Published by De Gruyter

Volume 4 Issue 1

January 2009

Issue of Capitalism and Society

Contents
Journal Overview

Article

June 23, 2009

David Hume and Modern Economics

Sheila C. Dow

Abstract

Hume's contribution to modern economics is normally thought of in terms of his early statement of the quantity theory of money, and to a lesser extent his views on trade and development. At a methodological level the influence from his empiricism is commonly traced to the development of econometrics. But if we explore his philosophy more fully, we find a much richer set of ideas which can illuminate the way we approach issues in modern economics. Here therefore we explore Hume's theory of human nature and his theory of knowledge in order to understand how he viewed economic behaviour as inherently bound up in other aspects of life. From this follows a perspective on the relations between economics and other disciplines (notably history, sociology and psychology) which may inform current explorations of these relations. This reading of Hume's approach to economics is illustrated by revisiting his theories of money and growth, and his approach to empiricism. Hume holds the potential for a much richer contribution to modern economics than is normally understood.

June 23, 2009

Nietzsche and the Economics of Becoming

Richard Robb

Abstract

Freud supposedly said that Nietzsche knew himself better than anyone who ever lived or is likely to live in the future. If the story is true, it's one of the best compliments of all time. Yet Nietzsche's psychological theories remain largely unknown to psychologists, philosophers and certainly to economists. These theories, taken together, constitute a profound attack on the foundations of neoclassical models in which individuals maximize the discounted flow of gratification they expect to receive. Scattered through Nietzsche's writings, we can find an alternative description of intertemporal choice motivated by overcoming obstacles. A principal objective of this paper is to show how Nietzsche's theory of overcoming can explain a great deal of observable behavior and solve important problems in economics.

Discussion and Commentary

June 23, 2009

Comment on "David Hume and Modern Economics" (by Sheila Dow)

Carl Wennerlind

June 23, 2009

Comment on "Nietzsche and the Economics of Becoming" (by Richard Robb)

James J. Heckman

Reader Response

June 23, 2009

Response to James Heckman's Comment

Richard Robb

About this journal

Effective January 1, 2013, Capitalism and Society will be published by the Social Science Research Network. CLICK HERE for more information.

The capitalist system is of great interest and importance in view of its outstanding dynamism relative to that of other systems tried in the past century. Yet the established body of economic theory—intertemporal, information-theoretic and game-theoretic—does not incorporate key elements of the capitalist dynamic: business innovation as distinct from technological advance and the contributions of entrepreneurs and financiers to the innovation process. As a consequence, established theory cannot capture the core of the dynamism. In fact, it contradicts the existence of such dynamism: capitalism is an evolving, unruly, open-ended system while the theory implies a deterministic future however buffeted it is by stochastic shocks.

The Center on Capitalism and Society aims to further understanding of the mechanisms of capitalist dynamism and the satisfactions it gives. Today’s established economics—the economics dominant in classrooms, banks and governments—misconceives the modern economy. This disconnect has consequences for how we understand history, how we make policy, and how we view capitalism. Its explanations fail and mislead at important junctures in modern history. Until economics is grounded on the basic character of modern economies—the ignorance, the uncertainty, and the new ideas for speculation and innovation—it limits and distorts our view. In capitalist economies, new commercial ideas are the driving force. The implementation of many of them is boundless because either they do not require technological advance or they induce the advance they need. Their formation, development and adoption lifts a capitalist economy's performance in most dimensions: productivity and pay, job creation and how rewarding the jobs are—mental stimulation, intellectual development and personal growth. Yet such new ideas raise difficulties owing to Knightian uncertainty about their value. Our task is to model the processes by which the entrepreneurs and financiers of capitalist economies generate and select new ideas for try-out and the ways in which consumers and producers manage to evaluate the new products and methods. With such models we can see better how one fabric of economic institutions might give better performance than another.

This publication (supported by a generous grant from the Kauffman Foundation) provides an outlet for scholarly work that advances the goals of the Center, especially for those articles whose length, subject matter, approach, etc. might preclude publication in a standard journal. We want to provide a stimulating forum for discourse of ideas that may not be proven beyond a reasonable doubt. Accordingly, we will publish papers along with the commentary of a reviewer, leaving room for “agreement to disagree.”