Beyond Individualism in Law and Economics (original) (raw)
Related papers
2012
A chapter on the methodology of law and economics, i.e. the economic analysis of law, concerns the methodology of economics. The above quote (Becker 1976, 5) shows that economics should not be defined by its subject, but by its method (also Veljanovski 2007, 19). This method forms the core of our contribution. We discuss several related issues. In his entry on methodology in the Encyclopedia of Law and Economics, Kerkmeester (2000) states that most legal economists follow a pragmatic, eclectic approach and that it is hard to fit them in a particular school. A review of the methodology of law and economics must therefore concentrate on the ideas which are shared by the vast majority of legal economists (Kerkmeester 2000, 383). De Geest defines the use of elements from different schools as the ‘integrated paradigm’, and the predominant approach to law and economics as the ‘mainstream approach’ (De Geest 1994, 459ff, Mackaay 1991, p. 1509). In law and economics, the economic approach o...
Methodological Individualism: Still a Useful Methodology for the Social Sciences?
Atlantic Economic Journal, 2022
This paper explains the role of methodological individualism as a methodology for the social sciences by briefly discussing its forerunners in economics and sociology, especially in the works of Carl Menger and Max Weber, followed by some comments on Karl Popper’s and other critical rationalists’ contributions as well as rational choice theories. Some recent arguments against methodological rationalism are then provided, including counterarguments, mainly based on exemplary work by economists and sociologists. This paper proposes a scheme for analyses using (weak) methodological individualism, in particular, arguing that evolutionary approaches to the explanation of economic and other social phenomena that accord with methodological individualism suggest that it is a successful and progressive methodology for economics and sociology.
This article focuses on a broad distinction within economic thinking and the methodological misconceptions that are implied by it. We find today, on the one hand, mainstream economics, which uses both the method of abstract rationality typical of the logical-formal sciences and the method of the natural sciences—two methodologies that, as we shall prove, are inappropriate for the study of social reality. On the other hand we find the opponents of mainstream economics, primarily heterodox economics, who emphasize methodological pluralism and lend, in the extreme, their support to the relativist view that all views may be right in their own way. Such an unconstrained pluralist attitude to method obstructs interaction and reciprocal understanding among students, the scientific appreciation of theoretical contributions and the same fecundating role of pluralism. We shall see that methodological diffuseness is the primary factor explaining the failure of attacks against mainstream economics and we shall look for a solution to this embarrassing impotence by searching for general methodological procedure and rules fully appropriate to the scientific study of social reality.
2 3 Cross-Disciplinary Economic Theory
A knowledge economy still produces goods and services, although by the important use of knowledge. Therefore, economic models are relevant to understanding how a knowledge economy should properly work, particularly the financial system in a knowledge economy. When finance fails, all knowledge stops. Cross-disciplinary approaches to societal models of a knowledge economy are necessary and useful, because societies are more complex than can be seen by any single social science discipline. This was dramatically demonstrated in the first decade of the twenty-first century by the major failure of mainstream economic theory, as a basis for financial regulation. The surprising thing was that the economic discipline as a whole did not take this empirical opportunity to rethink economic theory, to build together a new and valid theory. Instead, the schools of economics continued to argue with one another. We take this historical case of scholastic conflict to reexamine economic theory, but within a cross-disciplinary framework. We use the modeling that had been accomplished in the two conflicting economic schools-exogenous and endogenous schools. Each modeled parts of an economic system, production subsystem (exogenous school) and financial subsystem (endogenous school). But neither succeeded in modeling the whole of an economic system. Within a larger cross-disciplinary framework of societal dynamics theory, we show how to assemble these partial models into a more complete economic model.