Category: Philosophy of Economics

Philosophy as if the world mattered: critical development studies and the work of Tony Lawson

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No reader of this blog needs reminding that positivism retains a powerful grip on development studies. Not because every theorist, researcher and department carries a card or flies a flag self-identifying as positivist, but because positivist concepts of what knowledge is and how it is assessed continue to dominate, in so far as these have captured the concept of ‘science’. As Ingrid Kvangraven’s critique establishes, one need look no further than the dominance of random control trials (RCTs) for evidence of this. While there are many specific problems one might identify with RCTs, such as the capture of policy by what can be researched using RCTs rather than by what may be more significant as structural causes of poverty, perhaps the fundamental one is the model form, which stands behind RCTs. It is this that lends authority to RCTs, as it does to many other branches of economics.

Tony Lawson is probably the best known critic of mainstream mathematical modelling and in a recent interview he reprises his argument. Lawson is a ‘critical realist’ and ‘social ontologist’ and his, and other critical realists’ argument, is deceptively simple. All knowledge claims involve assumptions about the nature of the world, what and how it might appropriately be investigated. Whether this is acknowledged or not this presupposes a theory of reality or being (an ontology) and an orientation to knowledge (an epistemology). Philosophy thus has an important role in making these assumptions explicit and in exposing them to critical scrutiny to address their plausibility, consistency etc. Such philosophy does not replace the sciences or social sciences, but rather ‘under-labours’ for or supports their endeavours and is itself subject to critique in this context.

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Oikonomia is Back, for Now

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Plato and Aristotle, at The School of Athens. Photo by By Raphael – Web Gallery of Art.

The current pandemic is a human tragedy on an enormous scale, not only in terms of death and illness but also in loss of employment, disruption to education and increased anxiety. Perhaps of most concern to politicians, the various restrictions put in place to reduce the spread of COVID-19 have had large negative effects on national and regional economies. 

As a result, many leaders have opted to ‘re-open’ their economies prematurely, partly since economic performance affects electoral cycles. In some cases there have been disastrous consequences to such loosening of social distancing restrictions, with spikes in infections in various countries or states. This has led to a discussion of a false dichotomy – between protecting human life and reviving the economy. 

This dichotomy is false for several reasons. At the most basic level, if large parts of the population get infected and either die or are unable to work, this would not bode well for the economy either. But more fundamentally, what we think of as ‘the economy’ is really broader than just profits and asset values. Read More »

The Nature of Social Reality: Issues in Social Ontology (Review)

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Review of Lawson, T. (2019). The Nature of Social Reality: Issues in Social Ontology. London and New York: Routledge.

Ontology is the study of being. Social ontology is the study of social being or, in other words, the study of the nature and basic structure of social reality. We all do ontology all of the time, economists included, whether we like it or not. For all practices carry ontological presuppositions. Economists only have a choice between doing ontology explicitly or implicitly. Tony Lawson’s contributions stand out and are of such profound significance precisely because he explicitly grounds his analysis in an account of social ontology. It is only by redressing the ontological neglect that has for some decades characterised the discipline that a productive transformation of economics is at all feasible. 

Lawson is perhaps best known amongst heterodox economists for his critique of the mainstream emphasis on mathematical modelling. Lawson shows that the implicit ontological presupposition of an insistence of mathematical modelling is a world of isolated atoms and argues that, as the social realm is not characterised by isolated atoms, the mainstream approach will produce largely irrelevant research. However, it would be wrong to consider this critique to be his major contribution. Rather, it is but one of an increasing number of powerful (sometimes startling) results derived from Lawson’s three-decade project of developing and defending, along with other participants of the Cambridge Social Ontology Group, an account of the nature of social reality. 

The Nature of Social Reality: Issues in Social Ontology provides the latest developments that Lawson has made in the field of social ontology. Here, he sets out an account of social ontology that has come to be regularly referred to as a theory of social positioning, demonstrating its explanatory power. An exciting feature of the book is that it sets out the theory of social positioning in its most advanced form to date and then puts it to work through analysing the nature of the corporation, money and emancipatory practice. Whilst Lawson is pursuing themes in social ontology at an advanced level, he takes great pains to ensure that the analysis is everywhere accessible. The detailed and provocative accounts of the corporation and of money provide ample illustrations of the enormous potential of the social positioning framework.  Read More »

Why so Hostile? Busting Myths about Heterodox Economics

Ingrid Harvold Kvangraven13 Comments

Call-for-Application-Pluralist-Economics

By Ingrid Harvold Kvangraven and Carolina Alves

“Economics is unique among the social sciences in having a single monolithic mainstream, which is either unaware of or actively hostile to alternative approaches.” (John King 2013: 17)

What does heterodox economics mean? Is the label helpful or harmful? Being outside of the mainstream of the Economics discipline, the way we position ourselves may be particularly important. For this reason, many around us shun the use of the term “heterodox” and advise against using it. However, we believe the reluctance to use the term stems in part from misunderstandings of (and sometimes disagreement over) what the term means and perhaps disagreements over strategies for how to change the discipline.

In other words, this is an important debate about both identification and strategy. In this blog, we wish to raise the issue in heterodox and mainstream circles, by busting a few common myths about Heterodox Economics – mostly stemming from the orthodoxy. This is a small part of a larger project on defining heterodox economics.

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Brexit’s Keynesian Lesson: Fundamental Uncertainty Revisited

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“About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know.”

An economist’s words but not meant to be a description of where things stand today in the aftermath of the Brexit referendum, though they might as well be. These are Keynes’s words from a 1937 article following the publication of his magnum opus, The General Theory of Employment, Interest and Money in 1936.Read More »

Why positive thinking won’t get you out of poverty

Farwa Sial10 Comments

attitude-be-positive-draw-262532.jpgBy Farwa Sial and Carolina Alves

In a recent article in the New York Times, the development economist Seema Jayachandran discusses three studies that used Randomised Controlled Trials (or RCTs) to understand the benefits of enhancing the self-worth of poor people. Despite wide differences in context, all the cases explore the viability of ‘modest interventions’ to ‘instill hope’ in marginalised communities, concluding that ‘remarkable improvements’ in the quest for poverty reduction are possible.

One of the studies from Uganda, for example, argues that “a role model can have significant effects on students’ educational attainment,” so the suggestion for policy-makers might be “to place more emphasis on motivation and inspiration through example.” Another case study of sex workers in Kolkata Brothels argues that “psychological barriers impede such disadvantaged groups from breaking the vicious circle and achieving better outcomes in life,” so small but effective changes that address these psychological constraints can alleviate the effects of poverty and social exclusion.

The underlying theme of these studies is that individuals can surmount the structural challenges of poverty through their own efforts using tools like ‘effective role models,’ the generation of ‘more hope,’ and the ‘improvement of their mental health.’ Positive psychology of this kind and an emphasis on behavior change to meet the goals of individuals have been around at least since the 1950s, first in the popular literature of self-help books and now in academia, where they form part of an increasingly fashionable trend to ‘do poverty reduction differently.’Read More »

The Power of the Market

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“The ‘market’ is a bad master, but can be a good servant.”
– S. Chakravarty (1993: 420)

In the world today, more and more interpersonal interactions are replaced by market transactions. The market system is both an economic and a cultural phenomenon, yet we seem to be hardly aware of the values that are bound up in it. This phenomenon is manifest at many levels: from the family, through the neighbourhood and the enterprise, to the nation and the globe. If there is such a thing as global ethics, I suggest, then they are – like it or not – the ethics of the market. My purpose here is to elaborate this claim, and to assess its implications. I shall distinguish between the market as a theoretical construct in economics, and the market as a social institution.

My main hypothesis can be briefly stated as follows: the most convincing ethical argument currently being made in favour of the market is its neutrality. Whether the market is in fact neutral may be disputed. But if one accepts this claim, it implies that the market is amoral, rather than immoral, and there remain, I suggest, two objections to allowing the market ethic to prevail. The first is that this is an abrogation of moral responsibility. It implies delegating decisions of major social and material significance to powers which are beyond our control, and whose outcome is uncertain. Second, the neutrality of the market comes at a cost in social and human terms; social relations between persons are replaced by contractual relations between economic agents.Read More »

Towards a Critical Pluralist Research Agenda in Development Economics: Some Bricks from Berlin to Build Upon

Svenja Flechtner1 Comment

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By Svenja Flechtner, Jakob Hafele & Theresa Neef

Much has been said about what’s going wrong in development economics – on this blog (for example by Adel Daoud, Ingrid H. Kvangraven, or Jacob Assa) and elsewhere (for example by Angus Deaton, Dani Rodrik, and Benjamin Selwyn), as well as in newspapers. Much has been written, too, about alternative perspectives and approaches to economic development thinking (this recent compilation by Reinert, Ghosh and Kattel gives an overview of many of them). But is it possible to build a coherent pluralist and critical framework out of these approaches? If so, what could a critical and pluralist research agenda for development economics look like?Read More »