Value, Historicity, and Economic Epistemology : An Archaeology of Economic Science

This volume appears at a time when we are seeing an unprecedented degree of reflection on the discipline of economics. Economic and finan-cial crises have sparked off periods of reflection in the past, but this time feels different. Mainstream economics has evolved somewhat to reflect the changing environment. At the same time, the policy discourse has been drawing increasingly on a wider range of ideas from other schools of thought in order to address crises in the economy, in finance, in climate, in health and in state provision of physical and social infrastructure. We are beginning to see signs of these changes being embedded in economics education, ensuring a more lasting set of changes to economic theorizing in the future. A key factor has been the organization and activities of the international student movement (notably in the form of Rethinking Economics and INET’s Young Scholars Initiative) seeking a more pluralist education from a wider philosophical and historical perspective. Although it has been a focus of heterodox schools of thought for a long time, reflection on the discipline is being given new life. Foreword Contents About the Author List of Figures List of Tables 1 Introduction An Archeology Why Foucault? Epistemology, History of Economic Thought and History of Ideas Epistemology and Historicity The History of Economic Ideas and the Historical Method Historicity and Substantial Hypothesis The General Problematic The General Structure of the Book References Part I An Archeology of Economic Science: From the Physiocrats to the Neoclassics 2 History of Sciences and Epistemology History of Science and Epistemology: Internal History Versus External History? The Different Conceptions The Autonomy of the Scientific Field and the Progress of Science The Autonomization Process A Relative Autonomy Historicity and Epistemology The General Problem Some Examples in Economic Science Episteme and Economic Science The Scientific Community: A Heroic Hypothesis Foucault’s Contribution Episteme: A First Approach The Different Epistemes Episteme, Historicity and Economy Kunh and Foucault Convergences and Divergences The Dynamics of Change References 3 From Physiocratic School to Neoclassical Economics The Physiocratic School and Adam Smith Physiocracy Adam Smith: Labor Value Versus Utility Value? The Labor Value Theory Utility The Ambivalence The Labor Value Theory: Ricardo and Marx The Ricardian Theory of Value The Incorporated Labor Theory The Ricardian Concept of Capital Marx Neoclassical Economics: The “Triumph” of Utility Value The Theory of Subjective Utility Value The Aggregate Quantity of Capital History of Economic Thought, Episteme and Historicity Episteme and Nature of Ruptures A Taxonomy of Different Schools of Thought Physiocracy Smith Ricardo and Marx The Neoclassical School References 4 The Different Epistemological Trajectories: From Archeology to Genealogy Autonomization of Economic Science and Substantial Hypothesis Autonomization of Economic Science A Progressive Emancipation The Substantial Hypothesis: A First Approach The Substantial Hypothesis in Different Paradigms Wealth, Value and Historicity: The Rupture Introduced by Ricardo The Classical Economy Marx Neoclassical Economics: Mercantile Objectivity A Premonitory Intuition from Cultural Economics The Exclusion of Cultural Goods from the Field of Economic Theory: The Van Gogh Paradox Use Value: The Relational, Social and Historical Dimension The Different Epistemological Trajectories A Winding Path A Reconstruction of Internal History Some Controversies About the Theory of Value Keynes Versus Neoclassical Economics: Blaug’s Interpretation The Incommensurability of Different Paradigms An Episteme Proper to Economic Science? The Definition of the Object of Study References Part II Epistemological Ruptures: Three Contemporary Examples 5 The Reswitching of Techniques and Its Epistemological Implications: A Deepening of Criticism The Architecture of Neoclassical Macroeconomics The Main Causal Relations of Neoclassical Macroeconomics The Starting Point of Neo-Ricardian Criticism Stability, Equilibrium Instability and Substitution Principle The Loanable Funds Theory Convergence to the Steady State The Reswitching of Techniques: A Deepening of Neo-Ricardian Criticism The Traditional Presentation The Fundamental Mechanisms The Implicit Hypothesis The Different Cases A Deepening of Criticism Some Logical Fallacies An Alternative Analysis Final Remarks References 6 Hayek and Neoclassic Economics: Some Dangerous Liaisons? Hayek’s Scientific Research Program Methodological Monism and Universalism The Hayekian Individualism The Nature of Capital The Nature of the Rupture Between Hayek and the Neoclassical Economics Equilibrium and Adjustment Mechanisms The Hayekian Modus Operandi Capital Scarcity and Economic Cycle Savings, Business Cycle and Money Nature Finances, Expectations and Auctioneer Real Cycle Theory or Monetary Cycle Theory? Information and Prices: The Competitive Order Final Observations References 7 Money, Finance and Real Economy Keynes and the LFT: The Fundamentals of Criticism and the Affirmation of the Non-Neutrality of Money Keynes’s Critique Interest Rate and Liquidity Preference The Interest Rate Determination Preference for Liquidity and Idle Money: The Ambiguities Present in GT Speculative Finance, Spillover Effect and Non-neutrality of Finance Productive Versus Speculative Finance Liquidity Preference and Idle Money Propagation Effects and Nature of the Banking System Final Remarks References 8 Beyond Episteme: The Concept of Order Individualism, Individual Rationality Limits and the Concept of Order The Modernity Paradoxes The Holistic Dimension Beyond Episteme Concept The Different Orders The “Liberal” Order The “Institutional” Order Welfare Economics and Social Cost Welfare Economics: Varian, Pindyck and Rubinfeld’s Model The Problem of Social Costs Some Limits Ricardo’s Theory of Differential Rent: An Other Order The Social Choice The Condorcet’s Paradox Arrow’s Impossibility Theorem The Impossibility of Defining a Purely Individual and Collective Rationality Democracy, Freedom and Law Final Remarks References 9 General Conclusion Foucault’s Contribution to the History of Economic Thought: An Archaeological View The Limits of Foucault’s Analysis with Regard to Economics Beyond Episteme: The Hybrid Concept of Order A Typology Orders and Episteme References Author Index Thematic Index This book aims to study, from an approach linked to epistemology and the history of ideas, the evolution of economic science and its differing seminal systems. Today mainstream economics solves certain problems chosen within the scope of "normal science" without questioning the epistemological foundations that support the paradigm within which they were conceived. Contrary to a Neoclassical interpretation, the historicist interpretation shows that, from the incommensurability of the different paradigms, it is impossible to conceive of a progress of economic science, in a long-term perspective. This book ultimately reveals, from the different economic schools of thought analyzed, that there is no pure form of episteme, or system of understanding. Each concrete episteme in the history of economic thought is by nature hybrid in the sense that it contains components from preceding systems of knowledge. Alain Herscovici is Full Professor of the Department of Economics and the Postgraduate Program in Economics, at the Federal University of Espirito Santo (UFES), Brazil, and leader of the CNPq (National Council for Scientific and Technological Development) Research Group on Macroeconomics. He is the author of Essays on the Historicity of Capital, published by Palgrave Macmillan in 2019