Turning back to the economy

CRESPO, RICARDO F.

Salvador de Bahia

Simposio; I Simpósio Internacional de Filosofia da Economia; 2011

Universidade Federal da Bahia

A recent paper of Margaret Schabas states that one might suppose that economists study “the economy”. However, according to Schabas this “overarching entity is absent from mainstream theory” (2009, p. 3). This latter theory leaves aside institutions, power relations and properties that form the leading indicators of macroeconomics. She adds that this incompleteness is mainly found in scientific economics, not in folk economics. In the same vein, Ronald Coase (1978) maintains that, through a double movement of enlarging the domain of concern and narrowing the perspective of analysis of it, economics has become a science dealing with something different than what is usually understood by people and even folk economists as the economy. This double tendency of economics has to do with its adoption of a narrow concept of rationality, i.e., maximizing instrumental rationality. This paper will hold that this logic is not enough to understand and to do trustworthy predictions about the economic system because its complexity requires a more sophisticated approach. We should open the doors to other complementary logics in order to fully understand it and to predict more accurately. These rationalities could be put under the label of “practical rationality”. Coase’s suggestion entails that economics should concentrate on a specific sphere of human affairs, given that other social sciences deal with the remaining spheres: it must be domain-focused. It has to analyze the economic system; but to do it completely it has to take into account all the factors that determine how it works. He asserts: ‘I think economists do have a subject matter: the study of the working of the economic system in which we can earn and spend our incomes’ (1998, p. 73). The paper will argue that then, economics should neither advance as an economic analysis of other social realities, nor as a reduction of all social rationalities to only instrumental maximizing rationality. The way to go is to add other rationalities, logics or points of views, learned from other social sciences, to analyze the economic field. We must reinsert economics into the context of the social sciences (Ioannides and Nielsen 2007, p. 2). Economics needs to recuperate practical rationality.