Erwin Dekker and Arjo Klamer
This chapter argues that the art of phronesis is central to doing the right thing as an economist. Phronesis, or practical wisdom, is what we practice when we deliberate, weigh values, take into account our feelings and those of others, consider the circumstances, and grope for the right thing to do. Central to phronesis is figuring out the goods to strive for and the appropriate means to realize those goods. We argue that the goods can be categorized into personal goods, social goods, societal goods, and transcendental goods. An important choice that any economist faces is which conversation to join, to which part of economics he wishes to contribute. We argue that situating ourselves in a university department, in the search for truth and truth only, is an important moral choice, with consequences for the goods we can realize.
Célestin Monga and Justin Yifu Lin
This introductory chapter presents the objectives of this volume and discusses the challenges of producing relevant knowledge. It starts with an exploration of the reasons why Africa has remained neglected in economics, despite its important contributions to the discipline. It then highlights Africa’s enduring intellectual influence on some of the world’s leading economists. It discusses the traditional reasons why that deep positive influence is little known and rarely acknowledged in mainstream economics. It also offers a different explanation of the neglect of Africa as a rich source of economic knowledge, highlighting the fact that economic thinking on Africa has generally mirrored the general evolution of macroeconomics and the dominant frameworks of analysis of the continent’s low-income countries have always been fraught with analytical sins and mimetic choices.
Anabaptists have moved from a position of separatism to a call for faithful interaction with the world even if ambiguities lead to some compromises. Anabaptists can improve the secular order on the margins by joining with non-Christians who share some of their values and by providing in their businesses and consumer practices an alternative model of what faithful stewardship might look like for the Christian. For some, this is movement down a slippery slope to worldliness and for others this increased involvement in existing social institutions is light and salt to the world. This chapter examines the origins of Anabaptist social thought and then follows the trend toward constructive engagement with the social order by examining the work of key Anabaptist thinkers and practitioners from the last century. There is not a unified theoretical approach to economic systems in recent Anabaptist thought, but the historical contextual methodology of American institutionalism may be the most appealing economic school of thought for Anabaptism today.
Earlier Anglican approaches to economics were influenced by its historical position as an established church with considerable political influence. This position has changed in the past half century, and Anglican economists since the pioneering post war work of Denys Munby in Britain and Paul Heyne in North America are moving toward a position of practical neutrality of theology with respect to economic science. Anglicans like Geoffrey Brennan correspondingly defend the economists’ scientific model of the atomistic agent as a legitimate tool for Christian economists. By the same token, Anglican thinking gives a role to theology in motivating economic enquiry and assessing the operation of a virtuous market economy, with the work of Donald Hay and historian Anthony Waterman representing examples of this. To date, arguably, Anglican ethical critiques are yet to convincingly dislodge the classical proposition that markets raise the net supply of positive behaviors congruent with moral sentiments, doing so more predictably and at lower cost than any feasible alternative. Equally, observed short run moral deviations still occur in practice, and Anglicans have shown interest in the ordained role of government and how theology might guide remedial economic policy, with much room still left for further calibration of this question.
William A. Darity Jr., Mary Lopez, Olugbenga Ajilore, and Leslie Wallace
Kevin S. O’Neil and Marta Tienda
Austrian business cycle theory (ABCT) is a body of hypotheses embodying particularly Austrian insights and assumptions. The canonical variant associated with Ludwig von Mises and Friedrich A. Hayek is particularly well suited to the Great Depression. However, it is an inadequate account of the recent US recession and financial crisis. This chapter develops a suitable ABCT variant that explicitly incorporates not only the economy’s time structure of production but also (1) its structure of consumption and (2) its risk structure. The continuous input–continuous output nature of the housing market is highlighted, along with the Treasury and the Federal Reserve’s roles in externalizing the risk associated with government-sponsored entities’ (GSEs’) debt. The chapter then extends Roger Garrison’s graphical framework to illustrate this ABCT variant.
Naomi Beck and Ulrich Witt
This chapter discusses the challenges raised by the inclusion of evolutionary elements in the theories of Carl Menger, Joseph Schumpeter, and Friedrich Hayek. Each adopted an idiosyncratic position in terms of method of inquiry, focus, and general message. The breadth of the topics and phenomena they cover testifies to the great variety of interpretations and potential uses of evolutionary concepts in economics. Menger, who made no reference to Darwin’s theory, advanced an “organic” view of the emergence of social institutions. Schumpeter elaborated an original theory of industrial development based on the recurrent emergence and dissemination of innovations. Hayek adopted the biological notion of group selection and made it the central element in his theory of cultural evolution and the rise of the free market. The chapter concludes with a preliminary evaluation of the possible role that evolutionary theorizing might play in the future development of Austrian economics.
This chapter offers a synthetic account of the key methodological ideas espoused by prominent Austrian economists. It focuses on the contributions of Carl Menger, Ludwig von Mises, Friedrich Hayek, Ludwig Lachmann, and Donald Lavoie, arguing that epistemological concerns fail to encapsulate their overlapping but distinctive and complementary methodological arguments. Their methodological positions are better explained as flowing from a shared and distinctive social ontology that underlies Austrian economic theory. Austrian social ontology is distinct because of its commitment to three key concepts: radical subjectivism, sheer ignorance, and spontaneous order. The chapter then presents a stylized schema of social processes that embodies these key concepts and shows that the schema both accommodates distinctively Austrian theories and allows for a synthesis of the key methodological contributions of all the Austrian economists discussed earlier.
Austrian school economists have long been interested in monetary and financial operations that characterize modern capitalism. With a few exceptions, this interest was confined, at least until the late twentieth century, primarily to the aggregate effects of these operations on the workings of the economy at large, focusing on the overall outcomes of human action rather than specifics of how the decision to engage in those actions comes about. In other words, Austrian theorists emphasized the role of business enterprise but not the conduct of business. The last thirty years of development in the Austrian school have seen a profound change in this regard, with notable contributions emerging in all areas of business education. This chapter demonstrates the development of Austrian theory with respect to finance and makes the case that this development is sufficient in scope to qualify as a distinctive Austrian theory of finance.