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Philosophy and economics, also philosophy of economics, studies topics
such as rational choice, the appraisal of economic outcomes, institutions and
processes, the status of highly idealized economic models, the ontology of
economic phenomena and the possibilities of acquiring knowledge of them.[1] It
is useful to divide philosophy of economics in this way into three subject
matters which can be regarded respectively as branches of action theory, ethics
(or normative social and political philosophy), and philosophy of science.
Economic theories of rationality, welfare, and social choice defend 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. Economics is of special
interest to those interested in epistemology and philosophy of science both
because of its detailed peculiarities and because it has many of the overt
features of the natural sciences, while its object consists of social
phenomena.[2]
Scope Definition and ontology of economics The question usually addressed in
any subfield of philosophy (the philosophy of X) is "what is X?" 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 of methodology in a subject. Definitions of
economics have varied over time from the modern origins of the subject,
reflecting programmatic concerns and distinctions of expositors.[3] Ontological
questions 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.[4] Methodology and epistemology of economics Main article:
Economic methodology An epistemology deals with how we know things. In the
philosophy of economics this means asking questions such as: what kind of a
"truth claim" is made by economic theories – for example, are we
claiming that the theories relate to reality or 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 of Alexander Rosenberg and Daniel M. Hausman
dating to 3 decades ago.[5] Rational choice, decision theory and game theory
Main articles: Decision theory and Game theory Philosophical approaches in
decision theory focus on foundational concepts in decision theory – for
example, on the natures of choice or preference, rationality, risk and
uncertainty, and economic agents.[6] Game theory is shared between a number of
disciplines, but especially mathematics, economics and philosophy. 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.[7] Ethics and justice Main articles:
Distributive justice and Justice (economics) The ethics of economic systems
deals with the issues such as how it is right (just, fair) to keep or
distribute economic goods. Economic systems as a product of collective activity
allow examination of their ethical consequences for all of their participants.
Ethics and economics relates ethical studies to welfare economics.[8] 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 behavior, given social interdependence.[9]
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)[10] and Robert Nozick's
Anarchy, State and Utopia (1974). 'Justice' in economics is a subcategory of
welfare economics[11] with models frequently representing the ethical-social
requirements of a given theory. "Practical" matters include such
subjects as law[12] and cost–benefit analysis[13] Utilitarianism, one of
the ethical methodologies, has its origins inextricably interwoven with the
emergence 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.[14] Many
political ideologies have 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
called dialectical materialism. Non-mainstream economic thinking Main article:
Heterodox economics 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
the analytic–synthetic distinction of Immanuel Kant). Developed by Ludwig
von Mises within the Austrian School, is a self-conscious opposition to the
mathematical modeling and hypothesis-testing to validate neoclassical
economics.[15][16] Cross-cultural perspectives on economics, and economic
anthropology: an example is the Buddhist-inspired Bhutanese "Gross
National Happiness" concept (suggested as a better development measure
than GNI/GDP). Amartya Sen is a renowned advocate for the integration of
cross-cultural phenomena into economic thinking.[17] Feminist perspectives on
economics, or feminist economics.[18]
Related disciplines The ethics of economic systems is an area of overlap
between business ethics and the philosophy of economics. People who write on
the ethics of economic systems are more likely to call themselves political
philosophers than business ethicists or economic philosophers. There is
significant overlap between theoretical issues in economics and the philosophy
of economics. As economics is generally accepted to have its origins in
philosophy, the history of economics overlaps with the philosophy of economics.
Degrees Some universities offer joint degrees that combine philosophy, 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 the London School of Economics,the Erasmus University
Rotterdam, Copenhagen Business School,the University of Vienna and the
University of Bayreuth offer master's degree programs specialized in philosophy
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
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