Chapter 6 moves from combatting capability shortfalls to expanding people’s capability development through capability gains. In addition to promoting people’s basic capabilities for what they can be and do, we can also promote their potential enhanced capabilities when societies are democratic and reduce social inequality. I argue this calls for envisioning the economy as a capability generation process rather than as income generation process (or preference satisfaction process) as the mainstream sees it. I address the relationship between democracy and capabilities, explain democracy in the social contract tradition as a system of public reason, discuss the nature of collective capabilities in terms of the idea of people forming collective intentions, and argue that this all entails seeing democratic societies as “open political systems” that allow for constant innovation and evolution in how diverse kinds of people settle upon and consent to rules that govern the decision-making practices they find functional to living together. Finally, I close by arguing that this is all inconsistent with the mainstream conception of private subjectivity. I return to the idea of a person’s self-narratives as a personal identity capability and suggest understanding it requires we rethink how subjectivity is socially embodied and socially situated – a topic taken up in Part III.

Chapter 3 links context-dependent choice with what has recently been called in economics the “reconciliation problem” between positive and normative economics, and argues that efforts to solve that problem have led to a number of different strategies for reconstructing economics’ individual conception. It first reviews the mainstream’s “inner rational agent” attempt to preserve Homo economicus and then contrasts two broad strategies for reconstructing economics’ individual conception based on opposing views of individual autonomy: an “internalist” view that makes it depend on private subjectivity, and an “externalist” view that makes it depend on economic and social institutions. The chapter reviews four, recent strategies in the literature which take the “externalist” view and move toward a socially embedded individual conception. All four make ability to adjust part of what people are, but all four remain attached to the idea that individuals are only made up of preferences. Thus, I argue they fail to explain how people are autonomous individuals able to choose and act freely.

The book’s closing Chapter 9 on change in economics begins with an examination of the methodological problem of explaining what counts as change, and argues change in economics needs to be explained in terms of economics’ relationships to other disciplines. It argues that economics’ core–periphery structure works to insulate its core from other disciplines’ influences upon it, minimizing their influences. This raises the question: Can other disciplines influence economics’ core and potentially produce change in economics? To investigate this question, the chapter develops an open–closed systems model of disciplinary boundary crossings and argues that economics’ core is only incompletely closed and consequently its adopting other disciplines’ contents can change its interpretation. Using the different forms of relationships between disciplines distinguished in Chapter 7, mainstream economics’ relations to other disciplines are argued to currently be interdisciplinarity, but may also be unstable and can break down. When and under what circumstances? Moving from what happens within social science, two sets of external forces influencing change in economics – change in how research is done and historical changes in social values and social expectations regarding what economics is and should be about – are argued likely to increase boundary crossings between economics and other disciplines, undermine the insularity of its core, and move economics toward being a multidisciplinary, more pluralistic discipline. What would then be especially different about economics would be that individuals are seen as socially embedded and an objective economics is seen as a normative, value-entangled science.

Chapter 4 lays out the book’s adaptive, reflexive capability view of socially embedded individuals. An important reason we ought to see people as adaptive is that this provides a basis for explaining how they make choices and act in changing, often highly uncertain environments – large worlds rather than small Bayesian ones. When we accept that choice is context-dependent, we need to be able to explain individuals’ behavior in the most demanding circumstances they can face. An implication of this framing is that, as in Simon’s procedural rationality view, behaviorally speaking there is really no maximization – only continual adjustment over time. To capture all this, I use a stock flow, state description/process description characterization of adaptive individuals, and then model their behavior more specifically as a capability choice/action capability pattern of behavioral adjustment that works via a reflexive feedback loop. Given that this individual conception also needs to satisfy the two identity criteria I used in Part I to evaluate the standard Homo economicus individual conception, I then show how an adaptive, capability individual conception successfully individuates people as distinct and independent. In light of how undemocratic economic and social institutions limit people’s capability development, I also discuss the circumstances under which they can be reidentified as the same individuals over time.

Chapter 1 provides philosophical foundations for the arguments of this book in discussing the issue of scientific objectivity in economics. It criticizes a closed science, “view from nowhere” conception of economics, and defends an open science, “view from somewhere” conception of economics as an objective science. The first conception is ascribed to current mainstream economics, is associated with its principle practices – reductionist modeling, formalization, limited interdisciplinarity, and value neutrality – and has as its foundation the abstract Homo economicus conception. Two problematic consequences of these practices are value blindness regarding the range and complexity of human values; fatalism regarding human behavior in employing a tenseless rather than tensed representation of time. In contrast, the principle practices of an open science, “view from somewhere” conception of economics as a science – complexity modeling, mixed methods, strong relationships to other disciplines, and value diversity – provide the foundations of a socially and historically embedded individual conception. The chapter closes with discussion of the question: Might mainstream economics be a science bubble?