Virtues and Economics

Volume 3

Series Editors Peter Róna, University of Oxford, UK László Zsolnai, Corvinus University of Budapest, Hungary

Editorial Advisory Board Helen Alford, Pontifical University of St. Thomas Aquinas (“Angelicum”), Rome, Italy Luk Bouckaert, Catholic University of Leuven, Belgium Luigino Bruni, LUMSA University, Rome and Sophia University Institute, Loppiano Georges Enderle, University of Notre Dame, USA Carlos Hoevel, Catholic University of Argentina, Buenos Aires, Argentina John Loughlin, Blackfriars Hall, University of Oxford and Von Hügel Institute David W. Miller, Princeton University, USA Sanjoy Mukherjee, Rajiv Gandhi Indian Institute of Management Shillong, India Mike Thompson, GoodBrand, London, CEIBS Shanghai, and University of Victoria, Vancouver, Canada Johan Verstraeten, Catholic University of Leuven, Belgium Stefano Zamagni, University of Bologna, and Johns Hopkins University – SAIS Europe and Pontifical Academy of Social Sciences, Italy The series is dedicated to virtue ethics and economics. Its purpose is to relocate economic theory to a domain where the connection between the virtues and economic decisions, as that connection is actually experienced in everyday life, is an organic component of theory rather than some sort of an optionally added ingredient. The goal is to help develop a virtue-based economic theory which connects virtues with the contents of economic activities of individuals, unincorporated and incorporated economic agents. The primary context is Catholic Social Teaching but other faith traditions (especially Judaism, Islam, Hinduism, Buddhism, and Confucianism) will also be explored for their construction of virtues in economic action. Special attention will be made to regulatory and policy issues in promoting economic justice. The series connects virtue ethics with the core of economic theory and practice. It examines the basic and irreducible intentionality of human activities concerned with the production, distribution and consumption of goods and services. It considers the incommensurability of values as the central problem of economic decision making and examines whether that problem can be overcome by any means other than practical reason. This series will cover high quality edited volumes and monographs.

More information about this series at http://www.springer.com/series/15627 Peter Róna • László Zsolnai Editors

Economic Objects and the Objects of Economics Editors Peter Róna László Zsolnai Blackfriars Hall Business Ethics Center University of Oxford Corvinus University of Budapest St. Giles, Oxford, UK Budapest, Hungary

Includes one non exclusive license agreement - Dave Colander: Is Economics a Moral Science?

ISSN 2520-1794 ISSN 2520-1808 (electronic) Virtues and Economics ISBN 978-3-319-94528-6 ISBN 978-3-319-94529-3 (eBook) https://doi.org/10.1007/978-3-319-94529-3

Library of Congress Control Number: 2018949115

© Springer International Publishing AG, part of Springer Nature 2018 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Preface

The papers collected in this second volume of our Virtues and Economics series were delivered at a symposium held at the Las Casas Institute, Blackfriars Hall, Oxford University on 7th and 8th of July, 2017. Papers delivered at previous symposia, also at the Las Casas Institute and the Catholic University of Leuven, were published in our previous volume titled Economics as a Moral Science. These papers concern the moral content of economic life and the capacity of economic theory to accommodate that moral content. Our first volume traced and reflected the transformation of economics as a moral science into an analytic disci- ple and the consequences of that transformation. The essays in this volume address, from a variety of perspectives, the ontological characteristics of the subject matter of the discipline and challenge the assumption that the methodology of the natural sciences can be productively applied to the economy. The exclusion of the moral dimension of economic life from the axioms, models, and paradigms of modern economic theory, the notion that the economy is the product of the sorts of law-like regularities that characterise the natural sciences instead of being the product of human will, desire and action have had increasingly trou- bling consequences. Instead of the sort of stability that the discovery of law-like regularities are expected to secure, the search for analogies between the natural and the social sciences has generated increasing social, economic, environmental and political instability. If the wealth of the world has greatly increased, so has human suffering. A re-examination of the foundations of modern economic theory seems to be needed. The editors would like to thank the authors of these papers for their contribution and to express their enthusiastic support of the dialogue that has developed among them. We would also like to express our gratitude to the Mallinckrodt Foundation for its generous financial support without which these symposia could not have been organised, and thank the Las Casas Institute for its hospitality and administrative support to the 2017 symposium.

Peter Róna László Zsolnai

v Acknowledgement

The editors would like to acknowledge the financial support provided by the Mallinckrodt Foundation to the workshop held at Blackfriars Hall in 2017.

vii Contents

Part I Introduction 1 Ontology and Economics �� 3 Peter Róna

Part II The Importance of Ontology 2 Objects of Nature and Objects of Thought �� 11 Peter Róna 3 Positioning and the Nature of Social Objects �� 35 Stephen Pratten 4 Central Fallacies of Modern Economics �� 51 Tony Lawson

Part III Ontology of Modern Economics 5 Social Scientific Naturalism Revisited �� 71 Daniel M. Hausman 6 Is Economics a Moral Science? �� 85 David Colander 7 New Theoretical City or Dispersed Tribes? An Exploration Journey through Contemporary Heterodox Economics and Methodology �� 97 Carlos Hoevel

ix x Contents

Part IV Temporality, Reactivity and Crowding 8 Rational Choice Theory and Backward-Looking Motives �� 117 Roger Teichmann 9 Time-Value in Economics �� 125 Kevin T. Jackson 10 The Crucial Role of Reactivity in Economic Science �� 141 Bruno S. Frey 11 Economic Actors and the Ultimate Goal of the Economy �� 151 László Zsolnai

Part V Implications for Economic Policy 12 How Does the Methodology of Neoclassical Economics Eliminate the Question of Fairness? �� 163 Zoltán Pogátsa 13 Economics Is a Moral Science: A Value Based Approach �� 169 Arjo Klamer

Part VI Conclusion 14 Postscript on Ontology and Economics �� 185 Peter Róna

Index �� 193 About the Contributors

David Colander is Distinguished College Professor at Middlebury College, Vermont, USA. He has authored, co-authored, or edited 30 books and over 100 articles on a wide range of topics. These include Principles of Economics (McGraw- Hill), History of Economic Thought (with Harry Landreth) (Houghton Mifflin), Macroeconomics (with Ed Gamber) (Prentice Hall), Why Aren't Economists as Important as Garbagemen? (Sharpe), and MAP: A Market Anti-Inflation Plan (with Abba Lerner) (Harcourt Brace Jovanovich). He received his Ph.D. from Columbia University and has taught at Columbia University, Vassar College, the University of Miami, and Princeton University. He has been on the board of numerous economic societies and has been Vice President and President of the Eastern Economic Association and Vice-President of the History of Economic Thought Society. His latest work focuses on economic education, complexity, and the methodology appropriate to applied policy economics.

Bruno S. Frey is Permanent Visiting Professor at the University of Basel. He was Professor of Economics at the University of Konstanz from 1970–1977 and at the University of Zurich from 1977–2012, Distinguished Professor of Behavioral Science at the Warwick Business School at the University of Warwick, UK from 2010–2013 and Senior Professor of Economics at Zeppelin University Friedrichshafen, DE from 2013–2015. He is Research Director of CREMA – Center for Research in Economics, Management and the Arts and Co-Founder of CREW – Center for Research in Economics and Well-Being at the University of Basel. He was Managing Editor, from 1969–2015, and is now Honorary Editor of Kyklos. Bruno Frey seeks to extend economics beyond standard neo-classics by including insights from other disciplines, including political science, psychology and sociology.

Daniel M. Hausman is Herbert A. Simon and Hilldale Professor at the Department of Philosophy of University of Wisconsin-Madison, USA. He has taught at the University of Maryland at College Park, Carnegie Mellon University, and he has visited at the Institute for Advanced Studies and the London School of Economics.

xi xii About the Contributors

Most of his research has focused on methodological, metaphysical, and ethical issues at the boundaries between economics and philosophy, and in collaboration with Michael McPherson, he founded the journal Economics and Philosophy. He is also the editor of “The Philosophy of Economics: An Anthology” (3rd edition 2007). His books include “The Inexact and Separate Science of Economics” (1992), “Economic Analysis and Moral Philosophy” (co-authored with Michael McPherson, 1996), “Economic Analysis, Moral Philosophy, and Public Policy” (co-authored with Michael McPherson, 2006), and “Preference, Value, Choice and Welfare” (2011).

Carlos Hoevel is Professor of History of Economic and Political Ideas, Business Ethics and Philosophy of Economics at the Catholic University of Argentina in Buenos Aires, Argentina. He is also Director of the University's Center of Studies in Economy and Culture and Editor of the Journal of Economic Culture. His publica- tions include “The Economy of Recognition” (Springer, 2013).

Kevin T. Jackson is professor and Daniel Janssen Chair at the Solvay Brussels School of Economics and Management in Brussels, Belgium. He is a scholar in international business ethics, global economic governance, and legal philosophy. His research papers have been published in Business Ethics Quarterly, Journal of Business Ethics, Brooklyn Journal of International Law, Harvard Journal of Law and Public Policy and Law and Philosophy. His Charting Global Responsibilities: Legal Philosophy and Human Rights (University Press of America, 1994) was pre- sented as a gift to His Holiness the Dalai Lama by the U.S. State Department.

Arjo Klamer is professor of the Economics of Art and Culture at Erasmus University in Rotterdam, The Netherlands, and holds Chair of Cultural Economics. After acquiring his PhD at Duke University, he taught at several US universities including Wellesley College and George Washington University. He has collabo- rated with Deirdre McCloskey to promote the rhetorical perspective on economics. His latest book is “Doing the Right Thing: A Value Based Economy” (London, 2017. Ubiquity Press).

Tony Lawson is Professor of Economics and Philosophy in the Faculty of Economics at the University of Cambridge, UK He is a co-editor of the Cambridge Journal of Economics, a former director of the University of Cambridge Centre for Gender Studies, and co-founder of the Cambridge Realist Workshop and the Cambridge Social Ontology Group. Lawson is widely noted for his contributions to heterodox economics and to philosophical issues in social theorizing, most especially to social ontology. His books include “Economics and Reality” (Routledge, 1997), “Reorienting Economics” (Routledge, 2003), and “Essays on The Nature and State of Modern Economics” (Routledge, 2015).

Zoltán Pogátsa is a political economist and Associate Professor at the University of West Hungary, in Sopron, Hungary. His research focuses on the economics of European integration. He has published six books and numerous professional and About the Contributors xiii media articles, and is a regular commentator in Hungarian and international media on issues related to European integration and economic development. His book “Heterodox International Political Economics”, offers a number of different perspectives on understanding the global economy of the 21st century.

Stephen Pratten is Reader in Economics and Philosophy at King’s College, London, UK. After completing his PhD in the Economics Faculty at the University of Cambridge he became a Research Fellow at the Centre for Business Research before joining King’s in 1999. His primary research area is the methodology of economics, focusing particularly on issues related to social ontology and realist theorizing. He is co-editor of the Cambridge Journal of Economics and a Research Associate at the Centre for Business Research.

Peter Róna was born in Hungary and emigrated to the United States in 1956. He obtained his B.A. degree in economic history (cum laude) from the University of Pennsylvania and his law degree from Oxford University (First Class) in 1964. He was an associate of the Washington, D.C, law firm, Arnold & Porter and counsel to the US Department of Commerce before becoming the personal assistant of Lord Richardson, Governor of the Bank of England. He joined the Schroder Group in 1969 as the General Counsel of its operations in the United Sates, and became the President and Chief Executive of the IBJ Schroder Bank & Trust co. in 1985. After the collapse of the Berlin Wall he returned to Hungary, where he managed an invest- ment fund. In 2003 he joined the faculty of Eötvös Lóránd University where he taught public international law. In 2006 he was made an Honorary Professor of the Eötvös Lóránd University. He joined the teaching staff of Blackfriars Hall, University of Oxford in 2009, where he teaches courses in economics and the philosophical foundations of the social sciences. His published articles include a study of the Euro and an examination of the philosophical foundations of economics.

Roger Teichmann is College Lecturer in Philosophy at St. Hilda’s College, University of Oxford, UK. He gives tutorials at St Hilda's in Ethics, Knowledge and Reality, Logic and Language, Later Wittgenstein, Early Modern Philosophy, and Frege-Russell-Wittgenstein. His research interests are in Ethics, Mind, Action, Language, Wittgenstein, and Anscombe. His book, “The Philosophy of Elizabeth Anscombe” was published in 2008.

László Zsolnai is Professor and Director of the Business Ethics Center at the Corvinus University of Budapest. He is president of the European SPES Institute in Leuven, Belgium. László Zsolnai’s recent books include The Palgrave Handbook of Spirituality and Business (2011. Houndmills, UK, New York, NY: Palgrave Macmillan), Beyond Self: Ethical and Spiritual Dimensions of Economics (2014. Peter Lang Academic Publishers, Oxford), The Spiritual Dimension of Business Ethics and Sustainability Management (2015, Springer), Post-Materialistic Business: Spiritual Value-Orientation in Renewing Management (2015, Palgrave) and Ethical Leadership. Indian and European Spiritual Approaches (2016, Palgrave- Macmillan). His website: http://laszlo-zsolnai.net