The Philosophy of Economics: An Anthology

537 Pages·2007·2.27 MB·English

by  Daniel M. Hausman

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THEPHILOSOPHYOFECONOMICS
Thisisacomprehensiveanthologyofworksonthephilosophyofeconomics,
including classic texts and essays exploring specific branches and schools of
economics.Otherthantheclassics,mostoftheselectionsinthethirdedition
arenew,andboththecomprehensiveintroductionandthebibliographyhave
beenrevampedtobringthevolumeuptodate.Thevolumecontainstwenty-six
chapters organized into five parts: (I) Classic Discussions, (II) Positivist and
PopperianViews,(III)IdeologyandNormativeEconomics,(IV)Branchesand
SchoolsofEconomicsandTheirMethodologicalProblems,and(V)NewDirec-
tionsinEconomicMethodology.Itincludescrucialhistoricalcontributionsby
figures such as Mill, Marx, Weber, Robbins, Knight, and Veblen, as well as
worksbytheleadingcontemporaryfigureswritingoneconomicmethodology,
includingfiveNobelLaureatesinEconomics.
Daniel M. Hausman is Herbert A. Simon Professor in the Department of
Philosophy at the University of Wisconsin–Madison. He previously taught at
theUniversityofMarylandatCollegeParkandCarnegieMellonUniversity.His
researchhasfocusedonmethodological,metaphysical,andethicalissuesatthe
boundariesbetweeneconomicsandphilosophy.IncollaborationwithMichael
McPherson, he founded the Cambridge University Press journal Economics
andPhilosophyandediteditforitsfirsttenyears.Hismostimportantbooks
include Capital, Profits and Prices (1981) The Inexact and Separate Science of
Economics (1992), Causal Asymmetries (1998) and, coauthored with Michael
McPherson,EconomicAnalysisandMoralPhilosophy(1996)anditsexpanded
secondedition,EconomicAnalysis,MoralPhilosophyandPublicPolicy(2006).
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The Philosophy of Economics
An Anthology
Third Edition
Editedby
DANIEL M. HAUSMAN
UniversityofWisconsin–Madison
iii
CAMBRIDGEUNIVERSITYPRESS
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Cambridge University Press
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Published in the United States of America by Cambridge University Press, New York
www.cambridge.org
Information on this title: www.cambridge.org/9780521883504
© Cambridge University Press 1984, 1994, 2008
This publication is in copyright. Subject to statutory exception and to the provision of
relevant collective licensing agreements, no reproduction of any part may take place
without the written permission of Cambridge University Press.
First published in print format 2007
ISBN-13 978-0-511-37141-7 eBook (NetLibrary)
ISBN-10 0-511-37141-1 eBook (NetLibrary)
ISBN-13 978-0-521-88350-4 hardback
ISBN-10 0-521-88350-4 hardback
Cambridge University Press has no responsibility for the persistence or accuracy of urls
for external or third-party internet websites referred to in this publication, and does not
guarantee that any content on such websites is, or will remain, accurate or appropriate.
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Contents
Introduction page 1
PART ONE. CLASSIC DISCUSSIONS 39
1. OntheDefinitionandMethodofPoliticalEconomy 41
JohnStuartMill
2. ObjectivityandUnderstandinginEconomics 59
MaxWeber
3. TheNatureandSignificanceofEconomicScience 73
LionelRobbins
4. EconomicsandHumanAction 100
FrankKnight
5. SelectedTextsonEconomics,History,andSocialScience 108
KarlMarx
6. TheLimitationsofMarginalUtility 129
ThorsteinVeblen
PARTTWO. POSITIVISTANDPOPPERIANVIEWS 143
7. TheMethodologyofPositiveEconomics 145
MiltonFriedman
8. TestabilityandApproximation 179
HerbertSimon
9. WhyLookUndertheHood? 183
DanielM.Hausman
10. PopperandLakatosinEconomicMethodology 188
D.WadeHands
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vi Contents
PARTTHREE. IDEOLOGYANDNORMATIVEECONOMICS 205
11. ScienceandIdeology 207
JosephSchumpeter
12. WelfarePropositionsofEconomicsandInterpersonal
ComparisonsofUtility 222
NicholasKaldor
13. ThePhilosophicalFoundationsofMainstream
NormativeEconomics 226
DanielM.HausmanandMichaelS.McPherson
14. WhyIsCost-BenefitAnalysisSoControversial? 251
RobertH.Frank
15. CapabilityandWell-Being 270
AmartyaSen
PARTFOUR. BRANCHESANDSCHOOLSOFECONOMICSANDTHEIR
METHODOLOGICALPROBLEMS 295
16. EconometricsasObservation:TheLucasCritiqueand
theNatureofEconometricInference 297
KevinD.Hoover
17. DoesMacroeconomicsNeedMicrofoundations? 315
KevinD.Hoover
18. EconomicsintheLaboratory 334
VernonSmith
19. Neuroeconomics:UsingNeurosciencetoMake
EconomicPredictions 356
ColinF.Camerer
20. TheMarketasaCreativeProcess 378
JamesM.BuchananandViktorJ.Vanberg
21. WhatIstheEssenceofInstitutionalEconomics? 399
GeoffreyM.Hodgson
PARTFIVE. NEWDIRECTIONSINECONOMICMETHODOLOGY 413
22. TheRhetoricofThisEconomics 415
DeirdreN.McCloskey
23. Realism 431
UskaliMa¨ki
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Contents vii
24. WhatHasRealismGottoDowithIt? 439
TonyLawson
25. FeminismandEconomics 454
JulieA.Nelson
26. CredibleWorlds:TheStatusofTheoreticalModelsinEconomics 476
RobertSugden
SelectedBibliographyofBooksonEconomicMethodology 511
Index 521
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viii