references from psychology and especially from social psychology in order to construct his arguments. Influenced by Easterlin, references to theoretical and empirical work in psychology became more apparent when happiness economics attracted more interest by the end of the 20th century. After showing its rich historical past of interaction with psychology, the paper argues that this stance is contrary to the established mainstream tradition and methodology. Further, it demonstrates that leading figures of happiness economics adopt a conscious methodological position towards interacting with psychology, and this puts them at odds with the mainstream economics methodological approach. It is also argued that the economics of happiness attitude towards psychology is linked to other important differences of methodological nature. The paper identifies three major points of diversion: utility cardinality and comparability, empirical methodology, and the specification of agents’ utility function and the ensuing policy implications.
    Keywords: Economics and Psychology; Economics of Wellbeing; Economic Methodology; History of Economic Thought
    JEL: B20 B40 I30
    Date: 2023–07
  3. By: Tim Krieger; Daniel Nientiedt
    Abstract: The economic tradition of ordoliberalism, understood as the theoretical and policy ideas of the Freiburg School, emerged in 1930s and 1940s Germany. In the years thereafter, it was quickly superseded by Keynesianism and other theories imported from the English-speaking world. The crisis in Keynesian economics in the mid-1970s led to what has been described as a “renaissance of ordoliberal reasoning” (Gebhard Kirchgässner) during the late 1970s and the 1980s. The present paper describes this development in detail and shows how it affected the academic discourse and, more indirectly, policymaking. In academic economics, ordoliberal concepts were used to inform debates about pressing issues of the day such as unemployment, social security reform, competition policy, the provision of public goods, and European integration. There was, however, no consensus on the methodological question of whether ordoliberalism could be fully integrated into international research programs such as the new institutional economics or constitutional economics. The paper argues that the renaissance of ordoliberalism failed to have a lasting impact on German academic economics and discusses possible implications of this finding for the future of the ordoliberal research agenda.
    Keywords: ordoliberalism, Freiburg school, economic policy, social market economy, Keynesianisnm, European integration
    JEL: B29 D40 E60 H60 P16
    Date: 2023
  4. By: Clémence Thebaut (NET - Neuroépidémiologie Tropicale - CHU Limoges - Institut d'Epidémiologie Neurologique et de Neurologie Tropicale - INSERM - Institut National de la Santé et de la Recherche Médicale - GEIST - Institut Génomique, Environnement, Immunité, Santé, Thérapeutique - UNILIM - Université de Limoges, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, PSL - Université Paris sciences et lettres, UNILIM - Université de Limoges)
    Abstract: Objective: We seek here to draw on the methods and tools put forward by Michel Foucault in The Order of the Things (1966) to shed light on history of welfare economics. More specifically we consider that the rejection of interpersonal comparisons that foreshadowed the marginalist revolution and the transition to ordinal measures of utility during the 19th century can be explained by the shift from the classical episteme to a modern episteme which is described by Foucault. Method: To explore this hypothesis, we drawn on the method of archaeological knowledge, proposed by Foucault (1966, 1969). We started by building a corpus using an incremental research strategy (the "snowball" method), starting from first bibliographic reference on history of welfare economics Baujard (2013, 2014). Then, we study the various statements within a corpus, in order to identify regularities and turning points both in semantics and concepts, so as to compare discourse "styles". Unlike other approaches in social sciences, the method of knowledge archaeology consists in analysing scientific discourses in themselves, outside the social, economic and political context that led them to emerge. Results: Using this methodology, we first examine to what extent the early utilitarianism is typical of the classical episteme as described by Foucault, which entails (i) the use of a mechanistic framework, (ii) the use of mathematics and more generally (iii) an effort to classify different entities. Second we examined how the rejection of interpersonal comparisons in the marginalist literature and the transition to ordinal utilities could be typical of the modern episteme, through the development of positivist stand and transcendental function of the notion of utility.
    Abstract: Cet article s'inscrit dans le cadre d'un projet de recherche visant à mobiliser les méthodes et outils proposés par Michel Foucault pour apporter un éclairage sur un ensemble de discussions que soulève l'évaluation économique en santé. Nous nous intéressons ici à l'ancrage épistémologique des méthodes de révélation des préférences individuelles issues de l'économie du bien-être, qui sont aujourd'hui utilisées pour valoriser les bénéfices en santé, en nous appuyant sur la typologie des épistémès de Foucault dans les Mots et les choses. Plus précisément, nous envisageons que le rejet des comparaisons interpersonnelles, que préfigure la révolution marginaliste et la transition vers une mesure ordinale des utilités, s'explique par le passage d'une épistémè classique à une épistémè moderne. La question du caractère cardinal ou ordinal de la mesure de l'utilité reste centrale pour l'évaluation économique en santé. En effet, les méthodes d'évaluation des bénéfices en santé, notamment au moyen des QALY, se rapprochent d'une mesure cardinale, contrairement au paradigme de la nouvelle économie du bien-être dans lequel elle est censée s'inscrire.
    Keywords: JEL Classification: B12, D61, D63, I10 Welfare economics, Health economic evaluation, Epistemology, Foucault
    Date: 2023–06–24
  5. By: Mathieu Guigourez (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The Stern-Nordhaus controversy has been emblematic of the economic and ethical debate around the formulation of a discount rate and a carbon price. The aim of this article is to study this controversy in order to shed light on the epistemological and ethical postulates implicitly accepted by the two economists in their work, and more broadly in the integrated models concluding to a social cost of carbon. These implicitly accepted postulates are 1) the comprehension of economic rationality solely as the maximization of expected utility, and 2) a consequentialist point of view. The latter compartmentalize the scope of the ethical debate into cleavages over the formulation of an optimal discount rate. This article aims to broaden the ethical debate around these integrated models by questioning the implicit normativity of how economic rationality is at play in these models and proposes a new way of conceiving individual responsibility in regard to climate change.
    Keywords: Integrated Assessment Models, Economic Rationality, Discount Rate, Social Cost of Carbon, Individual Responsibility, Philosophy of Economics, Expected utility
    Date: 2023–05
  6. By: Marek Jenöffy-Lochau (Büro am Carlsplatz)
    Abstract: The concept of 'preferences' is a cornerstone of economic theory. However, the question whether or how preferences accrue has not been discussed in economic literature so much. Kirchgässner suggested that this happens during a 'phase of socialisation' of an individual. Discussing the topic 'preferences, ' leads to several contradictions and unanswered questions. I show a path how to address the topic and present a first step towards an economic 'theory of persuasive rhetoric' that Galperti recently requested.
    Keywords: Preferences, Preference Formation, Information, Communication, Persuasion, Economic Methodology
    Date: 2023–06–23
  7. By: Gindler, Allen (Cyberrex Associates, Inc.)
    Abstract: This article argues that praxeology, as a general theoretical approach, can explain the emergence of the socialist doctrine. However, socialist laws of economics cannot be derived from praxeology. It is specifically shown that the immutability of market economic laws does not allow society to achieve a full-fledged communist reality. Using the Soviet Union as an example, this article demonstrates that the market economy cannot be eradicated, despite government efforts, but is omni- present even if it is ostensibly outlawed. Also, this article demonstrates that Ludwig von Mises’s conclusion about the principal impossibility of economic calculation under socialism is fully applicable to the highest stage of communism, as theorized in Marxism. In relation to socialism in a broader sense, as the collectivization of the means of production grows, the magnitude of the impairment of economic calculation grows with it. Socialist thinkers failed to rebuff Mises’s reasoning because all their proposals violated the economic uncertainty principle: the exact price structures before the exchange are unknown and are in superposition.
    Date: 2023–07–07
  8. By: Antoinette Baujard (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Under welfarism, assertions such as "this social state is better than an alternative" or "this policy should be enacted" are based on the assumption that social welfare ultimately depends only on the well-being of individuals. A normative analysis of welfarism seeks to provide a transparent description of the basis upon which welfarism makes its value judgements, which is equivalent to an investigation into its choice of a preferred notion of well-being. Such an investigation, this paper claims, can take two forms, which we should distinguish: the ethical analysis of welfarism is concerned with the appeal to a given ethical theory of well-being; and the technical analysis of welfarism concerns the specific measure of individual utility that in practice is used to measure social welfare. Reviewing a series of claims which bear on how these two versions of welfarism are articulated (the standard, proxy, evidential and tension claims), the paper explores the differences between the ethical and technical approaches in the normative interpretation of welfarist assertions.
    Abstract: Dans le cadre d'étude welfariste, des affirmations telles que "cet état social est meilleur que tel autre état social" ou "cette politique devrait être promulguée" reposent sur l'hypothèse que le bien-être social ne dépend que du bien-être des individus et de rien d'autre. Une analyse normative du welfarisme vise à fournir une description transparente des jugements de valeur impliqués dans ces évaluations et ces recommandations, ce qui revient à s'interroger en particulier sur la notion du bien-être qui a été retenue. Cette enquête normative peut prendre deux formes et cet article défend l'idée qu'il convient de les distinguer : l'analyse éthique du welfarisme concerne le recours à une théorie éthique donnée du bien-être ; et l'analyse technique du welfarisme concerne la mesure de l'utilité individuelle qui est utilisée en pratique pour mesurer ce bien-être social. L'article passe en revue successivement quatre points de vue type portant sur l'articulation de ces deux versions du welfarisme : le point de vue standard, de l'approximation, de la preuve et de la tension. En étudiant l'interprétation normative des affirmations welfaristes, il explore les différences qui émergent entre les approches éthique et technique.
    Keywords: Welfare Economics, Welfarism, Ethics, Practice, Ethical welfarism, Technical welfarism, Demarcation, Neutrality, Non-Neutrality, Axiological transparency, Value judgements
    Date: 2022

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