Truth or precision? Some reflections on the economists’ failure to predict the financial crisis

The failure of professional economic forecasters to predict the financial crises has led many to question the credibility of modern economics as a reliable foundation for economic policy. If economists were unable to foresee so big a crisis, how can they be trusted to cure or prevent it? Several accounts of this failure exist. The paper offers a tentative answer based on the lessons that may be drawn from the wisdom of a short list of past and present economists: Hayek, Neville Keynes, Mankiw, Tinbergen, Maynard Keynes and Lucas. The glue to keep such an odd bunch together is the distinction between truth and precision provided by science historian Ted Porter

James M. Buchanan: Neoclassical, Austrian, Neither, or Both?

James McGill Buchanan (1919-2013) received the Nobel Memorial Prize in 1986 for his work in public choice theory, set out in his The Calculus of Consent (1962), co-authored with Gordon Tullock. The Virginia School of Political Economy can be seen as a product of the work of Buchanan and Tullock, along with Ronald Coase, who published his ground-breaking paper on “The Problem of Social Cost” in 1960 while he was at the University of Virginia. This school of thought is generally thought to be in some ill-defined sense allied to the Austrian school of economics, mainly perhaps because of a shared pro-market policy stance. On the other hand, links between Buchanan and neoclassical economists such as Friedman and Stigler are frequently drawn, again probably with the pro-market policy recommendations of each in mind. It is notable that Buchanan, Hayek, and Friedman were all at various times presidents of the Mont Pelerin Society. Yet the differences between neoclassical and Austrian perspectives are profound. It has often been said that the one can be characterized as “equilibrium always” and the other as “equilibrium never”. The case of Buchanan and the Virginia School is therefore extremely interesting for the historian of economic thought. Significant questions are raised about the scope for reconciliation between schools of thought at the most profound levels of methodology and social philosophy. I posit that, allowing for a slight amount of breathing room, James Buchanan’s economic writings are more Austrian than anything else. From his earliest writings to his last publications, Buchanan clearly had an Austrian-leaning approach. Additionally, many of the criticisms he laid out about the economics profession were directed toward the more neoclassical minded among his peers. While the act of criticizing neoclassical economists does not indicate that Buchanan was an Austrian, it does seem to lay to rest any conclusions that he was a neoclassical economist himself

JOINT COMMITMENT, COERCION AND FREEDOM IN SCIENCE Conceptual Analysis and Case Studies

International audienceThis paper deals with the Ethics of group life in the sciences, if not directly with the policy of science that might evolve from it, and more precisely with the issue of democracy within scientific life

Entrepreneurs’ age, institutions, and social value creation goals: a multi-country study

This study explores the relationship between an entrepreneur's age and his/her social value creation goals. Building on the lifespan developmental psychology literature and institutional theory, we hypothesize a U-shaped relationship between entrepreneurs’ age and their choice to create social value through their ventures, such that younger and older entrepreneurs create more social value with their businesses while middle age entrepreneurs are relatively more economically and less socially oriented with their ventures. We further hypothesize that the quality of a country’s formal institutions in terms of economic, social, and political freedom steepen the U-shaped relationship between entrepreneurs’ age and their choice to pursue social value creation as supportive institutional environments allow entrepreneurs to follow their age-based preferences. We confirm our predictions using multilevel mixed-effects linear regressions on a sample of over 15,000 entrepreneurs (aged between 18 and 64 years) in 45 countries from Global Entrepreneurship Monitor data. The findings are robust to several alternative specifications. Based on our findings, we discuss implications for theory and practice, and we propose future research directions

Are Hermeneutics and the Austrian Approach Compatible? A Clarifying Analysis

This paper investigates the merging of the Austrian Approach and Hermeneutics under a new light. It defends a middle ground between the standpoint of the Austrian hermeneutists and that of their critics. The latter, especially Rothbard, considered hermeneutics to be incompatible with Austrian School because they confused hermeneutics with what Mises calls "polylogism", i.e. with cognitive nihilism. Their view was incorrect, but their criticism of the Austrian hermeneutists was not completely unfounded. Austrian hermeneutists did not clearly separate what they called hermeneutics from the postmodernist epistemologies of authors such as Derrida, Kuhn, and Rorty. This article demonstrates that hermeneutics as intended by Gadamer, its greatest theorist, has nothing to do with postmodernism. It is a fallibilist theory of the objective truth in the sense of Popper. So it is compatible both with the Austrians' antipolylogism and their methodological individualism

Commensurability and beyond: from Mises and Neurath to the future of the socialist calculation debate

Mises' 'calculation argument' against socialism argues that monetary calculation is indispensable as a commensurable unit for evaluating factors of production. This is not due to his conception of rationality being purely 'algorithmic,' for it accommodates non-monetary, incommensurable values. Commensurability is needed, rather, as an aid in the face of economic complexity. The socialist Neurath's response to Mises is unsatisfactory in rejecting the need to explore possible non-market techniques for achieving a certain degree of commensurability. Yet Neurath's contribution is valuable in emphasizing the need for a balanced, comparative approach to the question of market versus non-market that puts the commensurability question in context. These central issues raised by adversaries in the early socialist calculation debate have continued relevance for the contemporary discussion

Economic Analysis of Knowledge: The History of Thought and the Central Themes

Following the development of knowledge economies, there has been a rapid expansion of economic analysis of knowledge, both in the context of technological knowledge in particular and the decision theory in general. This paper surveys this literature by identifying the main themes and contributions and outlines the future prospects of the discipline. The wide scope of knowledge related questions in terms of applicability and alternative approaches has led to the fragmentation of research. Nevertheless, one can identify a continuing tradition which analyses various aspects of the generation, dissemination and use of knowledge in the economy