- •Contents
- •Acknowledgements
- •Notes on contributors
- •1 Introduction
- •WHAT IS HERMENEUTICS?
- •ALTERNATIVE VIEWS OF HERMENEUTICS FROM A PARTICULAR ECONOMIC STANDPOINT
- •NOTES
- •REFERENCES
- •2 Towards the native’s point of view
- •PRELUDE
- •IS THERE A PROBLEM?
- •A note of clarification
- •THREE WAYS OF DEALING WITH A PROBLEM4
- •ECONOMICS ACCORDING TO PICTURE I
- •IRONY IN PICTURE I
- •PICTURE II FOR ECONOMIC DISCOURSE
- •THE NATIVE’S POINT OF VIEW
- •CONCLUSION
- •NOTES
- •REFERENCES
- •3 Getting beyond objectivism
- •INTRODUCTION
- •HERMENEUTICS
- •GADAMER’S CRITIQUE OF OBJECTIVISM
- •RICOEUR’S CRITIQUE OF SUBJECTIVISM
- •EXPLANATION/UNDERSTANDING
- •CONCLUSION
- •NOTES
- •REFERENCES
- •4 Storytelling in economics1
- •NOTE
- •REFERENCES
- •5 The philosophical bases of institutionalist economics
- •THE DURKHEIM/MAUSS/DOUGLAS THESIS
- •PRAGMATISM AND PEIRCE
- •JOHN DEWEY
- •THORSTEIN VEBLEN
- •JOHN R.COMMONS
- •POST-1930s INSTITUTIONALISM
- •REVOLUTIONS IN SCIENCE AND PHILOSOPHY
- •ACKNOWLEDGEMENTS
- •NOTES
- •REFERENCES
- •6 The scope and goals of economic science
- •Keynesian economics and the ‘scientization of politics’
- •Neoclassical economics and distorted communication
- •TOWARD A CRITICAL ECONOMIC SCIENCE
- •NOTES
- •REFERENCES
- •7 Austrian economics
- •INTRODUCTION
- •WHY HERMENEUTICS?
- •WHAT IS HERMENEUTICS?
- •INSTITUTIONS AND THE AUSTRIAN SCHOOL
- •HERMENEUTICAL ALLIES OF THE AUSTRIANS
- •REFERENCES
- •8 Practical syllogism, entrepreneurship and the invisible hand
- •SYNOPSIS OF THE ARGUMENT
- •THE CHALLENGE OF VERSTEHEN
- •CONCLUSION
- •ACNOWLEDGEMENTS
- •NOTES
- •REFERENCES
- •9 What is a price? Explanation and understanding
- •INTRODUCTION
- •NOTES
- •REFERENCES
- •10 The economics of rationality and the rationality of economics
- •INTRODUCTION
- •Description of RE theory
- •Psychological versus philosophical critiques of RE
- •EPISTEMIC ANALYSIS OF RE
- •The problem of epistemic regress
- •THE METHOD OF FOUNDATIONALISM
- •Problems with foundationalism
- •Foundationalism and economic methodology
- •Problems with positivism
- •THE COHERENCE STRATEGY
- •Coherence theory and rational economics
- •Problems with coherence theories
- •The lack of empirical inputs
- •Inter-system indeterminacy
- •Ambiguous coherence criteria
- •Vicious circularity
- •A problematic view of truth
- •Language as a mediator
- •Addressing the problem of relativism
- •ACKNOWLEDGEMENTS
- •NOTES
- •REFERENCES
- •11 On the microfoundations of money
- •PHILOSOPHIC BACKGROUND
- •TOOLS AND METHODS
- •MONEY AND MARKETS
- •SUMMARY AND CONCLUDING REMARKS
- •ACKNOWLEDGEMENTS
- •NOTES
- •REFERENCES
- •12 Self-interpretation, attention, and language
- •SELF-INTERPRETING UTILITY FUNCTIONS
- •SOCIAL THEORY AS PRACTICE
- •WHAT IS A GOOD?
- •ATTENTION AND LANGUAGE
- •ATTENTION AND ECONOMICS
- •IMPLICATIONS FOR ECONOMIC ANALYSIS
- •HERMENEUTICAL EXPECTATIONS
- •CONCLUSION
- •NOTES
- •REFERENCES
- •13 What a non-Paretian welfare economics would have to look like
- •INTRODUCTION
- •HOW DO NON-PARETIAN APPROACHES DIFFER?
- •A central problem
- •Developing a standard
- •Aggregation
- •WHAT AN ACTUAL STANDARD MIGHT LOOK LIKE
- •Discovery and innovation
- •Complexity
- •Provision of consumer goods
- •SECOND-BEST CONSIDERATIONS
- •A NON-FOUNDATIONALIST APPROACH
- •CONCLUDING COMMENTS
- •ACKNOWLEDGEMENTS
- •NOTES
- •REFERENCES
- •14 The hermeneutical view of freedom
- •WE LIVE IN A WORLD OF SIGNIFICANCE
- •THE ‘IS’ WITHIN THE ‘OUGHT’
- •REASON, SPEECH AND PRICES
- •THE SATISFACTION OF GENERATED WANTS
- •PROCESS AND ORDER
- •Advertising
- •Property rights
- •CONCLUSION: COMPETITION AND LIBERTY
- •NOTES
- •REFERENCES
- •Index
12 INTRODUCTION
Tom G.Palmer concludes the book by considering what hermeneutics may have to do with economic policy. Gadamer uses the model of the conversation to elaborate his theory of how we understand a text; Habermas uses the conversation as a model for politics. Palmer argues that the market, like a conversation, is a ‘forum for persusasion’. He draws implications from Gadamer’s hermeneutics for certain central questions in economic policy—such as public goods, the regulation of advertising, and the design of property rights. The different ways in which such issues would be appropriated by Habermasian and Gadamerian perspectives suggest that economists could profit from holding their own version of that classic debate.
These diverse essays take the interpretive turn seriously, and begin exploring the question of what this philosophical shift implies for the practice of economics. It is hoped that they will serve to open the economics profession to a broader set of philosophical perspectives than is typically considered.
NOTES
1One of the best summaries of hermeneutical philosophy is Warnke (1987). Other works that provide useful interpretations of the philosophy include Bernstein (1983), Dallmayr and McCarthy (1977), Linge (1976), Mueller-Vollmer (1985), Weinsheimer (1985), and Winograd and Flores (1986).
2For what is essentially a hermeneutic approach to the natural sciences see Polanyi (1958; 1959; 1969). For the argument that Polanyi’s approach is similar to Gadamer’s, see Weinsheimer (1985).
3I have elaborated on Gadamer’s point about understanding differently, and related it to Hayek’s work on the communicative processes of markets and culture in Lavoie (1987; 1990b).
4The interpretation of the texts of economics raises no special problems not already encountered in any effort of intellectual history, and in any case it is what historians of economics are already doing. I do think such research would benefit from a dose of hermeneutics. A good place to start for economists might be Samuels (1990).
5Among the main writings of Gadamer and Ricoeur which develop the main outlines of philosophical hermeneutics are Gadamer (1976; 1982; [1960] 1989) and Ricoeur (1981a; 1981b; 1984; 1985).
6Some of the important contributions by writers who are hermeneutical in this wider sense, and which are of interest to anyone who would like to consider the relevance of the approach for the human sciences, include Geertz (1973; 1984), Rorty (1979), and Taylor (1971; 1980).
7For an interesting collection of social-science essays that productively deploy hermeneutical insights, see Rabinow and Sullivan (1979; 1987), where economics is conspicuous by its absence.
8Weber’s magnum opus was entitled Economy and Society: An Outline of Interpretive Sociology (1978). Georg Simmel’s The Philosophy of Money ([1907] 1978) is a neglected classic of monetary theory.
INTRODUCTION 13
9Among my own favourite books, written from a variety of perspectives, that articulate what is wrong with economics today, and point in the direction of what a more interpretive approach to economics might be like, are Hodgson (1988), Leijonhufvud (1981), O’Driscoll and Rizzo (1985), and Shackle (1972). Arjo Klamer and I have recently launched a book series in ‘interpretive economics’ with Basil Blackwell (publishers) to try to encourage more work of this kind in the profession.
10For example, by Caldwell (1982).
11Klamer’s book of interviews with economists (1983) exposes some of the problems which economists have engaging with one another in productive dialogue, problems which an attention to hermeneutics might help them to overcome.
12My own attempt to argue this point is in Lavoie (1990a).
13McCloskey’s work on ‘rhetoric’ (1983; 1985) has gone the furthest of any economist to bring interpretive themes to the attention of the mainstream of the profession.
14An excellent summary of Habermas’s complex social theory and his debate with Gadamer can be found in McCarthy (1985).
15Lachmann’s neglected book on Max Weber (1971) can be called the first explicitly hermeneutical contribution to Austrian economics.
16The two economists who provoked the debate by beginning to use hermeneutics to revise Austrian economics are Ebeling (1985; 1986) who has mainly referred to Schütz and Ricoeur, and Lavoie (1986; 1990b), who has mainly referred to Gadamer.
17Among the more strident critics of the hermeneutical Austrians have been Albert (1988) and Rothbard (1988). A counter-argument was written by G.B.Madison (1988), and a rejoinder by David Gordon (1990).
18Mäki makes what many of the other critics of the hermeneutical Austrians would consider an important concession when he admits the ubiquitousness of hermeneutics in all scholarship.
REFERENCES
Albert, Hans (1988) ‘Hermeneutics and economics: a criticism of hermeneutical thinking in the social sciences’, KYKLOS 41:573–602.
Bernstein, Richard, J. (1983) Beyond Objectivism and Relativism: Science, Hermeneutics, and Praxis, Philadelphia: University of Pennsylvania Press.
Caldwell, Bruce (1982) Beyond Positivism: Economic Methodology in the Twentieth Century, Boston: Allen & Unwin.
Dallmayr, Fred R. and McCarthy, Thomas A. (eds) (1977) Understanding and Social Inquiry, Notre Dame, Indiana: University of Notre Dame Press.
Ebeling, Richard M. (1985) ‘Hermeneutics and the interpretive element in the analysis of the market process’, Center for the Study of Market Processes Working Paper no. 16, George Mason University.
——(1986) ‘Toward a hermeneutical economics: expectations, prices, and the role of interpretation in a theory of the market process’, in Israel M.Kirzner (ed.)
Subjectivism, Intelligibility, and Economic Understanding: Essays in Honor of
14 INTRODUCTION
Ludwig M.Lachmann on his Eightieth Birthday, New York: New York University Press.
Gadamer, Hans-Georg (1976) Philosophical Hermeneutics, translated and edited by David E.Linge, Berkeley: University of California Press.
——(l982) Reason in the Age of Science, translated by F.G.Lawrence, Cambridge, Mass.: MIT Press.
——([1960] 1989) Truth and Method, revised translation of Wahrheit und Methode: Grundzuge Einer Philosophischen Hermeneutik, by J.Weinsheimer and D.Marshall, New York: Crossroad.
Geertz, Clifford (1973) The Interpretation of Cultures, New York: Basic Books. ——(1983) Local Knowledge: Further Essays in Interpretive Anthropology, New York:
Basic Books.
——(1984) ‘Distinguished lecture: anti anti-relativism’, American Anthropologist, 86 (2): 263–78.
Gordon, David (1990) ‘Review of G.B.Madison, Understanding: A PhenomenologicalPragmatic Analysis’, The Review of Austrian Economics 4:215–22.
Hodgson, Geoffrey M. (1988) Economics and Institutions: A Manifesto for Modern Institutional Economics, Philadelphia: University of Pennsylvania Press.
Klamer, Arjo (1983) Conversations With Economists, Totowa, N.J.: Rowman & Allenheld.
Lachmann, Ludwig M. (1971) The Legacy of Max Weber, Berkeley: Glendessary Press. Lavoie, Don (1986) ‘Euclideanism versus hermeneutics: a re-interpretation of Misesian
apriorism’, in Israel M.Kirzner (ed.) Subjectivism, Intelligibility, and Economic
Understanding: Essays in Honor of Ludwig M.Lachmann on his Eightieth Birthday,
New York: New York University Press.
——(1987) ‘The accounting of interpretations and the interpretation of accounts: the communicative function of “The Language of Business”’, Accounting, Organizations and Society 12:579–604.
——(1990a) ‘Hermeneutics, subjectivity, and the Lester/Machlup debate: toward a more anthropological approach to empirical economics’, in Warren Samuels (ed.) Economics As Discourse, Boston: Kluwer Academic Publishing.
——(1990b) ‘Understanding differently: hermeneutics and the spontaneous order of communicative processes’, History of Political Economy 22A (Special Issue): forthcoming.):
Leijonhufvud, Axel (1981) Information and Coordination: Essays in Macroeconomic Theory, New York: Oxford University Press.
Linge, David E. (1976) ‘Editor’s introduction’, in Hans-Georg Gadamer, Philosophical Hermeneutics, translated and edited by David E.Linge, Berkeley: University of California Press.
McCarthy, Thomas (1985) The Critical Theory of Jürgen Habermas, Cambridge: MIT Press.
McCloskey, Donald M. (1983) ‘The rhetoric of economics’, Journal of Economic Literature 21 (June): 481–517.
——(1985) The Rhetoric of Economics, Madison, Wisconsin: University of Wisconsin Press.
Madison, G.B. (1988) ‘Hermeneutical integrity: a guide for the perplexed’, Market Process 6 (1): 2–8.
Mueller-Vollmer, Kurt (1985) The Hermeneutics Reader, New York: Continuum.
INTRODUCTION 15
O’Driscoll, Gerald P. (Jun.), and Rizzo, M.J. (1985) The Economics of Time and Ignorance, New York: Columbia University Press.
Polanyi, Michael (1958) Personal Knowledge: Towards a Post-Critical Philosophy,
Chicago: University of Chicago Press.
——(1959) The Study of Man, Chicago: University of Chicago Press.
——(1969) Knowing and Being, edited by Marjorie Grene, Chicago: University of Chicago Press.
Rabinow, Paul and Sullivan, W.M. (eds) (1979) Interpretive Social Science: A Reader, Berkeley: University of California Press.
——(1987) Interpretive Social Science: A Second Look, Berkeley: University of California Press.
Ricoeur, Paul (1981a) ‘The model of the text: meaningful action considered as a text’, in P.Ricoeur, Hermeneutics and the Human Sciences, edited and translated by J.B.Thompson, New York: Cambridge University Press.
——(1981b) Hermeneutics and the Human Sciences, edited and translated by J.B. Thompson, New York: Cambridge University Press.
——(1984) Time and Narrative, vol. 1, Chicago: University of Chicago Press. ——(1985) Time and Narrative, vol. 2, Chicago: University of Chicago Press.
Rorty, Richard (1979) Philosophy and the Mirror of Nature, Princeton, N.J.: Princeton University Press.
Rothbard, Murray N. (1988) ‘The hermeneutical invasion of philosophy and economics’,
The Review of Austrian Economics 3:45–59.
Samuels, Warren (ed.) (1990) Economics As Discourse, Boston: Kluwer Academic Publishing.
Shackle, G.L.S. (1972) Epistemics and Economics: A Critique of Economic Doctrines,
Cambridge: Cambridge University Press.
Simmel, Georg ([1907] 1978) The Philosophy of Money, Boston: Routledge & Kegan Paul. Taylor, Charles (1971) ‘‘Interpretation and the sciences of man’, Review of Metaphysics
25 (Sept.): 3–51.
——(1980) ‘Understanding in human science’, Review of Metaphysics 34 (Sept.). Warnke, Georgia (1987) Gadamer: Hermeneutics, Tradition and Reason, Cambridge:
Polity Press.
Weber, Max (1978) Economy and Society: An Outline of Interpretive Sociology, Berkeley: University of California Press.
Weinsheimer, Joel C. (1985) Gadamer’s Hermeneutics: A Reading of Truth and Method,
New Haven: Yale University Press.
Winograd, Terry and Flores, F. (1986) Understanding Computers and Cognition,
Norwood, N.J.: Ablex.
Part I
What is hermeneutics?