G. R. Steele

Keynes and Hayek : The Money Economy

1. Introduction 2. Vision in Economics 3. Philosophy and Political Economy 4. Money Issues 5. Macrodisequilibriam 6. Keynes and SENIE Macromodels 7. Value Theory and Monetary Theory 8. Money, Capital and Cycles 9. Austrians and Post-Keynsians 10. Economic Guidance

Critical thoughts about critical realism

Abstract As microeconomic calculus and macroeconomic estimation superseded earlier approaches to political economy, broad questions about how things are (ontology), how things might be known (epistemology), and how science should proceed (methodology) were neglected. As a corrective, Critical Realism (CR) has been proposed as an alternative to the orthodox deductive‐nomological (ODN) tradition; i.e., to mathematical deduction and statistical induction. In their place, retroduction—the use of analogy, metaphor, intuition and ordinary language—is supposed to illuminate root causes by identifying the deep mechanisms that govern events. CR offers guidelines for social science that are of a most general kind: from initial “premises,” retroduction proceeds to hypotheses about deep structures and mechanisms. The initial premises are determined by a desire to understand events that surprise us. However, nothing is thereby excluded, including ODN. And since historical processes are revealed neither by assumption nor by the net effects of whatever initial conditions hold, it might be apposite to drop the search for (deep) socio‐economic laws and to use whatever evidence is at hand to see whether, and the extent to which, ideal types apply to any given historical sequence.

Networks, Knowledge and Entrepreneurship

Abstract Neural activity and social activity share close parallels, particularly the fact that spontaneous adaptations are paramount in both realms. Environmental pressures require organisms and societies to adapt to new and uncertain situations. Adaptations create, respectively, stronger neural and social networks that may, in turn, make the system more resilient to future uncertainties—but only if the adaptations are beneficial to the system.

Hayek’s Legacy

Hayek considered that some of the distinctions he had chosen to make were of such importance as to warrant a special vocabulary. Since this vocabulary has not entered into common usage, a reiteration of the salient features of Hayek’s legacy is an opportunity to present a brief glossary of his preferred terminology. Praxeology is the science of human action, in which the a priori approach is adopted: the surest axioms are those discovered through introspection. This use of introspection is an important advantage the social sciences have over the physical sciences, and it contrasts with scientism which is the slavish and misguided imitation of the method and language of the physical sciences. The use of statistical aggregates to estimate parameters pertaining to market forces at work is bogus.

The Economic Thought of Henry Calvert Simons:Crown Prince of the Chicago School

Drawing on years of research, Gerald Steele delves into the diverse ideas of Henry Simons, a neglected economist whose work in the 1930s on monetary and financial instability is extremely relevant to today’s debates about commercial bank credit, the interdependence of fiscal and monetary policy, and financial regulation. Steele describes the emergence of the first Chicago school of economics and its distinctive difference to the School subsequently associated with the Monetarism of Milton Friedman, and shows how Simons provides the basis for what is now referred to as ‘the fiscal theory of the price level’ and how this differs from the monetarist attempt to control prices by controlling the supply of broad money. This book will be of interest to advanced students and researchers of the history of economic thought, economic history, macroeconomics and banking and finance.

Hayek’s Pure Theory of Capital

The Elgar Companion to Hayekian Economics provides an in-depth treatment of Friedrich August von Hayek’s economic thought from his technical economics of the 1920s and 1930s to his broader views on the spontaneous order of a free society. Taken together, the chapters show evidence both of continuity of thought and of significant changes in focus.

Complexity and Degeneracy in Socio-economic Systems

Complexity has relevance to socio-economic systems. In particular, complexity has long been a theme in behavioral economics. Herbert Simon, the leader/founder of the Carnegie branch of (old) behavioral economics, was concerned with the issue of complexity, not only as it relates to the economy, but also in physical, biological and all social systems. This is evidenced by his writings during the early days of the formation of behavioral economics, at Carnegie Tech. Examples are his essays “The Architecture of Complexity” and “The Organization of Complex Systems” (Simon, 1962; 1973). Simon provided a general definition of complex systems: Roughly by a complex system I mean one made up of a large number of parts that interact in a non-simple way. In such systems, the whole is more than the sum of the parts, not in an ultimate metaphysical sense, but in the important pragmatic sense that, given the properties of the parts and the laws of their interaction, it is not a trivial matter to infer the properties of the whole. (Simon, 1962, p. 468) By that definition Simon directed his focus upon the hierarchical structure of systems. In the above essay, Simon continues: the central theme that runs through my remarks is that complexity frequently takes the form of hierarchy …. By a hierarchic system, or hierarchy, I mean a system that is composed of interrelated subsystems, each of the latter being, in turn, hierarchic in structure. (ibid.)

Keynes, Keynesianism and Krugman

Short courses in economics carry an implicit warning: superficial analysis leads to simplistic conclusions. Where textbooks might be forgiven, a Nobel-Prize-winning economist who builds upon that superficiality deserves a reprimand.

CRITICAL REALISM AND THE ONTOLOGICAL TURN: REJOINDER TO LEWIS

Abstract I agree with Paul Lewis that mathematics has a valuable but not all-encompassing role in economics, that event regularities must be supplemented with a persuasive narrative, and that inferences can inform our understanding of economic behavior. However, Lewiss full-throated defense of critical realism does little to allay my original concerns. It is absurd to maintain, as critical realists do, that mainstream economics has nothing valuable to offer heterodox economists, as their critique of the quantity theory of money tries to demonstrate. More crucially, critical realists—unlike Austrian economists—neglect to provide an epistemological explanation of economic actors’ perceptions, which is necessary if we are to bridge critical realisms own division of the social world into the “actual,” “empirical,” and “non-actual real.”

REFLECTING UPON KNOWLEDGE: HAYEK'S PSYCHOLOGY AND SOCIAL SCIENCE

Purpose – To present the argument that the paradigm of spontaneously self-ordering open adaptation is common to Hayeks thesis on the mind (The Sensory Order) and to his presentations of social science (the social order). Methodology/approach – To show how Hayeks methodological stance for social science interrelates with his theoretical work in neuroscience and psychology, where the ‘connectionist’ paradigm is relevant to extensive writings upon the human condition. Findings – •close parallels across biological, psychological and social adaptations give a basis for determining which methods are appropriate to gain knowledge about knowledge;•broad confirmation is evident that methods of proven worth to physical science have little relevance for the analysis of psychological and social phenomena, which are more complex than the phenomena of the material world. Research limitations/implications – •that the social order rests upon common beliefs;•that no simple distinction separates subjective and objective knowledge;•that any drive for social science to match the precision of physical science is misguided;•that in seeking an objective focus, behaviourism eliminates crucial introspective insights upon motivation and goals. Originality/value of paper – The presentation is one of exegesis showing the relevance of Hayeks seminal work in theoretical psychology to the broadest themes of human understanding and social adaptation.