Philosophy and economics

See also:Philosophy, politics and economics

Philosophy and economicsstudies topics such aspublic economics,behavioural economics,rationality,justice,history of economic thought,rational choice,the appraisal of economic outcomes,institutionsand processes, the status of highly idealized economic models, theontologyof economic phenomena and the possibilities of acquiring knowledge of them.

It is useful to divide philosophy of economics in this way into three subject matters which can be regarded respectively as branches ofaction theory,ethics(or normative social and political philosophy), andphilosophy of science.Economic theories ofrationality,welfare,andsocial choicedefend substantive philosophical theses often informed by relevant philosophical literature and of evident interest to those interested in action theory, philosophical psychology, and social and political philosophy.

Economicsis of special interest to those interested inepistemologyand philosophy of science both because of its detailed peculiarities and because it has many of the overt features of thenatural sciences,while its object consists ofsocial phenomena.In any empirical setting, the epistemic assumptions offinancial economics(and related applied financial disciplines) are relevant,and are further discussed under theEpistemology of finance.

Scope

Definition and ontology of economics

The question usually addressed in any subfield of philosophy (the philosophy ofX) is "what isX?".A philosophical approach to the question" what is economics? "is less likely to produce an answer than it is to produce a survey of the definitional and territorial difficulties and controversies. Similar considerations apply as a prologue to further discussion ofmethodologyin a subject.Definitions of economicshave varied over time from the modern origins of the subject, reflecting programmatic concerns and distinctions of expositors.

Ontologicalquestions continue with further "what is..." questions addressed at fundamental economic phenomena, such as "what is (economic) value?" or "what is a market?". While it is possible to respond to such questions with real verbal definitions, the philosophical value of posing such questions actually aims at shifting entire perspectives as to the nature of the foundations of economics. In the rare cases that attempts at ontological shifts gain wide acceptance, their ripple effects can spread throughout the entire field of economics.

Methodology and epistemology of economics

Main article:Economic methodology

Anepistemologydeals with how weknowthings. In the philosophy of economics this means asking questions such as: what kind of a "truthclaim "is made by economic theories – for example, are we claiming that the theories relate torealityor perceptions? How can or should we prove economic theories – for example, must every economic theory be empirically verifiable? How exact are economic theories and can they lay claim to the status of an exact science – for example, are economic predictions as reliable as predictions in the natural sciences, and why or why not? Another way of expressing this issue is to ask whether economic theories can state "laws". Philosophers of science and economists have explored these issues intensively since the work ofAlexander RosenbergandDaniel M. Hausmandating to 3 decades ago.

Rational choice, decision theory and game theory

Main articles:Decision theoryandGame theory

Philosophical approaches in decision theory focus on foundational concepts in decision theory – for example, on the natures ofchoiceorpreference,rationality,riskanduncertainty,and economic agents. Game theory is shared between a number of disciplines, but especiallymathematics,economicsandphilosophy.Game theory is still extensively discussed within the field of the philosophy of economics. Game theory is closely related to and builds on decision theory and is likewise very strongly interdisciplinary.

Ethics and justice

Main articles:Distributive justiceandJustice (economics)

The ethics of economic systems deals with the issues such as how it is right (just, fair) to keep ordistributeeconomic goods.Economic systemsas a product of collective activity allow examination of their ethical consequences for all of their participants.Ethics and economicsrelates ethical studies towelfare economics.It has been argued that a closer relation between welfare economics and modern ethical studies may enrich both areas, even including predictive and descriptive economics as to rationality of behaviour, given social interdependence.

Ethics and justice overlap disciplines in different ways. Approaches are regarded as more philosophical when they study the fundamentals – for example,John Rawls'A Theory of Justice(1971)andRobert Nozick'sAnarchy, State and Utopia(1974). 'Justice' in economics is a subcategory ofwelfare economicswith models frequentlyrepresentingthe ethical-socialrequirementsof a given theory. "Practical" matters include such subjects aslawandcost–benefit analysis

Utilitarianism,one of the ethical methodologies, has its origins inextricably interwoven with theemergence of modern economic thought.Today utilitarianism has spread throughout applied ethics as one of a number of approaches. Non-utilitarian approaches in applied ethics are also now used when questioning the ethics of economic systems – e.g. rights-based (deontological) approaches.

Manypolitical ideologieshave been an immediate outgrowth of reflection on the ethics of economic systems.Marx,for example, is generally regarded primarily as a philosopher, his most notable work being on the philosophy of economics. However, Marx's economic critique of capitalism did not depend on ethics, justice, or any form of morality, instead focusing on the inherent contradictions of capitalism through the lens of a process which is today calleddialectical materialism.

Non-mainstream economic thinking

Main articles:Heterodox economicsandCritique of political economy

The philosophy of economics defines itself as including the questioning of foundations or assumptions of economics. The foundations and assumption of economics have been questioned from the perspective of noteworthy but typically under-represented groups. These areas are therefore to be included within the philosophy of economics.

• Praxeology:a deductive theory of human action based on premises presumed to be philosophically true (following theanalytic–synthetic distinctionofImmanuel Kant). Developed byLudwig von Miseswithin theAustrian School,is a self-conscious opposition to the mathematical modeling and hypothesis-testing to validate neoclassical economics.
• Cross-cultural perspectives on economics, andeconomic anthropology:an example is theBuddhist-inspiredBhutanese"Gross National Happiness"concept (suggested as a better development measure than GNI/GDP).Amartya Senis a renowned advocate for the integration of cross-cultural phenomena into economic thinking.
• Feminist perspectives on economics, orfeminist economics.

Scholars cited in the literature

• Aristotle
• Kenneth Arrow
• Roger E. Backhouse
• Ken Binmore
• Kevin Carson
• Milton Friedman
• Frank Hahn
• Friedrich Hayek

• Martin Hollis
• Daniel M. Hausman
• Terence Wilmot Hutchison
• David Hume
• John Neville Keynes
• John Maynard Keynes
• Tony Lawson
• John Locke
• Uskali Mäki

• Thomas Robert Malthus
• Karl Marx
• John Stuart Mill
• Ludwig von Mises
• Pierre-Joseph Proudhon
• John E. Roemer
• Murray Rothbard
• John Rawls
• Lionel Robbins
• Joan Robinson

• Alexander Rosenberg
• Paul Samuelson
• E. F. Schumacher
• Amartya Sen
• Brian Skyrms
• Adam Smith
• Max Weber
• Carl Menger
• Bernard Williams

Related disciplines

Theethics of economic systemsis an area of overlap betweenbusiness ethicsand the philosophy of economics. People who write on the ethics of economic systems are more likely to call themselvespolitical philosophersthanbusiness ethicistsoreconomic philosophers.There is significant overlap between theoretical issues ineconomicsand the philosophy of economics. As economics is generally accepted to have its origins in philosophy, thehistory of economicsoverlaps with the philosophy of economics.

Degrees

Some universities offer joint degrees that combinephilosophy, politics and economics.These degrees cover many of the problems that are discussed in Philosophy and Economics, but are more broadly construed. A small number of universities, notably theLondon School of Economics,University of Edinburgh,theErasmus University Rotterdam,Copenhagen Business School,theUniversity of ViennatheUniversity of Bayreuthand theUniversity of Hamburgoffer master's degree programs specialized in philosophy, politics and economics.

Journals

• Economics and Philosophy
• Erasmus Journal for Philosophy and Economics
• Journal of Economic Methodology
• Philosophy and Public Affairs
• Politics, Philosophy & Economics–Aims and Scope

See also

• Analytic philosophy
• Critique of political economy
• Epistemology of finance
• Philosophy of science
• Schools of economic thought
• History of economic thought
• Teoría de Precios: Porqué está mal la Economíatextbook (2010)

Further reading

• Boulding, Kenneth E.(1969). "Economics as a Moral Science,"American Economic Review,59(1), pp.1-12.
• Caldwell, Bruce (1987). "positivism,"The New Palgrave: A Dictionary of Economics,v.3, pp. 921–23.
• Downie, R.S. (1987). "moral philosophy,"The New Palgrave: A Dictionary of Economics,v. 3, pp. 551–56.
• Hands, D. Wade, ed. (1993).The Philosophy and Methodology of Economics,Edward Elgar. 3 v. Description and Table of Contentslinks.
• Davis, John B., Alain Marciano, Jochen Runde, eds. (2004).The Elgar Companion to Economics and Philosophy.Description & Table of Contentslinksand Introduction and ch. 1previewsvia sidebarscrolling.Articles from 1925 & 1940–1991.
• Hausman, Daniel M.(1992).Essays on Philosophy and Economic Methodology.Description,ch. 1link.Chapter-previewlinks.
• _____, ed. ([1984] 2008).The Philosophy of Economics: An Anthology,3rd ed. Cambridge. Description & Table of contentslinksandIntroduction.From John Stuart Mill on.
• Heilbroner, Robert L.([1953] 1999).The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers,7th ed. Scroll to chapter-previewlinks.
• Hodgson, Bernard (2001).Economics as Moral Science.Descriptionand chapter-preview links, pp.xi-xiv.
• Peil, Jan, and Irene van Staveren, eds. (2009).Handbook of Economics and Ethics,Edward Elgar.Descriptionandpreview.
• Putnam, Hilary(1993). "The Collapse of the Fact/Value Dichotomy," in Martha Nussbaum and Amartya Sen, ed.The Quality of Life,pp. 143–157. Oxford. Reprinted in Putnam (2002), Part I, pp. 5-64.
• _____ (2002).The Collapse of the Fact/Value Dichotomy and Other Essays,Descriptionand chapter-previewlinks.
• Robinson, Joan(1962).Economic Philosophy.Descriptionand scroll to chapter andpreviews.
• Rubinstein, Ariel(2006). "Dilemmas of an Economic Theorist,"Econometrica,74(4), pp.865–883(close Page tab).
• Szenberg, Michael,ed. (1992).Eminent Economists: Their Life Philosophies,Cambridge.Descriptionandpreview.
• Walsh, Vivian (1961).Scarcity and Evil]: An Original Exploration of Moral Issues on the Frontier Between Guilt and Tragedy.Prentice-Hall.
• _____ (1987). "philosophy and economics,"The New Palgrave: A Dictionary of Economics,v. 3, pp. 861–869.
• _____ (1996).Rationality, Allocation, and Reproduction.Cambridge.Descriptionand scroll to chapter-previewlinks.

External links

• Philosophy of Economics(Daniel Little's entry in theRoutledge Encyclopedia of the Philosophy of Science)
• Philosophy of Economics(Stanford Encyclopedia of Philosophy) by Daniel M. Hausman, notable in the field.