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TWO ACCOUNTS OF THE RELATION BETWEEN POLITICAL ECONOMY AND ECONOMICS (AND WHY IT MATTERS WHICH ACCOUNT IS BETTER)

Published online by Cambridge University Press:  07 January 2021

Shaun P. Hargreaves Heap
Affiliation:
Political Economy, King’s College London, United Kingdom

Abstract

In a providential account of the changing relation between political economy and economics, the late nineteenth-century development of economics is identified with the rational choice model; and the revival of political economy in the late twentieth century comes with the export of this model to politics and the other social sciences. An alternative prudential account locates the revival of political economy with a significant qualification to the rational choice model. This qualification restores an eighteenth- and nineteenth-century view of rule-following to human agency. This essay sets out these accounts and draws the conclusion that the choice of one over the other matters, not least for the practice of contemporary politics.

Type
Research Article
Copyright
© Social Philosophy & Policy Foundation 2020

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References

1 Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations (The Project Gutenberg EBook, [1776] 2009), chap. 1.Google Scholar

2 Lucas, Robert, “Econometric Policy Evaluation: A Critique,” Carnegie-Rochester Conference Series on Public Policy 1 (1976): 1946.CrossRefGoogle Scholar

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6 See David Hume, A Treatise of Human Nature (HarperTorch ibook edition, 2014 [1738]), Book III, Part II, Section II, “Of Origin of Justice and Property.”

7 Hume, Treatise, Book III, Part II, Section II, “Of Origin of Justice and Property”, p. 743.

8 Hume, Treatise, ibid.

9 Hume, Treatise, Book III, Part II, Section VII, “Of the Origin of Government,” p. 798.

10 Hume, Treatise, ibid.

11 Hume, Treatise, Book III, Part II, Section VII, “Of the Origin of Government,” p. 800–802.

12 Gauthier, David, Morals by Agreement (Oxford: Oxford University Press, 1986).Google Scholar

13 See Sobel, JordanConstrained Maximization,” Canadian Journal of Philosophy 21, no. 1 (1991): 2551 and the discussion on pages 189–91 in Shaun Hargreaves Heap and Yanis Varoufakis, Game Theory: A Critical Text (London: Routledge, 2004). Of course, this leaves open the question as to whether, nevertheless, we have the capacity to choose a disposition. That is, once we choose to be constrained maximizers in the Gauthier sense, is that it? Are we thereafter unrevisable constrained maximizers?CrossRefGoogle Scholar

14 Or it will need a different sense of reason. This is the traditional cue for Kant to awake, as he said from his slumbers. But equally it could be a cue for the late Wittgenstein type of sociology that works with the other insight of behavioral/experimental economics: our reliance on rules for epistemic reasons. The argument that follows is in this sociological vein. For a modern reworking of the Kantian response, see Braham, Matthew and van Hees, Martin, “The Formula of Universal Law: A Reconstruction,” Erkenntnis 80, no. 2 (2015): 243–60.CrossRefGoogle Scholar

15 See Sugden, Robert, The Economics of Rights, Co-operation and Welfare (Oxford: Basil Blackwell, 1986) for an account along these lines that builds on David Lewis’s understanding of a convention as a solution to a coordination game in Convention: A Philosophical Study (Cambridge, MA: Harvard University Press, 1969).Google Scholar

16 Behavioral economics has been important, not just in revealing that we are frequently motivated by social preferences; it has also revealed that we frequently depart from what the rational choice model suggests in noninteractive settings. For example, our decisions are influenced by framing and anchoring and reveal inconsistencies. I will not be drawing on that evidence here. However, I have argued, in Shaun Hargreaves Heap, “What is the Meaning of Behavioural Economics?” Cambridge Journal of Economics 37, no. 5 (2013): 985–1000, that much of that evidence points to the instability of our preferences. It is this instability, due in the argument of this essay to the influence of social preferences, that will be a key part of my later argument. In this way, the noninteractive experimental evidence can also be thought to support the key argument of this essay.

17 Gintis, Herb, “A Typology of Human Morality,” in Wilson, David and Kirman, Alan, eds., Complexity and Evolution (Cambridge, MA: MIT Press, 2016) provides an interesting account according to which people have both private and distinctly political, public personas, and each persona is represented by distinct preferences.Google Scholar

18 See, for example, Acemoglu, Daron and Robinson, James A., Why Nations Fail: The Origins of Power, Prosperity and Poverty (London: Profile Books, 2012) and Alberto Alesina and Eliana La Ferrara, “Ethnic Diversity and Economic Performance,” Journal of Economic Literature 43, no. 3 (2005): 762–800.Google Scholar

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20 Tocqueville, Democracy in America, 286–88.

21 Mill, John Stuart, Considerations on Representative Government (The Project Gutenberg EBook, 2004 [1861]).Google Scholar

22 Mill, Considerations on Representative Government, 66–67.

23 See Buchanan and Tullock, Calculus of Consent and George Stigler and Gary Becker, “De Gustibus Non Est Disputandum,” American Economic Review 67, no. 2 (1977): 76–90.

24 Brennan, Geoffrey and Buchanan, James, The Reason of Rules (Cambridge: Cambridge University Press, 1985), 56.Google Scholar

25 Frey, Bruno, “A Constitution for Knaves Crowds out Civic Virtue,” The Economic Journal 107 (1997): 1043–53, provides an early influential argument along these lines and a recent interesting illustrative experiment; Armen Falk and Nora Szech, “Morals and the Market,” Science, (2013): 707–11.CrossRefGoogle Scholar

26 Heap, Shaun Hargreaves and Zizzo, Daniel, “The Value of Groups,” American Economic Review 99, no. 1 (2009): 295323,CrossRefGoogle Scholar illustrate the in-group bias, for instance, in a Trust Game; and Philip Corr, Shaun Hargreaves Heap, Charles Segar and Kei Tsutsui, “An Experiment on ‘Parochial Altruism’ Revealing No Connection between Individual Altruism and Individual Parochialism,” Frontiers in Psychology, August 2015, article 1261, find that the in-group bias in one decision problem is not a good predictor of an in-group bias in another.

27 See for example The Economist, Briefing: “The Post-Truth World: Yes I’d Lie to You,” September 10, 2016 and Ralph Keyes, The Post-Truth Era: Dishonesty and Deception in Contemporary Life (New York: St Martins, 2004).

28 Amadae, Sonja, Prisoners of Reason: Game Theory and Neoliberal Political Economy (New York: Cambridge University Press, 2015).CrossRefGoogle Scholar

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TWO ACCOUNTS OF THE RELATION BETWEEN POLITICAL ECONOMY AND ECONOMICS (AND WHY IT MATTERS WHICH ACCOUNT IS BETTER)
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