A theory of planning horizons (2): the foundation for an ethical economics

Author(s): Frederic B. Jennings Jr. / Language(s): English Issue: 1/2012

The concept of planning horizons serves as a measure of many unsettled aspects of economic analysis. First and foremost, the notion is ordinal: we speak of ‘horizon effects’ as directional shifts in planning horizons without tallying ‘wits’ or calibrating horizonal axes of change. Second, the derivation of horizon effects is inductive; we simply assert their inherence in the range of factors subsumed within the imagined projections behind all choice. The planning horizon is set wherever surprise supplants expectation; the horizon occurs at the outer range of accurate anticipation, to which we lack clear epistemological access. Planning horizons – horizon effects – suggest a new foundation for an ethical economics of conscience, social maturation and growth. The idea of planning horizons invites a distinction of foresight from myopia in economic constructions. But time horizons are only one aspect of our planning horizons: to see ahead in time we must embrace all relevant causal effects. Foresight depends on knowledge of how reality actually works, which is a matter more of degree than ‘truth’; the planning horizon offers an index of our ‘rational bounds.’ Our range of anticipation is also related to our internalization of social and ecological externalities in our decisions, so to the scope of our ethical conscience and to our sense of human community. Indeed, the organizational health and integrity of our society is horizonal in this sense. The aim of this paper is to explore and develop the concept of planning horizons in its intellectual origins and economic concerns. Its philosophic conceptual roots, methodological underpinnings, psychological insights and economic implications are outlined to show why an economics of planning horizons offers an ethical economics of interdependent dynamic complex systems. With standard doctrines seen as a special case in a larger horizonal frame, social theory embraces an ethical economics with dissimilar institutional implications favoring cooperation.

The Hegelian dialectics of global imbalances

Author(s): Célestin Monga / Language(s): English Issue: 1/2012

Traditional narratives of external imbalances have focused on the analysis of national accounts, trade flows, and financial flows. They have generated two opposing views of the current situation of the world economy: on one side, a prudent, if not pessimistic view considers large imbalances as evidence of problems with the international monetary and financial system, and symptoms of domestic distortions (mainly in the United States and China). On the other side, a relaxed, if not optimistic view suggests that global imbalances are not anomalies but simply the predictable outcome of a world with increasingly globalized financial flows in search of the right mix of risks and returns. This paper offers a critical analysis of these competing explanations of the United States-China imbalances and suggests a way of reconciling them. The paper uses Hegel’s parable of the development of self-consciousness to explain the dynamics between the two countries. Hegel may not have been a great philosopher of history but his study of lordship and bondage provides a good framework for analyzing the dialectics of recognition and acknowledgement that currently characterizes the macroeconomic relationships between the United States and China.

Competitive markets, collective action, and the Big Box Retailer problem

Author(s): Brent D. Beal / Language(s): English Issue: 1/2012

I use a stylized scenario—the Big Box Retailer Problem—to demonstrate that the presence of behavioural interdependence in economic markets may result in deficient outcomes that are both stable and supported by ongoing participant behaviour. I present a theoretical discussion of social dilemmas and use the Big Box Retailer Problem to illustrate that these characteristics—stability and ongoing support—cannot be reliably employed as indicators of outcome efficiency. Equally important is the conclusion that upfront costs and the ongoing necessity of monitoring and encouraging contributory behaviour are not reliable indicators of the relative inefficiency of outcomes associated with collective action. Questions are raised regarding the ethical responsibilities of business educators and the implications of social dilemmas for corporate social responsibility research.

Observing productivity: what it might mean to be productive when viewed through the lens of Complexity Theory

Author(s): Manfred Füllsack / Language(s): English Issue: 1/2012

The paper tries to explore options and preconditions for a theoretically thoroughly grounded conception of productivity that is able to account for its observer-dependency and thereby meets the needs of a dynamic and highly differentiated modern society. It does so in respect to insights from Cybernetics and Complexity theory, thereby taking up charges about the contradiction of economic productivity and the Second Law of Thermodynamics. In respect to epistemological consequences of contemporary levels of productivity, a seemingly paradoxical constraint is put forward: the constraint that productivity is conditioned on being observed as such, with the observer in its turn being conditioned on productivity. The assumption is that this paradoxical constitution helps to keep productivity adaptive to the changes it itself incites in economy.

Between a rock and a hard place: second thoughts on Laibman’s Deep History and the theory of punctuated equilibrium with regard to intellectual evolution

Author(s): Altug Yalcintas / Language(s): English Issue: 1/2012

In this article I reconsider Laibman’s Deep History (2007) in the light of Niles Eldredge and Stephan Jay Gould’s theory of punctuated equilibrium. I argue that the theory of punctuated equilibrium explains (1) why conceptions of inevitability and directionality in intellectual evolution may not be as useful as Laibman thinks they are in the context of social evolution and (2) why stasis (that is, intellectual path dependence) in intellectual evolution does not allow different pathways of thought to converge.

Review of Vito Tanzi, Government versus Markets – The Changing Economic Role of the State, New York, Cambridge University Press, 2011, 376pp, Hardback, ISBN 978-1-107-09653-0

Author(s): Xavier Landes / Language(s): English Issue: 1/2012

Review of Paul Turpin, The Moral Rhetoric of Political Economy: Justice and Modern Economic Thought, Routledge, London & New York, 2011, pp. 163

Author(s): Sergiu Bălan / Language(s): English Issue: 1/2012

Ethics and economics, today and in the past

Author(s): James E. Alvey / Language(s): English Issue: 1/2011

Economics was traditionally viewed as part of a wider study of human things, including ethics. It has drifted away from ethics despite the fact that ethical considerations inevitably form part of economics. After a brief introduction, the second section outlines the state of play in the economics discipline. The third section deals with the ethical crisis of economics today. The fourth section presents two grand narratives of ethics and economics. The fifth section sketches Amartya Sen’s critique of the mainstream and his alternative approach to economics. The sixth section provides some concluding comments.

From the search for natural laws to the discovery of contingent rules in economics

Author(s): Nicolas Postel / Language(s): English Issue: 1/2011

In this article, the author defends the idea that one of the positive results of modern economic analysis is the conviction that there is no natural law in economics. Thus, the most thorough scientific research which has tried to provide an analytical foundation for the mythical invisible hand, the “general equilibrium paradigm,” has finally shown that such an equilibration process cannot be formally demonstrated. Hence, we can say that economists cannot demonstrate the existence of a law of “supply and demand” but, more simply, can assert that some causal but contingent relations may exist between price, supply and demand. According to this result, the critical approach of Kenneth John Arrow concludes with the necessity of social and moral rule (for the good functioning of the market). It is, thus, necessary to assume the contingent nature of economic rules, and the absence of natural law, and consequently, to modify economists’ theoretical model.

Finance contemporaine et postmodernisme: l’expression d’un capitalisme tardif

Author(s): Christophe Schinckus / Language(s): French Issue: 1/2011

This paper shows that the evolution of financial markets implies some features of the postmodernism, as for example, the emergence of a hyperreality or an over-exaggeration of the exchange. Computerization contributed to the development of what Baudrillard called a hyper-reality in which financial quotations are self-referent, i.e. they do not refer to an economic reality. Finance is now in post-modernity and this essay offers an analysis of this financial post-modernity.

The Christian ethics of socio­economic development promoted by the Catholic Social Teaching

Author(s): Edgardo Bucciarelli,Tony E. Persico,Nicola Mattoscio / Language(s): English Issue: 1/2011

This paper highlights the relationship between economic science and Christian moral in order to analyze the idea of socio­economic development promoted by the Catholic Social Teaching (CST). In the first period leading up to the Second Vatican Council (1891­1962), from Pope Leo XIII to Pope John XXIII, the idea of development was connected both to technical and industrial progress, and to the universal values of justice, charity, and truth, which national communities were asked to follow. During the Conciliar period (1962­1979), the concept of development assumes a social and economic dimension, and so it becomes one of the main pillars of Catholic Social Teaching, which introduces the earliest definition of integral human development. Ultimately, in the post­Conciliar phase (1979­2009) including Benedict XVI’s pontificate, the idea of integral human development reaches its maturity by incorporating the complexity of real­world economic interactions. Finally, this paper shows how the ethics bolstered by the Catholic Social Teaching is characterized by two distinct but complementary lines of thought: moral rules for both political action, and for socio­economic issues.

An inquiry into the explanatory virtues of transaction cost economics

Author(s): Lukasz Hardt / Language(s): English Issue: 1/2011

The aim of this paper is twofold. First, we offer a methodological reflection on how the explanatory virtues of economic theories can be assessed in a systematic way. Second, we use that theoretical apparatus to study the explanatory virtues of Transaction Cost Economics (TCE, henceforth). Precisely, we are primarily interested in assessing the progress within TCE with respect to its explanatory power rather than directly comparing TCE’s explanatory virtues to alternative theories. The paper offers also some general insights into the way we compare economic theories.

Implications of the Foucauldian decentralization of economics

Author(s): Zulfiqar Ali / Language(s): English Issue: 1/2011

This essay aims to explore Foucault’s project of decentralizing economics and to hint on some implications. It also makes a comparative analysis between Foucault’s project and the projects similar to his design and aim. I argue that Foucault’s critique of the idea of economics as a science is stronger than that of the critiques which challenge the status of economics as a science by exposing its deep fictional, literary or narrative content and style. I argue that the strength of Foucault’s decentralization project lies in the fact that he does not refer to the discursive content of economics in order to demonstrate that it is not a science. Instead, he unveils its epistemological conditions the character of which deeply haunts the sketch of economics as a science. Foucault undertakes decentralization both at the formal and historical level. At the formal level he shows that there are underlying epistemological conditions that govern the formation of discourses including economics in the West. At the historical level he demonstrates that there is no trace of economics up to the eighteenth century in the West. This fact, that economics is governed by modern Western epistemological conditions, encourages me to question the aim of teaching economics in societies such as Pakistan which are not part of the Western civilization.

Review essay on David Laibman, Deep History: A Study in Social Evolution and Human Potential

Author(s): Altug Yalcintas / Language(s): English Issue: 1/2011

While historical materialism and evolutionism provide similar explanations and ideas regarding the cause of long-term social change, the two theories are rarely used in conjunction with one another. In Deep History, the author David Laibman addresses some of the standard questions of evolutionary social theory and attempts to bridge the two concepts, by showing that historical and materialist explanations are present in both Marxian and evolutionary interpretations of history. His goal: develop a Marxist theory of history from an evolutionist perspective, and surmount the traditional confines of historical materialism, so as to embrace evolutionary conceptions in explaining social change. However, the unbalanced research methodology limits the reach and depth of Laibman’s contribution. The two main shortcomings of his work are discussed in the following sections: The Audience Problem and The Evolutionary Problem.

Are egalitarians really vulnerable to the Levelling-Down Objection and the Divided World Example?

Author(s): S. Subramanian / Language(s): English Issue: 2/2011

This essay is a quick critique of one aspect of Derek Parfit’s criticism of Egalitarianism in his larger consideration of the claims of, and distinction between, Prioritarianism and Egalitarianism. It reviews issues relating to the ‘Levelling Down Objection’ and the ‘Divided World Example’. More specifically, it is argued that the Levelling Down Objection is a serious problem only for Pure Telic Egalitarianism, not for Pluralist Telic Egalitarianism; and that even in a Divided World, one can have an egalitarian justification for preferring an equal distribution of a smaller sum of wellbeing to an unequal distribution of a larger sum. By these means, it is contended that Parfit’s claim of the vulnerability of Egalitarianism to the Levelling Down Objection and the Divided World Example is not sustainable.

The capacity to choose: reformulating the concept of choice in economic theory

Author(s): Mark S. Peacock / Language(s): English Issue: 2/2011

Despite being conceived as a ‘theory of rational choice’, orthodox economics fails to ascribe to human beings the ability to choose in a meaningful sense, something philosophical approaches to economics have long noted and tried to remedy. Tony Lawson’s critical realism is one attempt at a remedy. If, following Lawson, one conceives of choice as a ‘capacity’ of human beings, critical realist analysis suggests a distinction between humans’ possession and their exercise of this capacity. If one can sustain this distinction, one should be able to distinguish cases in which agents actually exercise their capacity to choose from those in which they do not. Investigation of this distinction does not, however, lead to the desired distinction between such cases. Consequently, a reformulation of the notion of choice is required. An implication for economic theory – namely, the possibility of conceptualizing ‘exploitation’ – is discussed.

More than a sum of its parts: A Keynesian epistemology of statistics

Author(s): Nicholas Werle / Language(s): English Issue: 2/2011

The major theoretical insight of Keynes’ General Theory is that aggregate quantities describing the state of an economy as a whole are irreducible to arithmetic summations of individual decisions. This breaks with the logic of classical political economy and establishes macroeconomics as the study of economy-wide dynamics, logically independent from any underlying theory of individual rationality. However, Keynes does have a theory of individual psychology that links expectations back up to aggregate quantities with robust statistical methods, which account for the fundamental uncertainty one faces in predicting the future. By comparing the theoretical structure of macroeconomics to that of thermodynamics and statistical mechanics, this essay proposes a novel reading of Keynes’ epistemology of statistical laws. On this view, statistical methods allow theoreticians to connect the mechanics of vast numbers of micro-scale entities to a macro-scale dynamics, even in the absence of a fully determinate causal story. Keynes’ belief that organic wholes emerge from the interactions of complex systems is a product of his early work on the development of statistical mechanics from kinetic theory. In light of this epistemological foundation, this essay shows how the neoclassical idea of supplying macroeconomics with microfoundations is inherently contradictory

There are no such things as ‘commodities’: a research note

Author(s): Rupert Read / Language(s): English Issue: 2/2011

This short paper is a note offering provisional results of my current research in philosophical economics and the philosophy of economics. It is offered in the spirit of promoting discussion of an interesting topic worthy of further investigation.

A Review of Christian Arnsperger, Full Spectrum Economics. Towards an Inclusive and Emancipatory Social Science, Routledge, 2010, 277 pp.

Author(s): Irina Zgreabãn / Language(s): English Issue: 2/2010

A Review of Jean-François Ponsot and Sergio Rossi (eds), The Political Economy of Monetary Circuits: Tradition and Change in Post-Keynesian Economics, Basingstoke, Palgrave Macmillan, 2009, 264 pp.

Author(s): Rémi Stellian / Language(s): English Issue: 2/2010