Ontology of Economics

PHI 637 (seminar, 2 credits). Registration number: [1]

Time: 1:00-3:50pm, selected Mondays (TBD), Fall Semester 2024

Room: Park 141, UB North Campus

Instructors: Barry Smith (Philosophy) and Emanuele Martinelli (Philosophy, University of Zurich)

Office hours: BS: by appointment via email; EM: by appointment via email

Course Description

The goal of the course is to give the students conceptual tools to understand and evaluate critically the philosophical assumptions of different schools of thoughts in economics. Debates between different approaches in economics may be sometimes reduced to ontological debates on the nature of social entities, for example institutions, prices, markets, economic actors. Hence, the course aims at introducing the core concepts that build up the world of economics and how different interpretations of such concepts can support different economic claims and systems.The first part of the course introduces topics in social ontology with an eye on economic applications: agency, complexity, information, collectivity. Part Two analyzes some themes underlying the works of the main contemporary economic schools of thought, including classical and neoclassical economics, Keynesian economics, institutional economics, Austrian economics, complexity economics, and marxist economics. Austrian economics will be given special prominence because it is arguably the economic school of thought that makes the most open use of philosophical concepts in its theories. Part Three will introducte AI technology as a bearer of new possibilities and a new understanding of the working of economic processes and of society as a whole.

All slides and videos will be made available at [link to be provided].

Recommended background reading

W. Grassl, and B. Smith (eds.), 2010, Austrian Economics: Historical and Philosophical Background, pp: 1-36, [2]

F. A. Hayek, 1945, "The Use of Knowledge in Society", [3]

G. M. Hodgson, 2007, “Meanings of Methodological Individualism”, [4]

C. List & P. Pettit, 2011, "Group Agency: The Possibility, Design, and Status of Corporate Agents", Part I, [5]

Recommended background video content

Barry Smith, 2023, "Beyond the Goods-Services Continuum", [6]

September 30: Introduction: Economic Agents and Agency

This class introduces the topic of 'agency' from the point of view of social ontology, with a focus on the different kinds of agents that populate the social world. This reflection of agency can make our understanding of core economic notions more sophisticated, including economic actors, markets, government interventions, firms. When reflecting on the assumptions of different economic models, philosophical considerations about society are instrumental. Another very important conceptual distinction is that between 'collectivism' and 'individualism'. Moving from the various levels of this distinction, the class will examine the methodological division between microeconomics and macroeconomics under the lense of individualist-collectivist sprectrum in the socio-ontological literature.

October 7: Market Equilibrium and Critical Perspectives

This class introduces the main contemporary proposals that have been advanced throughout mainstream economics to overcome some core tenets of classical economics. This will include reflection on the assumptions of neoclassical economics (in particular as represented by Léon Walras' works on general equilibrium models). The core tenets of (neo)classical economics, such as economic rationality, utility maximization, and general equilibrium, are discussed in their deeper philosophical implications by comparing them with notions of social ontology previously introduced in the course. Different perspectives that try to move away from classical economics in these regards are presented, with a major focus on schools of economic thoughts that have critized the core notion of economic equilibrium, from Keynesian economics, to complexity economics, to behavioral economics, to Austrian economics.

October 21: Economic Goods and Institutions

Samuelson's classic notions of 'rivalry' and 'excludability' and the subsequent debate around the definition of public goods may be extended to draw a basic ontology of different kinds of economic goods, following the intuitions of Elinor Ostrom and Mancur Olson on the matter. Moreover, the classic spectrum between goods and services can be stretched to further sophisticate our understanding of economic goods. Building an ontology of economic goods is important in the normative domain as well, as institutions can be understood as different systems of rules that are tailored to facilitate the social provision of different kinds of economic goods.

October 28: Austrian Economics 1 - Menger, Mises, and Apriorism

The class introduces the philosophical presuppositions of the Austrian school of economics, and its program to promote an understanding of economics as a philosophy of human action, or praxeology. This interest begins in the works of the two founding fathers of the school, Carl Menger and Ludwig von Mises, and the course thus introduces the main innovations they proposed: apriorism, the praxeological approach, entrepreneurship as a feature of human action, the subjective theory of value, the re-establishment of methodological individualism.

November 4: Austrian Economics 2 - Hayek and the Price System

One of the core objections to neoclassical economics made by the representatives of the Austrian school is their nuanced approach toward quantitative mathematical models of the economy. The course tries to present this point with reference to the Austrian's theory of economic equilibrium, represented by Friedrich von Hayek's refinement of the notion of the price system, as the spontaneous order that drives the complex system of the economy toward the correct allocation of resources. This mechanism puts forward an understanding of the economic equilibrium as a process rather than a static state or goal. The course will explore this topic by reflecting especially on its ontological presuppositions, namely the relevance of spontaneous social orders and the communication of price signals through the unintended consequences of the actions of economic agents.

November 11: Austrian Economics 3 - Schumpeter and Kirzner on Entrepreneurship and Creativity in Humans and Beyond

The last core tenet of Austrian economics that the course finds philosophically important is entrepreneurship as the equilibrating force that drives the process of market equilibrium. The course will present the topic of entrepreneurship through the (sometimes conflicting) ideas of Joseph Schumpeter and Israel Kirzner. The focal point is that entrepreneurship is a fundamental notion in economics that is rarely investigated outside the Austrian school, and this has to do with the Austrian's recognition of the intrinsic complexity of the economy. Entrepreneurship can be further generalized as a feature of all action that has to do with creativity and proactivity, and this will allow to consider the hypothesis of designing AI entrepreneurs out of present-day technologies like stock market prediction systems etc.

November 18: Market Socialism, AI, and Economic Planning

The class will explore the 'calculation debate' sparked by Mises' and Hayek's objections to economic planning. The two main socialist replies will be introduced: the objectivity of economic value through the labor theory of value, and market socialism. Soon, the calculation debate has been flooded by proposals to harness the successes of AI technology for planning the economy. The class will thus present and discuss the most promising models that attempt to plan the economy through AI intervention, starting from Salvador Allende's CyberSyn project in Chile: the Lange-Lerner model, the Cockshott-Cottrell model, Nieto's model, and Saros' democratic economic planning model.

Student Learning Outcomes

Program Outcomes/Competencies	Instructional Method(s)	Assessment Method(s)
The student will acquire a knowledge of the philosophy of the social sciences in general and of economics in particular.	Lectures and class discussions	Review of reading matter and associated online content and participation in class discussions
The student will acquire experience in using the methods of philosophical argument, in formulating complex propositions pertaining to economic matters	Participation in practical experiments	Review of results
The student will acquire experience in formulating ideas using powerful persuasive prose.	Creation of documentation and youtube presentations	Review of results

How to Write an Essay

Steven Pinker, The Sense of Style, Penguin Books, 2014

Strunk and White, The Elements of Style

Harvard's guide to writing philosophy

Jim Pryor's guide to writing philosophy

Jordan Peterson's Essay Writing Guide

How to Use ChatGPT to write an essay

Suggested Additional Reading

W. B. Arthur, 2021, “Foundations of Complexity Economics”, [7]

S. Bostaph, 2019, “Schumpeter vs Kirzner on Entrepreneurs”, [8]

P. Boettke & R. Candela, 2022, "On the Feasibility of Technosocialism", [9]

A. Cottrell & P. Cockshott, 1993, "Calculation, Complexity and Planning: The Socialist Calculation Debate Once Again", [10]

J. Fernández-Villaverde, 2020, "Simple Rules for a Complex World with Artificial Intelligence", [11]

F. A. Hayek, 2012, "Law, Legislation and Liberty. A New Statement of the Liberal Principles of Justice and Political Economy", pp: 35-54, [12]

O. Lange, 1936, “On the Economic Theory of Socialism”, [13]

M. Olson, 1971, "The Logic of Collective Action. Public Goods and the Theory of Groups", Part I, [14]

S. Phelan, 2020, "Can Entrepreneurship Be Learned by Intelligent Machines", [15]

F. Schmitt, 2003, "Joint Action: From Individualism to Supraindividualism", [16]

B. Smith, 1997, "The Connectionist Mind: A Study of Hayekian Psychology", [17]

S. Thurner et al., 2018, "Introduction to the Theory of Complex Systems", [18]

A. Quinton, 1976, “Social Objects”, [19]

Important Dates

Sep 11	- submit book review choice, and start to discuss the content of your essay with Dr Smith
Sep 25	- submit proposed title and abstract of your essay
Oct 2	- last day to present book summary
Oct 23	- submit a table of contents of your essay and 300 word summary plus draft of associated ppt slides
Oct 30	- submit first draft of essay (~1000 words) and associated powerpoint (~10 slides)
Nov 13	- submit second draft of essay (~2000 words) and associated powerpoint (~10 slides)
Nov 20	- class presentation
Dec 10	- submit final version of essay and powerpoint slides and upload final version of video to youtube

Grading

Grading will be based on two factors:

I: understanding and criticism of the material presented in classes 1-13

All students are required to take an active part in class (and where relevant on-line) discussions throughout the semester.

II: preparation of an essay, and associated powerpoint slides and recorded presentation.

Content and structure of the essay should be discussed with Dr Smith.

Grading Policy: Grading follows standard Graduate School policies. Grades will be weighted according to the following breakdown:

Weighting Assignment

20% - class discussions

15% - youtube video presentation

15% - powerpoint slides

50% - essay

Final Grades

Percentages refer to sum of assignment grades as listed above

Grade Quality Percentage

A	4.0	90.0% -100.00%
A-	3.67	87.0% - 89.9%
B+	3.33	84.0% - 86.9%
B	3.00	80.0% - 83.9%
B-	2.67	77.0% - 79.9%
C+	2.33	74.0% - 76.9%
C	2.00	71.0% - 73.9%
C-	1.67	68.0% - 70.9%
D+	1.33	65.0% - 67.9%
D	1.00	62.0% - 64.9%
F	0	61.9% or below

An interim grade of Incomplete (I) may be assigned if the student has not completed all requirements for the course. An interim grade of 'I' shall not be assigned to a student who did not attend the course. The default grade accompanying an interim grade of 'I' shall be 'U' and will be displayed on the UB record as 'IU.' The default Unsatisfactory (U) grade shall become the permanent course grade of record if the 'IU' is not changed through formal notice by the instructor upon the student's completion of the course.

Assignment of an interim 'IU' is at the discretion of the instructor. A grade of 'IU' can be assigned only if successful completion of unfulfilled course requirements can result in a final grade better than the default 'U' grade. The student should have a passing average in the requirements already completed. The instructor shall provide the student specification, in writing, of the requirements to be fulfilled.

The university’s Graduate Incomplete Policy can be found here.

Related Policies and Services

Academic integrity is a fundamental university value. Through the honest completion of academic work, students sustain the integrity of the university while facilitating the university's imperative for the transmission of knowledge and culture based upon the generation of new and innovative ideas. See http://grad.buffalo.edu/Academics/Policies-Procedures/Academic-Integrity.html.

Accessibility resources: If you have any disability which requires reasonable accommodations to enable you to participate in this course, please contact the Office of Accessibility Resources in 60 Capen Hall, 645-2608 and also the instructor of this course during the first week of class. The office will provide you with information and review appropriate arrangements for reasonable accommodations, which can be found on the web here.

University suppert services: Students are often unaware of university support services. For example, the Center for Excellence in Writing provides support for written work, and several tutoring centers on campus provide academic success support and resources.

Available resources on sexual assault: UB is committed to providing an environment free of all forms of discrimination and sexual harassment, including sexual assault, domestic and dating violence and stalking. If you have experienced gender-based violence (intimate partner violence, attempted or completed sexual assault, harassment, coercion, stalking, etc.), UB has resources to help. This includes academic accommodations, health and counseling services, housing accommodations, helping with legal protective orders, and assistance with reporting the incident to police or other UB officials if you so choose. Please contact UB’s Title IX Coordinator at 716-645-2266 for more information. For confidential assistance, you may also contact a Crisis Services Campus Advocate at 716-796-4399.

Counselling services: As a student you may experience a range of issues that can cause barriers to learning or reduce your ability to participate in daily activities. These might include strained relationships, anxiety, high levels of stress, alcohol/drug problems, feeling down, health concerns, or unwanted sexual experiences. Counseling, Health Services, and Health Promotion are here to help with these or other concerns. You learn can more about these programs and services by contacting:

Counseling Services: 120 Richmond Quad (North Campus), phone 716-645-2720

Health Services: Michael Hall (South Campus), phone: 716-829-3316

Health Promotion: 114 Student Union (North Campus), phone: 716- 645-2837