Economic theory as political philosophy

Abstract

I defend the integrity of the question of what the cognitive status of economic theory could amount to, and I argue that the theory is best understood as a compartment of formal political philosophy, in particular a species of contractarianism. This seems particularly apt as an account of general equilibrium theory. Given the intentional character of the explanatory variables of economic theory and the role of information in effecting choice, it is argued that economic theory is unlikely to secure the predictive power that would enable it to function as a factual instead of a normative theory.

Notes

1 Rosenberg (1976). In the nineteenth century, John Stuart Mill and John Neville Keynes both devoted considerable attention to these questions. Mill’s approach has been impressively revived in Hausman, 1993.

2 Unless perhaps one adopts view associated with moral realism. I discuss such approaches in Rosenberg (1990).

3 One reason to think this is right is the large number of autobiographical admissions of neoclassical economists that they were attracted to economics by the socialist vision. But as Stigler is infamous for noting, nothing makes an intelligent person an opponent of central planning faster than a good dose of microeconomics.

4 Compare Weintraub (1985), chap. 6.

5 But see Rosenberg (1992), chap. 5.