Ontology of Economics
PHI 637 (seminar, 3 credits). Registration number: [1]
Time: 1:00-3:50pm, Mondays, Fall Semester 2023
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, e.g. institutions and the market, with respect to individual 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 some useful topics in social ontology with an eye on economic applications: agency, complexity, information, collectivity. The second part of the course analyzes some themes underlying the works of the main contemporary economic school of thoughts, including classical and neoclassical economics, keynesian economics, institutional economics, Austrian economics, complexity economics, and marxist economics. Austrian economics will be given much relevance throughout the course because it is arguably the economic school of thought that makes the most open use of philosophical concepts in its theories. Part of the lectures will be devoted to the introduction of AI technology as a bearer of new possibilities and new understanding on the working of economic processes and 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]
Schedule
August 26: Introduction / General Overview (BS)
September 2: LABOR DAY (No class)
September 9: 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, including individual biological agents, collective agents, automated agents. Economi agency can then by understood in different ways in different applications via notions such as economic actor, market, institutions, microeconomic/macroeconomic agent, aggregate supply/demand.
September 16: Complex Systems and Economic Information
This class introduces the concept of 'complexity' and its applications to the economic context. Complexity as a notion can be attributed a myriad of interpretation, of which a short overview will be given. However, the main notions of complexity that are useful in economics are 'computational complexity' and, above all, 'systemic complexity'. Reflecting on the latter, the class will highlight the features of complex systems that offer obstacles to modeling and manipulation, e.g. their evolutionary character or their dynamic phase space transitions. A notable application of this in economics is the multiplicity of kinds of economic information that inform economic decisions, both at the microeconomic and macroeconomic levels, and these will be presented by drawing a distinction on econometric data and economic local knowledge.
September 23: Collectivism and Individualism
'Collectivism' and 'individualism' are crucial approaches to the social world that influence the construction of theories throughout the social sciences. The class will introduce three dimensions of the collectivist/individualist divide: ontological c./i., ethical c./i., methodological c./i. The focus will then be moved to ontological collectivism and individualism, and the class will explore some proposals in the socio-ontological literature along the individualist-collectivist sprectrum (e.g. Miller, Tuomela, Searle, F. Schmitt, Marx).
September 30: Kinds of Economic Goods and Kinds of Institutions
Samuelson's classic concepts 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 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 7: (Neo)Classical Economics: Individual Rationality and Social Equilibrium
This class introduces the core themes of classical economics and their refinement in neoclassical economics since the work on general equilibrium models by Léon Walras. 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.
October 14: FALL BREAK (No class)
October 21: Collective Proactivity from Keynesian Economics to Institutional Economics
The class introduces the core features of Keynesian economics and institutional economics, reflecting on their initial assumptions. An important shared theme between the two attempts to treat the limits of (neo)classical economics is to overcome its reliance on methodological and ontological individualism. Both schools offer their own blends of collectivist and individualist intuitions, by trying to introduce active macroeconomic institutions, such as the government that manipulates aggregate demand or market configurations that influence individual decisions, in our ontology of economic actors.
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 innovation 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 concept 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 concept of 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. The concept of entrepreneurship can be thus 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: Complexity Economics
The course will introduce the recent developments of complexity economics as a school of thought, or a shared approach, that tries to relativize the reliance on mathematical modeling and empirical content of economics by recognizing the complexity of the economic system as an ineliminable feature. The core proposals to treat the complexity of the economy in a formal way will be presented, alongside the limits of doing so. The analysis of this school will draw the parallels with the Austrian school of economics, which more or less implicitly operates under similar assumptions.
November 25: From Marxist Economics to Market Socialism
The class introduces the core philosophical assumptions of Marxist economics, deeply routed in a strong form of ontological collectivism. The relevant concepts will include class struggle, the labor theory of value, the relativization of individual attitudes. The features of Marxism as a school of economic thought are better understood in contrast with Mises' and Hayek's objection to economic planning in the context of the calculation debate. Thus, the course will introduce the two main socialist replies to their objections: the affirmation of the objectivity of value through the labor theory, and the more recent proposal of market socialism, embodied in the so-called Lange-Lerner model.
December 2: AI and Economic Planning
In response to Mises' and Hayek's remarks against economic planning, a calculation debate has been ignited by the works of Oskar Lange. In particular, the latest development of computer systems have mobilized a new wave of proposals to make economic planning a tractable problem through AI technology. The course will present the most promising models that attempt to plan the economy through AI intervention, starting from Salvador Allende's CyberSyn project in Chile up until the Cockshott-Cottrell models, and Nieto's and Morozov's purchase data search algorithms. The best approaches to the questions will be evaluated (namely, reinforcement learning, neural networks, agent-based computational models), as well as the challenges that impair the success of experiments in this direction.
December 9: Student Presentations
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
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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.
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