Philosophy and economics, also philosophy of economics, studies topics such as rational choice, the appraisal of economic outcomes, institutions and processes, and the ontology of economic phenomena and the possibilities of acquiring knowledge of them.
It is useful to divide philosophy of economics in this way into three subject matters which can be regarded respectively as branches of action theory, ethics (or normative social and political philosophy), and philosophy of science. Economic theories of rationality, welfare, and social choice defend substantive philosophical theses often informed by relevant philosophical literature and of evident interest to those interested in action theory, philosophical psychology, and social and political philosophy.
Economics is of special interest to those interested in epistemology and philosophy of science both because of its detailed peculiarities and because it has many of the overt features of the natural sciences, while its object consists of social phenomena.
Scope
Definition and ontology of economics
The question usually addressed in any subfield of philosophy (the philosophy of X) is "what is X?"
A philosophical approach to the question "what is economics?" is less
likely to produce an answer than it is to produce a survey of the
definitional and territorial difficulties and controversies. Similar
considerations apply as a prologue to further discussion of methodology in a subject. Definitions of economics have varied over time from the modern origins of the subject, reflecting programmatic concerns and distinctions of expositors.
Ontological
questions continue with further "what is..." questions addressed at
fundamental economic phenomena, such as "what is (economic) value?" or
"what is a market?". While it is possible to respond to such questions
with real verbal definitions, the philosophical value of posing such
questions actually aims at shifting entire perspectives as to the nature
of the foundations of economics. In the rare cases that attempts at
ontological shifts gain wide acceptance, their ripple effects can spread
throughout the entire field of economics.
Methodology and epistemology of economics
An epistemology deals with how we know things. In the philosophy of economics this means asking questions such as: what kind of a "truth claim" is made by economic theories – for example, are we claiming that the theories relate to reality
or perceptions? How can or should we prove economic theories – for
example, must every economic theory be empirically verifiable? How exact
are economic theories and can they lay claim to the status of an exact
science – for example, are economic predictions as reliable as
predictions in the natural sciences, and why or why not? Another way of
expressing this issue is to ask whether economic theories can state
"laws". Philosophers of science and economists have explored these
issues intensively since the work of Alexander Rosenberg and Daniel M. Hausman dating to 3 decades ago.
Rational choice, decision theory and game theory
Philosophical approaches in decision theory focus on foundational concepts in decision theory – for example, on the natures of choice or preference, rationality, risk and uncertainty, and economic agents.
Game theory is shared between a number of disciplines, but especially mathematics, economics and philosophy.
Game theory is still extensively discussed within the field of the
philosophy of economics. Game theory is closely related to and builds on
decision theory and is likewise very strongly interdisciplinary.
Ethics and justice
The ethics of economic systems deals with the issues such as how it is right (just, fair) to keep or distribute economic goods. Economic systems as a product of collective activity allow examination of their ethical consequences for all of their participants. Ethics and economics relates ethical studies to welfare economics.
It has been argued that a closer relation between welfare economics and
modern ethical studies may enrich both areas, even including predictive
and descriptive economics as to rationality of behavior, given social
interdependence.
Ethics and justice overlap disciplines in different ways.
Approaches are regarded as more philosophical when they study the
fundamentals – for example, John Rawls' A Theory of Justice (1971) and Robert Nozick's Anarchy, State and Utopia (1974). 'Justice' in economics is a subcategory of welfare economics with models frequently representing the ethical-social requirements of a given theory. "Practical" matters include such subjects as law and cost–benefit analysis
Utilitarianism, one of the ethical methodologies, has
its origins inextricably interwoven with the emergence of modern economic thought.
Today utilitarianism has spread throughout applied ethics as one of a
number of approaches. Non-utilitarian approaches in applied ethics are
also now used when questioning the ethics of economic systems – e.g.
rights-based (deontological) approaches.
Many political ideologies have been an immediate outgrowth of reflection on the ethics of economic systems. Marx,
for example, is generally regarded primarily as a philosopher, his most
notable work being on the philosophy of economics. However, Marx's
economic critique of capitalism did not depend on ethics, justice, or
any form of morality, instead focusing on the inherent contradictions of
capitalism through the lens of a process which is today called dialectical materialism.
Non-mainstream economic thinking
The philosophy of economics defines itself as including the
questioning of foundations or assumptions of economics. The foundations
and assumption of economics have been questioned from the perspective of
noteworthy but typically under-represented groups. These areas are
therefore to be included within the philosophy of economics.
- Praxeology: a deductive theory of human action based on premises presumed to be philosophically true (following the analytic–synthetic distinction of Immanuel Kant). Developed by Ludwig von Mises within the Austrian School, is a self-conscious opposition to the mathematical modeling and hypothesis-testing to validate neoclassical economics.
- Cross-cultural perspectives on economics, and economic anthropology: an example is the Buddhist-inspired Bhutanese "Gross National Happiness" concept (suggested as a better development measure than GNI/GDP). Amartya Sen is a renowned advocate for the integration of cross-cultural phenomena into economic thinking.
- Feminist perspectives on economics, or feminist economics.
Scholars cited in the literature
Related disciplines
The ethics of economic systems is an area of overlap between business ethics and the philosophy of economics. People who write on the ethics of economic systems are more likely to call themselves political philosophers than business ethicists or economic philosophers. There is significant overlap between theoretical issues in economics and the philosophy of economics. As economics is generally accepted to have its origins in philosophy, the history of economics overlaps with the philosophy of economics.
Degrees
Some universities offer joint degrees that combine philosophy, politics and economics.
These degrees cover many of the problems that are discussed in
Philosophy and Economics, but are more broadly construed. A small number
of universities, notably the LSE, the Erasmus University Rotterdam, Copenhagen Business School and the University of Bayreuth offer master's degree programs specialized in philosophy and economics.
