Jack Birner
The idea that scientific research and human action in general are aimed at solving problems guides my research. Problems tend not to respect disciplinary boundaries. As a consequence, much of my work is interdisciplinary.
Phone: +390461281335
Address: Dipartimento di sociologia e ricerca sociale
Via Verdi 26
38122 Trento (TN)
Italia
Phone: +390461281335
Address: Dipartimento di sociologia e ricerca sociale
Via Verdi 26
38122 Trento (TN)
Italia
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NB Here are some CORRECTIONS of the text.
p. 119, note 1 should read:
I thank em. prof. Flip de Kam and prof. Roberto Leombruni for precious hints and references, the employees of the Dutch Royal Library (Koninklijke Bibliotheek) in The Hague and the editor of ESB for their kind assistance and anonymous referees for their criticism and suggestions. None of them are responsible for what I did with them.
p. 134:
In 1973 the School of Economics merged into the newly-founded Erasmus University, where Tinbergen continued to teach and conduct research until his retirement in 1970.
Replace by
Tinbergen continued to teach and conduct research until his retirement in 1970. The School of Economics merged into the newly-founded Erasmus University in 1973.
p. 140:
It should be kept in mind, however, that the procedures that have evolved have led to important improvements of the quality of Dutch parliamentary democracy.
p. 140:
The Dutch experience may serve both as a guide and source of inspiration for creating the instruments for evaluating the financial and economic coherency of election programs in Italy and submitting the promises they make to an econometric scrutiny.
Design/methodology/approach – This paper consists of a survey of the main issues and some of the classical literature for an audience with no background in philosophy of science, social philosophy, the literature on complex systems and social choice.
Findings – In the didactical framework of the article, it would be more accurate to speak of learning objectives rather than findings. The learning objectives are the acquisition of the basic knowledge for understanding the features, the possibilities and the limitations of scientific explanations and predictions and their applications in the long-term perspective of complex social systems.
Research limitations/implications – Again, the implications are didactic. The basic knowledge that constitutes the learning objective of the course serves to give students the instruments for recognizing the main opportunities and obstacles in social forecasting.
Practical implications – The practical implications of this paper include making students aware of complexity-related problems in their working environment and of the opportunities and constraints involved in solving them.
Social implications – Operators who are aware of the main issues involved can contribute to a more balanced approach to social forecasting: avoiding to raise unrealistic expectations and making more efficient use of the available instruments.
Originality/value – This paper summarizes an original combination of elements from the philosophy of science, epistemology, social philosophy and social choice.
Hayek’s economics constitutes a research programme. One of the factors that influenced its further development was Sraffa’s criticism of Hayek’s Prices and Production. In reply to this, Hayek developed his highly sophisticated capital theory and his ideas on neutral money and the international monetary order. I intend to show that the development of Hayek’s economic research programme can only be understood if one takes into account his radically systematic and analytical approach.
ADDED COMMENT The paper has “radical ECONOMIST” in the title because I wanted to point out to the audience of the Department of Economics of NYU that the almost generally accepted idea that Hayek’s theory of capital is fatally flawed is wrong. It is one of the (alas!) several red herrings that keep freely swimming in the sea of Hayek research. In the early 1930s Piero Sraffa critized Hayek’s Prices and Production. One of his criticisms was that Hayek had not taken account of the fact that every factor of production has its “own rate of interest.” Hayek took this criticism seriously and with the thoroughness that is characteristic of all his work in all of the various disciplines – at least up till the publication of The Sensory Order in 1952 - set out to solve the problem Sraffa had indicated. That led to a series of articles and eventually The Pure Theory of Capital, in which he had meticulously constructed a highly abstract theory takes into account each productive input's own rate of interest. Hayek showed how entrepreneurial decisions on investment process involve all these own rates. The paper shows that this type of radicalism characterizes the rest of Hayek’s work, too. This more than once became a case of the better being the enemy of the good: because Hayek did not succeed in solving the (often very difficult) problems he had put on his agenda at all, or not in time, he either decided not to publish his attempt to solve it (in the case of his reply to Popper’s criticism of The Sensory Order – see my paper on “How artificial is intelligence in AI?”) or it was too late for the scientific community to take notice (the case of Sraffa’s criticism).
NB Here are some CORRECTIONS of the text.
p. 119, note 1 should read:
I thank em. prof. Flip de Kam and prof. Roberto Leombruni for precious hints and references, the employees of the Dutch Royal Library (Koninklijke Bibliotheek) in The Hague and the editor of ESB for their kind assistance and anonymous referees for their criticism and suggestions. None of them are responsible for what I did with them.
p. 134:
In 1973 the School of Economics merged into the newly-founded Erasmus University, where Tinbergen continued to teach and conduct research until his retirement in 1970.
Replace by
Tinbergen continued to teach and conduct research until his retirement in 1970. The School of Economics merged into the newly-founded Erasmus University in 1973.
p. 140:
It should be kept in mind, however, that the procedures that have evolved have led to important improvements of the quality of Dutch parliamentary democracy.
p. 140:
The Dutch experience may serve both as a guide and source of inspiration for creating the instruments for evaluating the financial and economic coherency of election programs in Italy and submitting the promises they make to an econometric scrutiny.
Design/methodology/approach – This paper consists of a survey of the main issues and some of the classical literature for an audience with no background in philosophy of science, social philosophy, the literature on complex systems and social choice.
Findings – In the didactical framework of the article, it would be more accurate to speak of learning objectives rather than findings. The learning objectives are the acquisition of the basic knowledge for understanding the features, the possibilities and the limitations of scientific explanations and predictions and their applications in the long-term perspective of complex social systems.
Research limitations/implications – Again, the implications are didactic. The basic knowledge that constitutes the learning objective of the course serves to give students the instruments for recognizing the main opportunities and obstacles in social forecasting.
Practical implications – The practical implications of this paper include making students aware of complexity-related problems in their working environment and of the opportunities and constraints involved in solving them.
Social implications – Operators who are aware of the main issues involved can contribute to a more balanced approach to social forecasting: avoiding to raise unrealistic expectations and making more efficient use of the available instruments.
Originality/value – This paper summarizes an original combination of elements from the philosophy of science, epistemology, social philosophy and social choice.
Hayek’s economics constitutes a research programme. One of the factors that influenced its further development was Sraffa’s criticism of Hayek’s Prices and Production. In reply to this, Hayek developed his highly sophisticated capital theory and his ideas on neutral money and the international monetary order. I intend to show that the development of Hayek’s economic research programme can only be understood if one takes into account his radically systematic and analytical approach.
ADDED COMMENT The paper has “radical ECONOMIST” in the title because I wanted to point out to the audience of the Department of Economics of NYU that the almost generally accepted idea that Hayek’s theory of capital is fatally flawed is wrong. It is one of the (alas!) several red herrings that keep freely swimming in the sea of Hayek research. In the early 1930s Piero Sraffa critized Hayek’s Prices and Production. One of his criticisms was that Hayek had not taken account of the fact that every factor of production has its “own rate of interest.” Hayek took this criticism seriously and with the thoroughness that is characteristic of all his work in all of the various disciplines – at least up till the publication of The Sensory Order in 1952 - set out to solve the problem Sraffa had indicated. That led to a series of articles and eventually The Pure Theory of Capital, in which he had meticulously constructed a highly abstract theory takes into account each productive input's own rate of interest. Hayek showed how entrepreneurial decisions on investment process involve all these own rates. The paper shows that this type of radicalism characterizes the rest of Hayek’s work, too. This more than once became a case of the better being the enemy of the good: because Hayek did not succeed in solving the (often very difficult) problems he had put on his agenda at all, or not in time, he either decided not to publish his attempt to solve it (in the case of his reply to Popper’s criticism of The Sensory Order – see my paper on “How artificial is intelligence in AI?”) or it was too late for the scientific community to take notice (the case of Sraffa’s criticism).
A market economy is a gigantic machine that through the division of labour, exchange on markets and competition creates value from the random distribution of talents and the boundlessness of human imagination. Its potential to do so is further boosted by the banking system and financial markets, that have made it possible to separate ownership and finance from management and production. An unintended consequence of these mechanisms, however, is the emergence of extreme socio-economic inequalities.
According to Thomas Piketty in Capital in the Twenty-first Century, the contrast between the arbitrariness of these inequalities and the meritocratic values of democratic societies threatens the latter’s stability and survival. In order to save democracy, we must transform capitalism by reducing the inequalities it creates. In Capital et idéologie, he argues that unless these inequalities can be justified, the global capitalist system itself risks destruction. We must transform capitalism in order to save it from itself.
Friedrich Hayek, on the contrary, claims that capitalism needs to be saved from democracy if it adopts the idea of distributive justice: social democracy will kill the capitalist goose that lays the golden egg of economic growth.
Both authors share a concern about the stability of a democratic market society. Their ideas of what threatens it and how it might be saved, however, are radically opposed.
The stability of a market society is also the central problem of Emile Durkheim’s De la division du travail social. His thesis is that, regardless of the political system, the market process will produce all the advantages economists claim for it provided it is embedded in a society with a sufficient degree of social cohesion. If it is not, the absence of solidarity turns competition into a centrifugal force that may tear society apart.
Durkheim offers a theory that is more general than Piketty’s collection of ideas: it is not limited to a democratic society, and inequalities are an aspect or an expression of a lack of solidarity. This raises the question why Piketty does not systematically link his ideas to Durkheim’s. Hayek on the other hand sees in Durkheim’s idea of solidarity an example of what threatens a market order.
I will examine the various connections between Piketty’s socialisme participatif, Hayek’s liberalism, and Durkheim’s analysis.
Piketty rejects Marx’ idea that the ideological superstructure is dependent on the economic base. That may be the reason why he overlooks the possibility of transforming the economic base of the capitalist system itself before resorting to the measures for reducing inequalities that he proposes. It may also explain his neglect of Durkheim.
I will argue that social democracy is a rational and egalitarian political system that has the best prospects for saving capitalism from itself. Whether it is capable of saving itself, however, is a problem whose solution can by no means be taken for granted. Karl Popper’s paradox of democracy may realize itself gradually and by neglect instead of through an explicit decision to abolish democracy.
The general framework of this chapter is that of the balance of power in the world. After WWII, the global balance of power has changed. The Soviet Union (SU) no longer exists and the hegemony of the United States of America (USA) is challenged by China. This is closely related to another change, the shift from political to economic factors as the foundation of geopolitical power. The successor of the SU, the Russian Federation, still thinks of itself as a global power but it lacks the economic basis for this. The EU, on the contrary, has a global economic weight that is in the same category as that of the USA and China, but is not considered, by others and by itself, to be a global political power. This double asymmetry is complicated by the fact that the SU has the biggest arsenal of nuclear weapons in the world whereas the EU has none; only one of its member countries does. The incongruence between the EU's political status and its economic weight is due to the fact that it has failed to adopt a clearly recognizable political regime. The central claim of this chapter is that in order for the EU to bring its global political position in line with its economic weight, the only feasible form of governance is a federation.
A common security policy of the EU was nipped in the bud by the creation of NATO. Its revival requires the solution of many problems, the most urgent of which is a redefinition of the relationship between a future EU defence force and NATO.
Finally, the chapter confronts the gradual, technocratic and economic-deterministic approach to the creation of a Federal Europe which is associated with Jean Monnet, with that of Altiero Spinelli and Friedrich Hayek, who advocate, from very different political viewpoints, the primacy of general principles. It is argued that Hayek's concept of federalism, in which economic factors are necessary but not sufficient conditions and democratic processes have a central role, contains the elements of overcoming the democratic deficit that has plagued the expansion of the EU into a federation.