PhD_07
Chapter 7: Conclusion; glossary; and bibliography
Links to the other chapters:
Title
page, dedication, contents, key words, abstract and acknowledgements
Chapter
1: Introduction: Holism versus reductionism in economic thought
Chapter
2: the Prisoners' Dilemma
Chapter
3: Arrow's Impossibility Theorem
Chapter
4: The Invisible Hand of God in Adam Smith
Chapter
5: Friedrich Hayek: a Panglossian evolutionary theorist
Chapter
6: Keynes’s methodological standpoint and policy prescription
Chapter 7 Conclusion
1 Retrospective: Keynes and providentialism
In a holist view of the world, the individual agents composing an economic system are, and are primarily, components of a social totality: their life process is determined by their mutual relations, the totality of which is the economic system. Under capitalism, however, the individual agents are divorced from each other and their relations are refracted through their sole link with society: the money nexus. This gives them the appearance of independent, asocial, biological totalities, and hence gives the real social totality the appearance of a mere congeries.
It is in a sense immaterial where the economist commences his or her study of society, whether (s)he ‘starts’ from the part and deduces therefrom the nature of the whole, or vice versa. Friedman, for example, correctly observes that both he and Keynes work ‘from the top down’, while many monetarists and Keynesians work in the opposite direction (Friedman, 1976: 316). That makes no difference: what matters is not where you ‘start’ but where you end up: do you understand the economy as a totality – with Keynes, Marx, Hayek, and Smith – or as a congeries – with Friedman, Lucas, and the neoclassical school.
Reductionism is implicit in the ‘classical’ methodology that Keynes criticised, as well as the methodology of those neoclassical writers, such as Friedman, who re-assert the claims of pre-Keynesian economics post-Keynes. The agent is a rational, utility-maximising being; since society is merely a mass of like individuals, the results of the analysis of his behaviour can be applied directly to society as a whole. Thereby the latter is shown to be a rational, welfare-maximising aggregate of many individuals. Protracted, general, involuntary unemployment is not possible: no rational individual would under-utilise scarce resources, so humanity in the aggregate must necessarily be just as rational. On the other hand, the appearance of unemployment can be explained away as false appearance concealing the intrinsic rationality of the system: irrationality on the level of the system cannot be the fault of the system but only of the individuals comprising it – so apparent unemployment must in fact be voluntary, caused, for example, by wage rigidity or other micro-irrationality.
Keynes, summarising his whole approach in a passage to which I have already drawn attention, goes straight to the heart of this question:
“I have called my theory a general theory. I mean by this that I am chiefly concerned with the economic system as a whole … And I argue that important mistakes have been made by extending to the system as a whole conclusions which have been correctly arrived at in respect of a part taken in isolation.” (GT: xxxii)
Keynes is saying that the principal differentia of his method from that of the ‘classical economists’ is that the system as a whole cannot be considered as a mere congeries of individuals ‘taken in isolation’. This is so because those individuals are not isolated from each other: what one does affects others. An individual’s decision to save or to invest, for instance, has consequences for other individuals who are not party to the relevant transaction and hence unable to affect its outcome.
In this clash between the private form and public consequences of the decisions to consume, and to save, to hold money and to invest, we see again the combination of independence in form and interdependence in content of those decisions, which lies at the heart of the prisoners dilemma. Keynes sees this clash between private action and public consequence as remediable only by the removal of the anachronistic private form of decision-making. Hence Keynes’s opposition to laissez-faire and his demands for social control of the propensity to consume, for the ‘comprehensive socialisation of investment’, and for ‘communal saving through the agency of the state’ (GT: 378, 376).
Keynes’s holism lies essentially in this: were the community as a whole, or some state agency representing it, to control saving and investment, there would need never be any discrepancy between the two. The desirability of the marginal unit of investment would be equal to the sacrifice involved in the marginal unit of saving, and with the accumulation of wealth, both would decline to zero.
The problem is the presence of an anachronistic institutional framework – laissez-faire – which fragments the decision-making process without mitigating the social consequences of the decisions made. The community can only do two things with its income: consume it or invest it. The individual acting on the basis of self-interest, however, has third alternative: he can hoard part of his income as money. Indeed, if he foresees any slackening of aggregate demand, he would be unwise not to, even if he realises the damage he will inflict on the economy thereby: ‘Every act of saving involves a ‘forced’ inevitable transfer of wealth to him who saves, though he in his turn may suffer from the saving of others.’ (GT: 212) Hence hoarding, which is the cause of the economic disease, is the rational response of individuals to the fear of that disease: ‘It may even be to the interest of individuals to aggravate the disease.’ (EP: 318). Though in practice the matter might be highly complex, the solution is in principle simple: that individuals should act no longer as individuals but as a collectivity, in so far as quantitative investment decisions are concerned.
* * *
The assumption standing behind pre- and post-Keynesian mainstream economics is that the unintended consequences of individual actions are essentially benign. This providential assumption pervades the writings of Smith and Hayek, Friedman and Lucas. Keynes devoted his theoretical life to the demonstration that unintended consequences, just because they are unintended, are uncontrolled and liable to be thoroughly malign:
“The world is not so governed from above that private and social interests always coincide … It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest.” (EP: 287-288) “There is no design but our own … the invisible hand is merely our own bleeding feet moving through pain and loss to an uncertain … destination.” (CWXX: 474)
Keynes’s rejection, in these passages, of providentialism and the invisible hand bring us full circle. The episodes in the history of economic thought considered in this thesis have shown that the combination in decision-making of independence in form and interdependence in content is an issue which continually re-emerges in political economy. At every stage there is a clash between the scientific and the vulgar, the desire to understand and explain, on the one hand, and fear of the consequences of doing so, on the other. Providentialism plays a key role here.
A relatively unsophisticated strategy of simply ignoring the disparity between levels has been noted but given little explicit attention: it has been assumed that for present purposes the reductionist methodology of the monetarist and new classical schools can be dismissed a limine. The bulk of the thesis has focused on two sophisticated attempts to underpin a reductionist laissez-faire policy prescription with a holistic methodology. Smith and Hayek, though separated by two centuries, have proposed very similar invisible hand mechanisms to mediate between the holistic nature of the world and the reductionist character of their desired policy framework. Consideration of Keynes has shone a light on their attempts: his account gives us an outstanding example of the fate of laissez-faire political economy if a holistic approach is not supplemented with the deus ex machina of an invisible hand.
The precise content of the two invisible hand mechanisms considered – the will of a deity in Smith and a group-evolutionary process in Hayek – was perhaps of less interest than the sheer fact of their existence. We were obliged to explore these propositions in detail to check their scientific status. Though from a systems perspective a default injunction, always to do nothing, is inherently implausible, there would be no justification for an a limine rejection. It might well have turned out that one or other of these proposed mechanisms grasped some unexpected aspect of the world. On the basis of that examination we may now see that that was not the case. Both turned out to be essentially ideological constructs, providential assertions which assumed what was to be demonstrated, namely the desirability of spontaneous outcomes.
Similarly, the precise content of Keynes’s escape from the twin strategies of reductionism, on the one hand, and holism plus an invisible hand, on the other, is perhaps of less interest than its existence. Keynes had a particular view of the class of which he was part – he saw it as a universal class in a Hegelian sense, leading humanity from darkness into light. He was also, in my reading, a virulent racist with very strong, deeply ambiguous feelings about Jews.[1] I believe that all of this shaped and coloured his reading of writers such as Ricardo and Marx, his positive analysis, and his policy prescription. So from the perspective of this thesis, the details are less important than the fact that he showed that there was an escape route: the economy is to be studied as a system and not as a congeries, and our default is to act, not to do nothing. Against the atomism of the ‘classical’ economists he argues for a clear, holistic, systems view, and against the providentialism of the invisible hand theorists he simply and clear-sightedly denies that any such providential mechanism exists, and shows in detail the implications, positive and normative, of that denial.
So for Keynes, the invisible hand ensuring that desirable social consequences flow from self-seeking individual behaviour is a myth: but the job it was supposed to do, the reconciliation of partially conflicting and partially overlapping interests, still needs to be done. This reconciliation is to be achieved in Keynes’s view by the universal class, the educated bourgeoisie, and, in particular, by the extra-parliamentary state which it will build, based around a board of national planning linking all the enterprises of the country to the central bank. For Keynes it is precisely the educated bourgeoisie which will take the place of the invisible hand.
2 Results and prospects
This thesis has thus used a review of some episodes in the history of economic thought to illuminate the ways writers have viewed the relationship between micro and macro levels in economics. The episodes considered are the prisoners’ dilemma in game theory, the libertarian response to Arrow’s impossibility theorem, Adam Smith’s invisible hand, Friedrich Hayek’s evolutionary theory, and the case made for planning by John Maynard Keynes.
A number of themes have emerged. Firstly, we saw that in a world of agents with partially overlapping and partially conflicting interests, prisoners’ dilemmas may arise and lead optimising agents spontaneously to suboptimal social outcomes. The appropriate policy prescription, the case for state action or otherwise in the economy, depends on the importance we attach to such suboptimalities. We have seen that the extent to which writers adopt a holistic or reductionistic approach is of great importance in appraising their overall standpoint and the policy prescription they promote. Nevertheless, we have also learnt that there is no strict relationship such that reductionists and only reductionists will support laissez-faire, and holists intervention. On the contrary, we have seen two towering examples of holists advocating laissez-faire: Smith and Hayek. The argument has been made that laissez-faire is essentially a reductionist policy prescription; that those advocating it face severe difficulties in what is in fact a holistic world; and that invisible hand mechanisms constitute an attempt to reconcile the two. We examined two examples: the invisible hand of an omnipotent, omniscient and beneficent deity in Adam Smith, and the group selection theory of the evolution of institutions in Friedrich Hayek. By contrast, in the case of John Maynard Keynes, we saw that when an explicitly holist standpoint is adopted, along with the explicit rejection of invisible hand mechanisms, then the logical result is a call for far-reaching reform and state activity in the economy.
The research begun here has opened many doors to further investigation. One example is the struggle with providentialism to be observed in the various editions of works by Thomas Malthus and his disciple, Charles Darwin (Poovey, 1998: 283; Darwin, 1928: 19-20, 462-3). Further instances include Walras’s struggle with the issue of coordination shown in the evolution and hypostatisation of the auctioneer through the first four editions of his Elements (Mirowski, 1989: 252). Lastly, there is the current resurgence of evolutionary ideas in political economy shown by Hodgson (1988, 1993) and Vromen (1995), to give just three examples of a burgeoning literature. These will constitute the starting points of future research in this area. Perhaps the most important underlying theme not so far explicitly addressed, but highly relevant for these proposed future studies as well as this thesis, is the continuing and fundamental importance of the Darwinian evolutionary theory of Richard Dawkins for an understanding of the key issues in political economy.
Glossary
Agent. An agent is an entity which carries out some action of interest, such as surviving, transmitting an impulse, buying a good, processing information or allocating resources between its functions. An agent can in principle exist at any level, micro or macro. A macro-level agent, then, is the aggregate or complex of all the micro-level agents composing it.
Aggregate. See under Micro and macro.
Apologetic. Of the nature of a formal defence or vindication. In the chapter on Smith, I identify an apologetic aspect to his work. Essentially, Smith is trying to defend two potentially incompatible things: the existing system of ranks and orders of society in politics, and the ‘simple system of natural liberty’ in economics.
Borda counts. A system of ascribing numbers to preferences such that in addition to the ranking of alternatives, some information on the intensity of preferences is impounded. On might, for example, give a weight of 3 to first choices, 2 to second, and 1 to one’s third choice. Then, instead of majority voting, one would arrive at a social choice by adding up the points scored by each alternative. Such a procedure defeats both the paradox of voting (qv) and Arrow’s impossibility theorem since we are no longer dealing with a purely ordinal ranking of individual preferences.
Cardinal. ‘The primitive numbers one, two, three, etc’ (Onions, 1973: 285) – but note that cardinals can take any value, positive, negative, fractional, etc, while ordinals can only have positive integer values. The older, cardinal approach to utility assumed not only that the consumer ranked consumption bundles, but that it was meaningful to speak of the magnitude of the utility yielded by these bundles, in terms of the (cardinal) number of ‘utils’ associated with each bundle. See also ordinal.
Classical. The term ‘classical’ is a source of much
confusion; it is much used in economics and, in particular, in the history of
economic thought, and indeed in highly inconsistent senses. It seems to me that there are at least three
meanings of the term in general use. Marx originally divided political economists into
‘classical’ and ‘vulgar’ classes, with Smith and Ricardo representing the
pinnacle of the scientific or classical group and, roughly, everyone after
Ricardo being consigned to the apologetic, or vulgar trend (Marx, 1972:
501). Keynes then borrowed the designation ‘classical economists’ from
Marx – and proceeded to use it in a completely different – almost opposite –
sense. For Marx, ‘classical’
political economy referred to scientific economics – that is, economics which,
he felt, tried to explain, rather than to explain away, the nature of
capitalistic production – from Petty in the late 17th century on, and
culminating in Smith and Ricardo.
Subsequent mainstream economists Marx designated ‘vulgar’, and
considered to be only interested in explaining away the undesirable features of
capitalism. For Keynes, on the
contrary, ‘classical’ economists are those mainstream economists, since
Ricardo, who, like Ricardo, adopt Say’s Law: he names JS Mill, Marshall,
Edgeworth and Pigou as examples (GT: 3). Hence, for Keynes, the labour theory of value of Smith and
Ricardo is ‘pre-classical’ (GT: 213), though logically Ricardo and Say
should be considered classical in Keynes’s schema since they both adopted Say’s
law. Marx, incidentally, while
designating Ricardo a classical economist, identified the adoption of Say’s law
as a vulgar element in Ricardo, unworthy of the rest of his contribution (Marx,
1968: 468, 502). Finally, in standard
History of Economic Thought contexts, ‘classical’ is generally taken to refer
to the principal economists – principally Smith, Ricardo, Malthus, the Mills,
and Marx – up to the marginal revolution of the 1870s, and ‘neoclassical’ to
those since.
Compatibilism. The view that causal determinism and moral responsibility are not mutually exclusive.
Connation. Sharing the same route into a subsequent generation. All a biological individual’s genes share a route into the next generation via the organism’s gametes – they thus share an interest in cooperating to ensure the success of those gametes. Parasite genes do not share a route to subsequent generations and thus are at liberty to damage host interests if it aids their own survival and reproduction. Memes and meme complexes do not share a route into the next generation with their human hosts and hence may have interests quite antagonistic to those hosts.
Congeries. A collection of things merely heaped together.
Consequentialism. The view that what gives our actions their moral character is their consequences. The claim that the deliberate killing of one innocent person in order to save the lives of more than one other person is a morally justified act would be a consequentialist claim. The end can justify the means. The opposite of deontology (qv).
Coordination. In an ensemble of interacting purposive elements coordination arises when the actions of the individual elements are consistent rather than chaotic and mutually defeating.
Cyclical preferences. Suppose three individuals, A, B, and C, and three possible policies or states of the world, x, y and z. Suppose also that the pattern of preferences is
A: x > y > z
B: z > x > y
C: y > z > x.
Simple majority voting on each pair of alternatives will elicit the social preference that x is preferred to y, y to z, and z to x: we are left going round in circles and each policy is preferred to both of the others by a 2-to-1 majority:
S: x > y > z > x …
See also, transitivity and transitive closure.
Decisiveness. In social choice theory, the preference of a decisive individual or group on some specific alternative about states of the world that we can bring about, is automatically the society’s preference, whatever anyone else’s preference may be. Decisiveness refers only to one alternative while dictatorship (qv) refers to all alternatives on which the society must choose.
Deontology. The view that some actions are right and others wrong by virtue of their intrinsic nature, regardless of the consequences of those actions. The end cannot justify the means. So, to refuse to tell a lie, even to save someone’s life, would be a deontological standpoint. The opposite of consequentialism (qv).
Dictatorship. An individual, or a group of individuals with identical preferences, is a dictator if its preferences over every possible state of the world that the society can bring about are automatically the society’s preferences, regardless of the preferences of other members of the society.
Dominant strategy. Player’s strategy (qv) in which the rationally optimal moves are independent of the moves made by the other player(s).
Emergence. Emergence is the idea that features of an entity at a particular level may ‘emerge’ at that level, that is, are not reducible to features of the underlying substrate of the entity. Emergence is therefore a characteristic of holist modes of thought. See also holism and reductionism.
Evolutionarily stable strategy (ESS). An ESS is a strategy such that, if all members of a population adopt it, then it is immune from invasion by any mutant strategy (Smith, 1982: 10). ESS is a close biological analogue of the concept of Nash equilibrium (qv).
Fallacy of composition. The fallacy of composition asserts that what is true of the parts taken in isolation is true of the whole. Thus Plott claims that the concept of social preferences is based on the fallacy of composition since ‘the concept of social preference involves an illegitimate transfer of the properties of an individual to the properties of a collection of individuals’ (Barry and Hardin, 1982: 242).
Genotype. ‘The genetic constitution of an organism at a particular locus or set of loci. Sometimes used more loosely as the whole genetic counterpart to phenotype’ (Dawkins, 1989b: 287). See also phenotype.
Idealism. A
philosophical standpoint in which the phenomenological world which we observe
is seen as the product of a reality standing behind it, and the substance of
that reality is thought or ideas or abstract forms. So, for example, Plato’s Theory of Forms is held to be a species
of idealism: we see a variety of forms of appearance, but they are all products
of and reducible to a few abstract geometrical forms. A materialist would say the forms are obtained in our minds by
abstraction from the things we see, an idealist that the things we see are
obtained by an obscure process of materialisation of the pre-existing forms or
ideas. See also materialism.
Holism. The view that phenomena at one level can be understood as emergent at that level, that a higher level entity can be understood as a product of the interrelationships between its component parts. The opposite of reductionism (qv). See also micro and macro, and micro-macro dichotomy.
Materialism. The philosophical standpoint in which the fundamental nature of the world we see is taken to be matter in motion. Thoughts, ideas, forms, are all held to be reflections of the material world, by a material, physiological process of abstraction, in brains which are themselves just one particular part of that physical world. See also idealism.
Meme. The units of selection in biological evolution are genes, the corresponding units of selection in cultural evolution are cultural traits or features with the capacity to be adopted, consciously or unconsciously, by human beings (Dawkins, 1989a: 192, 1989b: 290).
Micro and macro. Micro and macro just mean small or lower-level and big or higher-level. They are relative concepts. An atom is a macro level phenomenon as far as electrons, protons, quarks, neutrinos and so on are concerned; it is a micro concept as far as molecules, cells, organisms, etc, are concerned. Similarly, in economics, a market is a macro level concept when discussing the behaviour of agents within it, and a micro concept when looking at the whole economy. I also use the terms substrate and aggregate to refer to micro and macro level phenomena, respectively.
Micro-macro dichotomy. The putative failure of rationality at the micro level, the level of the individual agent, to guarantee rationality at the macro level, the level of the whole society.
Monism. The
view that ultimate reality consists of only one kind of stuff. Consistent idealism (qv) and
materialism (qv) are monist, since they hold that reality consists
exclusively of ideas, or matter, respectively.
The opposite of pluralism, which holds that there are many kinds of
stuff in the world. Cartesian dualism,
in which there are material bodies but also souls, is a species of
pluralism.
Nash equilibrium. An equilibrium in which each agent is doing the best it can, given what all the other agents are doing. Closely related to the concept of an evolutionarily stable strategy (qv).
Natural law. The conception that there are certain divinely appointed principles of human conduct, awaiting discovery by human reason, with which human law must conform if it is to be valid (Hart, 1961: 182, 152).
Neoclassical.
Mainstream economists since the marginal revolution of the 1870s.
Ontogeny. The
process of development of the individual organism from foetus to sexually
mature adult. See also phylogeny.
Ordinal.
‘Marking position in an order or series, as first, second,
third, etc’ (Onions, 1973: 1460).
Opposite of cardinal (qv). In the ordinal approach to utility, we only assume information on
whether a bundle of commodities yields more, less, or the same utility to the
consumer than (as) an alternative bundle.
Paradox. A
statement or condition that in some sense seems self-defeating. In the strong or logical sense, a paradox is
the bringing together of two (not necessarily distinct) incompatible but
apparently irrefutable statements.
‘This statement is false’ is a version of the Epimenides or Liar
Paradox, used in the Gödel indecidability theorem. In the weak sense, a paradox is a
statement merely contrary to orthodox belief. The parable of the Good Samaritan is paradoxical, not
because it was logically incoherent for Jesus to posit such an entity, but
because he knew his audience would have strong negative defaults about people
from Samaria. Keynes’s paradox of
thrift is in this latter category, as is the paradox of voting. In the latter, individuals with cyclical
preferences (qv) between a number of alternative actions are unable to
reach a coherent decision by simple majority voting on each pair of
alternatives. This result is
unexpected, rather than logically self-contradictory.
Pareto efficiency. An
outcome is Pareto-efficient if it is impossible to make an agent better-off
without making any other agent worse-off.
A change in behaviour causing a change in outcome which improves the
welfare of at least one agent without worsening that of any other agent is a
Pareto improvement. Pareto efficiency
is a minimal requirement of social welfare that most observers can agree on –
although a normative rather than a positive statement about the world, it is a
relatively robust one. It might not be
possible to agree what would constitute maximising social welfare, but still be
possible to agree that Pareto-inefficient outcomes show that social welfare is
not maximised.
Peripatetic. Aristotelian.
Phenotype. ‘The manifest attributes of an organism, the joint product of its genes and their environment during ontogeny’ (Dawkins 1989b: 292). See also genotype.
Phylogeny. ‘Ancestral history on the evolutionary timescale’ (Dawkins, 1989b: 292) – the sequence of forms taken by the species over long periods of time. See also ontogeny.
Providentialism. Belief in ‘the foreknowing and beneficent care and government of God (or of nature, etc); divine direction, control or guidance’ (Onions, 1973: 1696).
Quago. Quasi-autonomous governmental organisation. See also quango.
Quango. Quasi-autonomous non-governmental organisation. See also quago.
Rationality. Given an objective function to maximise, rational behaviour comprises just those actions which do in fact systematically maximise that function, within the constraints the agent is subject to. For example, an agent who fails to derive the maximum satisfaction from consumption because of systematic errors in forecasting the satisfaction to be gained from a particular class of commodities is acting irrationally. One mode of procedure would be to regard the problem – the agent’s habit of underestimating the enjoyability of a product, for example – as a constraint. The agent can then be defined to be acting rationally, given the constraint. This would be to define the problem away, and hence is a fundamentally uninteresting approach.
Reciprocity. The ability of players in a game to influence the behaviour of other players by the moves they themselves make.
Reductionism. The view that an entity at one level can be understood as an aggregate of entities at a lower, substrate level, that the properties and behaviour of higher level entities can be understood in terms of the properties and behaviour of its constituent lower level parts, taken in isolation, taken, that is, as a congeries (qv). The opposite of holism (qv). See also micro and macro, and micro-macro dichotomy.
Say’s Law. ‘Say’s Law’ is the view that ‘supply creates its own demand’ in the form of the revenues to the factors participating in production, hence we can only have offsetting over- and under-production in different sectors, but not generalised over-production. Suppose national income is Y. Now new output of DY is produced. All the factors combining to produce DY receive some compensation for their contribution. With this new revenue they demand additional products – perhaps some of the new product, perhaps some of the previously produced output. Now it may be that the demand for DY is greater than or less than this value, but that is an allocative matter: it just means that resources should be redirected towards this product and away from others, or vice versa. It has no meaning in this view to say that total demand is too high or too low.
Social welfare function (SWF). A measure of social happiness; a putative algorithm for reconciling and aggregating the preferences of members of society so that states of the world that we can bring about by our actions may be unambiguously ranked in terms of better and worse.
Solipsism. The view that only oneself exists.
Strategy. List of (or algorithm generating) all the moves that a player will make in all the different circumstances that can arise in the course of a game.
Substrate. See under micro and macro.
Teleology.
‘From the Greek word for goal, task, completion, or perfection. Teleological explanations attempt to account
for things and features by appeal to their contribution to optimal states, or
the normal functioning, or the attainment of goals, of wholes or systems they
belong to’ (James Bogen in Honderich,
1995: 868).
Theodicy. A vindication of God’s divine character in the face of the challenge of the existence of evil. The Theodicy of 1710 was the only book on philosophy Leibniz published in his lifetime. He argued that we necessarily live in the best of all possible worlds, since it was the one world, of all logically possible ones, which a necessarily morally perfect god had chosen to actualise. Hence any apparent imperfections in the world must be logically necessary ones.
Transitive closure. Cyclical preferences (qv) generate the preference ranking
S: x > y > z > x …
This violates transitivity (qv): x is preferred to y and y to z, but z is preferred to x. Hence the ranking is not an ordering. ‘Taking the transitive closure’ just means replacing such a preference ranking with the statement that
S: x = y = z = x
Which retains the salient fact that society is indifferent between the three alternatives, but restores transitivity.
Transitivity. Some relationships are transitive, some aren’t. ‘Older than’ is transitive: that Jane is older than Anne, and Anne is older than Jill, implies that Jane is older than Jill. ‘Is the mother of’ is intransitive: that Jane is the mother of Anne, and Anne is the mother of Jill, does not imply (indeed, in this case it precludes), that Jane is the mother of Jill.
Utilitarianism. A family of consequentialist views in which it is held that aggregate social welfare is an operational concept, a measurable entity which it is our duty and interest to maximise. The utilities of individual members of society feed into that aggregate, but it may be possible to trade off the utility of one member against that of another. A view fiercely opposed by the deontological standpoint, which argues that utilitarianism is an ideological cover for unjustified and immoral incursions into the freedom of members of society. See also social welfare function, consequentialism and deontology.
References and bibliography
A Anikin (1975) A Science in its Youth (Pre-Marxian Political Economy) Moscow: Progress Publishers (trans KM Cook)
Kenneth J Arrow (1951, 2e: 1963) Social Choice and Individual Values New Haven, Conn: Yale University Press
Robert Axelrod (1984; Penguin edition with Foreword by Richard Dawkins 1990) The Evolution of Co-operation New York: Basic Books
John D Barrow and Frank J
Tipler (1986, pbk ed with corrections 1988) The
Anthropic Cosmological Principle Oxford: Oxford University Press
Brian Barry and Russell Hardin (eds) (1982) Rational Man and Irrational Society? An introduction and sourcebook (London: Sage)
Norman P Barry (1988) The Invisible Hand in Economics and Politics. A Study in the Two Conflicting Explanations of Society: End-States and Processes London: Institute of Economic Affairs (Series title: Hobart Papers ed Arthur Seldon, No 111)
Carl L Becker (1932) The Heavenly City of the Eighteenth-Century Philosophers London: Yale University Press
David Begg, Stanley Fischer and Rudiger Dornbusch (3e: 1991) Economics London: McGraw-Hill
Ken Binmore (1994) Playing Fair. Game Theory and the Social Contract Vol I London: MIT Press
Susan Blackmore (1999) The
Meme Machine Oxford: Oxford University Press
Mark Blaug (3e: 1978) Economic Theory in Retrospect Cambridge: Cambridge University Press
Mario Bunge (2000) ‘Systemism: the alternative to individualism and holism’ The Journal of Socio-Economics 29: 147-157
Eamonn Butler ‘Foreword’, in KES: 7-8
RH Campbell and AS Skinner (1976) ‘General Introduction’ in Adam Smith (1976-1980) Volume II An Inquiry into the Nature and Causes of the Wealth of Nations (in two volumes), ed RH Campbell, AS Skinner and WB Todd
Anna Carabelli (1988) On Keynes’ Method London: Macmillan
Nancy Cartwright (1995) ‘Ceteris Paribus Laws and Socio-Economic Machines’ The Monist 78, 3, July, 276-294
PH Clarke (1996, 1998) ‘Adam Smith and the Stoics: The Influence of Marcus Aurelius’, University of the West of England, Faculty of Economics and Social Science, Working Papers in Economics No 18, April 1996; revised version January 1998, mimeo, School of Economics and International Studies, University of Lincolnshire and Humberside
B Corry (1978) ‘Keynes in the history of economic thought’. In AP Thirlwall (ed) (1978) Keynes and Laissez-Faire London: Macmillan
Rod Cross and Douglas Strachan (1997) ‘On George Soros and Economic Analysis’ Kyklos 50, 4, 561-574
Charles Darwin (1928) [1e: 1859] The Origin of Species [by means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life] London: J.M. Dent & Sons, Everyman’s Library
Richard Dawkins (2e:
1989a) [1e: 1976] The Selfish Gene
Oxford: Oxford University Press
Richard Dawkins (1989b) The Extended Phenotype: the Long Reach of the Gene Oxford: Oxford University Press. Second edition of Richard Dawkins (1982) The Extended Phenotype: the Gene as the Unit of Selection London: Freeman
Richard Dawkins (1995) River out of Eden – A Darwinian View of Life London: Phoenix/Orion
Andy Denis (1996a) ‘Collective and Individual Rationality in Economics: the Prisoners’ Dilemma’, City University, London, Department of Economics and Applied Econometrics Research Unit, Discussion Paper Series, 53
Andy Denis (1996b) ‘Collective and Individual Rationality in Economics: Arrow’s Impossibility Theorem’, City University, London, Department of Economics and Applied Econometrics Research Unit, Discussion Paper Series, 54
Andy Denis (1997) ‘Collective and Individual Rationality in Economics: The Invisible Hand of God in Adam Smith’, City University, London, Department of Economics and Applied Econometrics Research Unit, Discussion Paper Series, 62
Andy Denis (1999a) ‘Was Adam Smith an Individualist?’ History of the Human Sciences 12, 3, August, 71-86
Andy Denis (1999b) ‘Friedrich Hayek: a Panglossian evolutionary theorist’ Interdisciplinary Seminar Discussion Paper, City University, London, School of Social and Human Sciences
Andy Denis (2000) ‘Epistemology, observed particulars and providentialist assumptions: the Fact in the history of political economy’ Studies in the History and Philosophy of Science 31, 2, 353-361
Andy Denis (2001a) ‘Methodology and policy prescription in economic thought: a response to Mario Bunge’. Submitted to The Journal of Socio-Economics.
Andy Denis (2001b) ‘Was Hayek a Panglossian evolutionary theorist? A reply to Whitman’. Submitted to Constitutional Political Economy.
Daniel C Dennett (1993) Consciousness Explained London: Penguin Books
Daniel C Dennett (1995) Darwin’s Dangerous Idea. Evolution and the
Meanings of Life London: Penguin Books
Arthur De Vany (1996) ‘Information, chance, and evolution: Alchian and the economics of self-organisation’ Economic Inquiry XXXIV, 3, June, 427-443
Mohammed Dore (1997) ‘On Playing Fair: Professor Binmore on Game Theory and the Social Contract’ Theory and Decision 43, 3, November, 219-239
John Eatwell, Murray Milgate and Peter Newman (eds) (1989) ‘The New Palgrave’ The Invisible Hand London: Macmillan. Essays on ‘The Invisible Hand’ from John Eatwell, Murray Milgate and Peter Newman (eds) (1987) The New Palgrave: A Dictionary of Economics London: Macmillan
Antony GN Flew (1967) Evolutionary Ethics London: Macmillan (Series title: New Studies in Ethics ed WD Hudson)
Milton Friedman (1962) Capitalism and Freedom Chicago: Chicago University Press
Milton Friedman (1976) ‘Comment’ in J Stein (ed) (1976) Monetarism
Oxford: North-Holland Publishing Company
Roger W Garrison and Israel
M Kirzner ‘Friedrich August von Hayek’ in John Eatwell, Murray Milgate and
Peter Newman (1989) 119-130
Peter Gay (1964) The Party of Humanity. Studies in the French Enlightenment London: Weidenfeld and Nicolson
Peter Gay (1969) The Enlightenment: An Interpretation Vol II The Science of Freedom London: Weidenfeld and Nicolson
Alexander Gray (1931) The Development of Economic Doctrine. An Introductory Survey London: Longmans
Richard L Gregory (ed) (1987) The Oxford Companion to the Mind Oxford: Oxford University Press
Frank Hahn (1982) ‘Reflections on the Invisible Hand’ Lloyds Bank Review 144, April, 1-21 (The Fred Hirsch Memorial Lecture, Warwick University, 5 November 1981)
HLA Hart (1961) The Concept of Law Oxford: Clarendon Press/OUP
Alan Haworth (1994) Anti-libertarianism. Markets, philosophy and myth London: Routledge
For further discussion of works by Friedrich Hayek, please refer to the bibliographical note appended to Chapter 5 of this thesis.
Friedrich Hayek (1944) The Road to Serfdom London: George Routledge & Sons
Friedrich Hayek (1948) Individualism and Economic Order Chicago: University of Chicago Press; (reprinted, 1949, London: Routledge)
Friedrich Hayek (1952) The Sensory Order. An Inquiry into the Foundations of Theoretical Psychology London: Routledge & Kegan Paul
Friedrich Hayek (1e: 1952) The Counter-Revolution of Science. Studies on the Abuse of Reason Glencoe, Illinois (second edition, 1979, Indianapolis: LibertyPress)
Friedrich Hayek (1960) The Constitution of Liberty London: Routledge & Kegan Paul
Friedrich Hayek (1967) Studies in Philosophy, Politics and Economics London: Routledge & Kegan Paul
Friedrich Hayek (1978) New Studies in Philosophy, Politics, Economics and the History of Ideas London: Routledge & Kegan Paul
Friedrich Hayek (2e: 1978) (ed SR Shenoy) A Tiger by the Tail London: Institute for Economic Affairs
Friedrich Hayek (1982) Law, Legislation and Liberty. A new statement of the liberal principles of justice and political economy London: Routledge:
Volume 1 (1973) Rules and Order
Volume 2 (1976) The Mirage of Social Justice
Volume 3 (1979) The Political Order of a Free People.
Friedrich Hayek (1983) Knowledge, Evolution and Society London: Adam Smith Institute
Georg Wilhelm Friedrich Hegel (1952/1820) Hegel’s Philosophy of Right (ed, trans TM Knox) Oxford: Clarendon Press/OUP
Georg Wilhelm Friedrich Hegel (1975/1830) Logic (Part One of the Encyclopaedia of the Philosophical Sciences) (trans William Wallace, forward by FN Findlay) Oxford: Clarendon Press/OUP
Robert L Heilbroner (ed) (with the assistance of Laurence J Malone) (1986) The Essential Adam Smith London: Norton
Geoffrey M. Hodgson (1988) Economics and Institutions. A Manifesto for a Modern Institutional Economics Cambridge: Polity Press
Geoffrey M. Hodgson (1993) Economics and Evolution. Bringing Life Back into Economics Cambridge: Polity Press
Douglas R Hofstadter (1981) ‘Reflections [on Searle, 1980]’ in Hofstadter and Dennett (1982) 373-382
Douglas R Hofstadter (1985) Metamagical Themas Basic Books
Douglas R Hofstadter and Daniel C Dennett (eds) (1981, Penguin ed 1982) The Mind’s I. Fantasies and Reflections on Self and Soul London: Penguin
Ted Honderich (ed) (1995) The Oxford Companion to Philosophy Oxford: Oxford University Press
Kevin D Hoover (1995) ‘Is Macroeconomics for Real?’ The Monist 78, 3, July, 235-257
TW Hutchison (1977) Keynes vs the Keynesians …? London: Institute of Economic Affairs
TW Hutchison (1981) The Politics and Philosophy of Economics. Marxians, Keynesians and Austrians Oxford: Basil Blackwell
Immanuel Kant (1934) (trans JMD Meikljohn) [1st German ed: 1781, 2e: 1787] Critique of Pure Reason London: Dent Everyman’s Library
Immanuel Kant (1950) (trans Lewis White Beck) [1st German ed: 1783] Prolegomena to Any Future Metaphysics Which Will Be Able to Come Forth as Science New York: Bobbs-Merrill
John Kemp and Bruce Philp (1996) Epitaph for a Legless Centipede? A Paradox of Backward Induction Manchester Metropolitan University Discussion Papers in Economics and Economic History, Series No: 96-03, January 1996
For further discussion of works by John Maynard Keynes, please refer to the bibliographical note appended to Chapter 6 of this thesis.
John Maynard Keynes The Collected Writings of John Maynard Keynes eds: Richard Kahn, Roy Harrod, Austin Robinson et al, London: Macmillan/Royal Economic Society:
Volume VI (1971) [1e: 1930] A Treatise on Money Vol II
Volume VII (1973) [1e: 1936] The General Theory of Employment, Interest and Money
Volume IX (1972) [1e: 1931] Essays in Persuasion
Volume XIII (ed Donald Moggridge) (1973) The General Theory and After. Part I. Preparation
Volume XX (ed Donald Moggridge) (1981) Activities 1929-31. Rethinking Employment and Unemployment Policies
Volume XXI (ed Donald Moggridge) (1982) Activities 1931-1939. World Crises and Policies in Britain and America
Volume XXVII (ed Donald Moggridge) (1980) Activities 1940-1946. Shaping the Post-War World. Employment and Commodities
Volume XXIX (ed Donald Moggridge) (1979) The General Theory And After: A Supplement
P Lambert (1963) ‘The social philosophy of JM Keynes’, in John Cunningham Wood (ed) (1983) John Maynard Keynes: Critical Assessments London: Routledge
Harry Landreth and David C. Colander (3e: 1994) History of Economic Thought Boston: Houghton Mifflin
Titus Lucretius Carus (55 BC) De Rerum Natura. (i) trans, ed RE Latham (1951) Harmondsworth: Penguin, Series title: Penguin Classics, ed Betty Radice; (ii) trans, ed Martin Ferguson Smith (1969) London: Sphere
Robert E Lucas, Jr (1987) Models of Business Cycles Oxford: Blackwell
AL Macfie (1959) ‘Adam Smith’s Moral Sentiments as Foundation for his Wealth of Nations’ Oxford Economic Papers 2 (new series), October, 209-228
AL Macfie (1961) ‘Adam Smith’s Theory of Moral Sentiments’ Scottish Journal of Political Economy 8: 12-27
AL Macfie (1967) The Individual in Society. Papers on Adam Smith London: George Allen & Unwin (Series title: University of Glasgow Social and Economic Studies (New Series) ed Professor D.J. Robertson, Vol 11)
Alec Macfie (1971) ‘The Invisible Hand of Jupiter’ Journal of the History of Ideas 32: 595-99
Edward McCurdy (ed, trans) (1938) The Notebooks of Leonardo da Vinci London: Jonathan Cape
Fritz Machlup (ed) (1977a) Essays on Hayek London: Routledge & Kegan Paul
Fritz Machlup (1977b) ‘Hayek’s Contribution to Economics’ in
Machlup (1977a) 13‑59
Bryan Magee (1973) Popper London: Collins (series title: Fontana Modern Masters ed Frank Kermode)
Arthur Marwick (1970) The Nature of History London: Macmillan
Karl Marx (1843) ‘Critique of Hegel’s Doctrine of the State’ (trans Rodney Livingstone) in Marx (1975: 57-198)
Karl Marx (1968) Theories of Surplus Value Volume II, Moscow: Progress Publishers
Karl Marx (1972) Theories of Surplus Value Volume III, Moscow: Progress Publishers
Karl Marx (1974) Capital. A Critique of Political Economy Volume II The Process of Circulation of Capital London: Lawrence & Wishart
Karl Marx (1975) Early Writings Harmondsworth: Penguin/London: New Left Review (Series title: The Pelican Marx Library General Editor: Quintin Hoare)
Karl Marx and Friedrich Engels (1848) Manifesto of the Communist Party. In Karl Marx and Friedrich Engels (1976) pp 477-519
Karl Marx and Friedrich Engels (1976) Collected Works Vol 6 Marx and Engels: 1845-48 London: Lawrence & Wishart (for the Institute of Marxism–Leninism, Moscow)
Hyman P Minsky (1975) John Maynard Keynes London: Macmillan
Marvin Minsky (1985) The Society of Mind London: Picador/Heinemann
Philip Mirowski (1989) More Heat than Light. Economics as Social Physics: Physics as Nature’s Economics Cambridge: Cambridge University Press (Series title: Historical Perspectives on Modern Economics ed Craufurd D Goodwin)
James A Mirrlees (1997) 1996 Nobel Prize Lecture: ‘Information and Incentives: the Economics of Carrots and Sticks’ Economic Journal 107, 444, September, 1311-1329
Alan Nelson (1984) ‘Some issues surrounding the reduction of macroeconomics to microeconomics’ Philosophy of Science Vol 51: 573-594
Anthony O’Hear (1995) ‘Hayek, Friedrich August von’ (1899-1992) in Ted Honderich (ed) The Oxford Companion to Philosophy Oxford: OUP, 336
CT Onions (ed) (3e: 1973) The Shorter Oxford English Dictionary on Historical Principles (2 Vols) Oxford: Clarendon Press
Gordon Pask (1961) An Approach to Cybernetics London: Radius Books/Hutchinson
Geoffrey Pilling (1986) The Crisis of Keynesian Economics: A Marxist View London & Sydney: Croom Helm
Mary Poovey (1998) A History of the Modern Fact. Problems of Knowledge in the Sciences of Wealth and Society Chicago: Chicago University Press
Karl R Popper (1957) The Poverty of Historicism London: Routledge & Kegan Paul. First published as articles in Economica XI (new series), 42 and 43 (1944) and XII, 46 (1945)
William Poundstone (1988) Labyrinths of Reason. Paradox, puzzles and the frailty of knowledge London: Penguin
DD Raphael (1985) ‘Smith’ in Keith Thomas (ed) (1997) Three Great Economists Oxford: Oxford University Press (Series title: Past Masters ed Keith Thomas)
DD Raphael and AL Macfie (1976) ‘Introduction’ in Adam Smith (1976-1980) Volume I The Theory of Moral Sentiments, ed DD Raphael and AL Macfie
DD Raphael and AS Skinner (1980) ‘General Introduction’ in Adam Smith (1976-1980) Volume III Essays on Philosophical Subjects, ed WPD Wightman and JC Bryce
Matt Ridley (1996) The Origins of Virtue London: Viking
Joan Robinson (1962) Economic Philosophy, Watts, reprinted 1964, 1966, Harmondsworth: Penguin/Pelican
George C Roche III (1977) ‘The Relevance of Friedrich A. Hayek’ in Fritz Machlup (ed) Essays on Hayek London: Routledge & Kegan Paul
Nathan Rosenberg (1989) ‘Bernard Mandeville’ in Eatwell et al (1989: 196-198)
Nathan Rosenberg (1990) ‘Adam Smith as Social Critic’ The Royal Bank of Scotland Review 166 ‘Special Adam Smith Edition’, June, 17-33
Rudy Rucker [Rudolf vB Rucker] (1e: 1982; 2e: 1995; Penguin ed: 1997) Infinity and the Mind. The Science and Philosophy of the Infinite London: Penguin Books
George H Sabine (3e: 1951) A History of Political Theory London: Harrap
Andrew Schotter (1985) Free Market Economics. A Critical Appraisal New York: St Martin’s Press
John R Searle (1980) ‘Minds, Brains and Programs’ in Hofstadter and Dennett (1982) Ch 22
John Searle (1984) Minds, Brains and Science. The 1984 Reith Lectures London: BBC
Amartya Sen (1970) Collective Choice and Social Welfare London: Holden-Day (Series title: Mathematical Economics Texts eds K Arrow et al)
Amartya Sen (1983) ‘The Profit Motive’ Lloyds Bank Review No 147, January 1983: 1‑20
Amartya Sen and Bernard Williams (eds) (1982) Utilitarianism and beyond Cambridge: Cambridge University Press
Arthur Shenfield (1977) ‘Scientism and the Study of Society’ in Machlup (1977a) 61‑72
Robert Skidelsky (1975) Oswald Mosley London: Macmillan
For further discussion of works by Adam Smith, please refer to the bibliographical note inserted as Section 2 of Chapter 4 of this thesis.
Adam Smith (1976-1980) The Glasgow Edition of the Works and Correspondence of Adam Smith Oxford: Clarendon Press/OUP (reprinted (1981-82) Indianapolis: Liberty Fund):
Volume I (1976/1776), The Theory of Moral Sentiments, ed DD Raphael and AL Macfie
Volume II (1976/1759), An Inquiry into the Nature and Causes of the Wealth of Nations (in two volumes), ed RH Campbell, AS Skinner and WB Todd
Volume III (1980) Essays on Philosophical Subjects, ed WPD Wightman and JC Bryce
John Maynard Smith (1982) Evolution and the Theory of Games Cambridge: Cambridge University Press
Jan Christiaan Smuts (1996/1926) Holism and Evolution Highland, NY: Gestalt Journal Press
Elliott Sober and David Sloan Wilson (1998) Unto Others. The evolution and psychology of unselfish behavior Cambridge, Massachusetts and London: Harvard University Press
Jim Tomlinson (1990) Hayek and the Market London: Pluto Press (Series title: Pluto Perspectives ed Robert Moore)
John Toye (1997) ‘Keynes on population and economic growth’ Cambridge Economic Journal 21, 1, January, 1-26
Arnold Toynbee (1972) A Study of History (new edition revised and abridged from the 12-volume edition (Toynbee, 1920-61) by Arnold Toynbee and Jane Caplan) Oxford University Press/Thames and Hudson
Jacob Viner (1927) ‘Adam Smith and Laissez Faire’ Journal of Political Economy Vol XXXV; a lecture given in 1926 and reprinted in Jacob Viner (1958), 213-245
Jacob Viner (1958) The Long View and the Short Glencoe, Ill: The Free Press
Jack J Vromen (1995) Economic Evolution. An Enquiry into the foundations of New Institutional Economics London: Routledge (Series title: Economics as Social Theory ed Tony Lawson)
William Wallace (ed, trans) (1975) [1st English ed: 1873, 1st German ed: 1830] Hegel’s Logic Oxford: Clarendon Press/OUP
AMC Waterman (1997) ‘Economics as Theology: Adam Smith’s Wealth of Nations’, paper presented to the Southern Economic Association.
WPD Wightman (1980) ‘Introduction’ in Adam Smith (1976-1980) Volume III Essays on Philosophical Subjects, ed WPD Wightman and JC Bryce.
Send me an email: a.denis at city.ac.uk.
Back to my research page.
Revised: Saturday, 13 September 2003