Stefano Fiori

Visible and invisible order. The theoretical duality of Smith's political economy

The aim of the paper is to show that Adam Smith elaborated a distinctive image of nature related to economic discourse. In Smith, visible events (or interdependencies) must be connected to invisible principles which, in particular, should provide an explanation of the self-coordination processes (especially that of market). In a broad sense, this approach was adopted by a number of disciplines in Smiths time (especially the sciences of life), which focused the analysis of the organization of complex systems. Moreover, the conceptual pair (visibility and invisibility) is connoted in terms of theoretical duality, and the paper attempts to demonstrate how such duality is reproduced in Smiths economic categories.

Adam Smith on Relations of Subordination, Personal Incentives and the Division of Labour

In analysis of the reciprocal relations which link together the evolution of the relations of subordination, personal incentives, and the division of labor with special reference to the agricultural and the commercial stages, Adam Smith pointed out the exclusive role performed by personal incentives in increasing labor productivity. Subsequently, the authors note a change of emphasis due to the emergence of the mature stage of commerce. In this new context, the division of labor engenders a new form of property polarization, one connected no longer to land but to capital accumulation and which appears to act as an obstacle against social mobility. Copyright 1999 by Scottish Economic Society.

Hayek's theory on complexity and knowledge: dichotomies, levels of analysis, and bounded rationality

Hayek maintains that models of complexity must consider two closely interrelated factors: the large number of variables and the connections among them. These two conditions, which define complex phenomena, exhibit a different logical dimension. The former (the ‘large number of variables’) describes complexity in quantitative (numerical) terms; the latter provides a view of complex phenomena in logical-relational terms, and it is evoked to explain the emergent properties of the whole. Despite the close relation between these concepts, the first notion essentially prevails over the latter, delineating a distinctive configuration of the theory. This perspective also emerges when Hayek defines ‘dispersed’ and ‘inarticulate’ knowledge, and introduces the concept of the ‘explanations of the principles’. Finally, the notion of level of analysis is discussed in order to interpret Hayeks two concepts which define complexity.

Forms of Bounded Rationality: The Reception and Redefinition of Herbert A. Simon's Perspective

First, the paper seeks to show that Herbert Simons notion of bounded rationality should be interpreted in light of its connection with artificial intelligence. Second, offering four paradigmatic examples, the article presents the view that recent approaches that draw upon Simons heterodox theory only partially accept the teachings of their inspirer, splitting bounded rationality from the context of artificial intelligence, and replacing it with different analytical tools that help give new configurations to bounded rationality. The thesis is that these events can be interpreted as an implicit (and ideal) challenge for redefining what bounded rationality is.

ADAM SMITH ON METHOD: NEWTONIANISM, HISTORY, INSTITUTIONS, AND THE “INVISIBLE HAND”

Smith was influenced by Newton’s method. Nonetheless, he introduced elements that led him far from the Newtonian perspective. The present essay analyzes how historical dimensions, contingencies, institutions, and conflicting human inclinations modify a Newtonian horizon. Finally, the paper focuses on how, in Smith’s view, institutions determine “unintended outcomes,” which are sometimes opposed to those of the market. In this sense, the “invisible hand” is not only the result of the behavior of myopic individuals trying to improve their conditions; it is also the outcome of the work of institutions that operate as structures autonomous with respect to individuals.

Herbert A. Simon and Contemporary Theories of Bounded Rationality

Firstly, the paper seeks to show that Simons notion of bounded rationality should be interpreted in light of its connection with artificial intelligence. This connection points out that bounded rationality is a highly structured concept, and sheds light on several implications of Simons general view on rationality, especially as regards intentionality and instrumentality. Secondly, offering four paradigmatic examples, the article presents the view that recent approaches, which refer to Simons heterodox theory, only partially accept the teachings of their inspirer, splitting bounded rationality from the context of artificial intelligence, and substituting it with different analytical tools which help give new configurations to bounded rationality. In particular, consideration of the role of automatic, neurobiological, and unconscious mechanisms (and their interactions with deliberate reasoning) provides new perspectives on how (bounded) rationality works. The thesis is that these events can be interpreted as an implicit (and ideal) challenge for redefining what bounded rationality is.

Formal and informal norms: their relationships in society and in the economic sphere

Abstract The thesis put forward in this paper is that in social life in general, and in the economic sphere in particular, the relationships between formal norms and informal social norms can be interpreted in terms of either reciprocal complementarity or conflict. The concept of complementarity illustrates how the two kinds of norms cooperate with and reinforce each other, and describes under what circumstances formal norms can or cannot replace informal rules. Conversely, the notion of conflict between different kinds of norms distinguishes two forms of antagonism: prohibition (which occurs when one type of norm prohibits enforcement of the other), and mutual exclusiveness (which occurs when one type of norm crowds out the other, without this entailing prohibition).

Ideologies and beliefs in Douglass North’s theory

Abstract This article argues that North does not conceptualise the difference between ideologies as shared beliefs, which arise from shared mental models in consequence of bottom-up processes, and ideologies as views which stimulate top-down institutional processes, by means of which informal norms and existing beliefs are re-oriented. Top-down processes are possible because shared beliefs are characterised by variety and malleability, rather than by a (homogeneous) “cultural heritage”. Although in North’s theory the reciprocal influence between informal and formal norms is interpretable as an alternation of bottom-up and top-down processes, he does not develop this perspective.

Shifting Boundaries, Within and Outside Economics

The article is a contribution to a special issue on the shifting boundaries of economics at an era of fragmentation. By speculating on the origins of such fragmentation, the paper introduces readers to concepts like economics imperialism, paradigms in economics, pluralism and interdisciplinarity, in a historical perspective. It also aims to demonstrating that, by accepting the challenge and responsibility of exploring the current era of fragmentation, the history of economic thought can provide the theoretical ‘glue’ required for the analysis of economics in a post-foundational phase.

Pianificazione, mercato e organizzazioni in Herbert A. Simon

The thesis put forward in this paper is that Herbert A. Simon was a distinctive theoretician of decentralized decisional systems alternative to the market, from planning to organizations. This issue emerges from the convergence of four perspectives, each with a different role and influence on his intellectual life: administrative and organization theories, the bounded rationality approach, economic theory, and the epistemology of complex systems. Notwithstanding the changes over time in his scientific interests and methods, the conviction that planning and organizations as decentralized structures can often perform a coordinating function better than the market appears in both his juvenile and mature works.