Sheila C. Dow

The meaning of open systems

There has been considerable discussion lately of the concept of open systems, which has revealed that different participants are using the terms ‘openness’ and ‘closure’ in different ways. The purpose of this paper is to address issues of meaning that arise in this particular discourse, with a view to clarifying both conflicts in usage and the underlying issues involved. We explore the different meanings of openness and closure extant in the literature, as applied at the ontological and epistemological levels, focusing on our own use of the terms in relation to that which prevails in neoclassical economics on the one hand and to the use made of them by Tony Lawson and other critical realists on the other.

Regional Finance: A Survey

The role of money and ® nancial markets in the regional matters. 1 economy has been attracting increasing attention in We start with a review of the treatment of money recent years. It has been a topic of interest for longer in regional economics, and then turn to the much

Uncertainty about Uncertainty

‘To teach how to live without certainty, and yet without being paralysed by hesitation, is perhaps the chief thing that philosophy, in our age, can still do for those who study it’ (Russell, 1946, p. 14).

Why the banking system should be regulated

It has long been taken for granted that the financial system should be regulated. That this should now be open to question is to be welcomed. It is important in general to question assumptions, but it is particularly important to do so in the case of a sector which has undergone such major change over the last few decades. It is necessary therefore to go back to first principles and examine the implications of these principles in the current environment. The outcome outlined here is a renewed case for regulation, but one which takes account of the changing nature and role of banks. Historical evidence aids our understanding of these changes, but historical evidence must be used with care; the advocates of free banking misinterpret and misuse this evidence to support their position. The case for regulation rests on the very special economic role of money and the uncertainty associated with it. This uncertainty in turn renders free banking unworkable since the proposal requires the non-bank public to assess the expected value of the portfolios of the issuers of money. Adequate knowledge could only be generated if money-issuing were concentrated in a dominant institution, or set of institutions, which operated like a central bank. This outcome would only occur, and be socially acceptable, given a high degree of social cohesion. Rather than eradicating regulation on the grounds that it is flawed, and risking financial chaos, the more appropriate response is to consider how to improve regulation.

Methodological Pluralism and Pluralism of Method

Pluralism is the philosophical position that the ultimate reality of the universe consists of a plurality of entities; it is an ontological position. But the concept of pluralism can be applied at a variety of levels: to the (epistemological) understanding of reality (whether its ultimate nature is a plurality or not), to the methods employed to theorise about that understanding of reality, to the methodology which sets the criteria for theory choice and to the study of methodologies themselves. Pluralism has been advocated at all of these levels in economics discourse. Yet an understanding of what is entailed by methodological pluralism and pluralism of method has been hampered by lack of reference to epistemological and ontological foundations. In particular, pluralism takes on a different meaning in a closed-system mode of thought (as in mainstream economics) from its meaning in an open-system mode of thought (as in Post-Keynesian economics or institutional/evolutionary economics). The former can be thought of as ‘pure pluralism’, as the dual of a monist position, while the latter involves a more limited, although crucial, pluralism.

Prospects for the progress of heterodox economics

What are the prospects for progress in heterodox economics? The question posed for this roundtable discussion raises a wide range of important issues, for heterodox economics and for economics as a whole. In order to clarify some of these issues, this contribution approaches the question from a practical point of view: what strategy would promote the progress of heterodox economics?

Mainstream economic methodology

This is a survey of mainstream economic methodology, both in the sense of mainstream methodology and of mainstream economics. Tensions are identified in methodology resulting from an increasing preference for descriptivism over prescriptivism, and in economics resulting from an increasing preference for fragmentation over axiomatization. The increasing attention of methodologists to the actual practice of economists, and of economists to possibilities outside the traditional axiomatic strictures, are both welcome. But, still being based in a dualistic mode of thought, these developments threaten to go too far, denying methodology any constructive role and removing any focus on the foundations for theorizing. Nonmainstream methodology is shown to offer a nondualistic solution which could resolve current tensions. Copyright 1997 by Oxford University Press.

Monetary Policy with Endogenous Money and Liquidity Preference: A Nondualistic Treatment

Abstract: This paper builds on a synthesis of endogenous money and liquidity preference theory to address the mechanisms by which monetary policy takes effect. We focus on the United Kingdom, under a range of institutional arrangements. Rather than operating solely by means of “the” exogenous interest rate, we consider the real process by which the central bank exerts its influence on the banking system, and how that is transmitted to the credit market and the money market. The focus is on process rather than equilibrium, and on the state of expectations, departing from the usual dualism between the interest rate and the money supply.

Post-Keynesianism as political economy: a methodological discussion ∗

The purpose of this article is to develop a means of classifying post-Keynesianism with reference to methodology. I have attempted to achieve this by distinguishing between different types of realism. When we integrate this with the important notion of vision, best viewed as a means of understanding rather than appraising alternative perspectives, a more robust characterization of post-Keynesianism becomes possible.

Keynes's Epistemology and Economic Methodology

For most of us, the notion of epistemology is somewhat daunting. As a ‘theory of knowledge’ or (etymologically more correct) ‘theory of science’, epistemology seems to operate at a rarefied level, far removed from applied economics. In the hands of some (e.g. McCloskey, 1989), it performs the objectionable role of setting out the ground rules for economic method, thereby limiting the scope for enquiry by practising economists. In this form, epistemology is at least separable from the levels of method, theory and the object of theory, and thus relatively easy to identify. In Keynes’s hands epistemology was not separable; it imbued, and was imbued by, his methodology, his theory, his policy prescriptions and his perception of real economic processes. Indeed it is in the nature of his epistemology that it should do so.