What Is Philosophy of Economics?-Questioning the Foundations of Economic Orthodoxy
Philosophers of economics critically examine the philosophical assumptions underlying
economic theories. Those assumptions are generally of four types.
First are anthropological assumptions. Every economic theory assumes something about
“human nature.” Is it selfish or caring about others? Is it acquisitive or sharing? Competitive or
cooperative? Indeed, the long debate between defenders of capitalism and of socialism has been
largely over such questions of philosophical anthropology.
Second, economic principles are based upon metaphysical assumptions. For example, the
laws of supply and demand, which determine market prices, are, as we shall see in greater detail
later, applications by Adam Smith of principles of Isaac Newton’s mechanics to matters of
economy. Smith envisaged the economy as a kind of mechanism governed by the same sorts of
principles as those governing planets and moons. Is it legitimate to transfer principles from nonorganic physics to matters of human social and moral life? Are economies more like non-living
mechanisms or machines or like living organisms? Philosophers of economics ask metaphysical
questions of this sort about economy.
Third, all economic theories make ethical assumptions, although, as we shall see
orthodox economists, at least in the United States, generally claim that they do not make any
ethical assumption: On the contrary, they claim that they are ethically neutral. I argue that all
economic theories make some assumptions about what the “good life” is for human beings when
they adopt their various criteria for the measurement of economic performance. For example,
orthodox United States economists assume the proper measure of economy to be “utility,” but
other economists, such as Amartya Sen and myself, disagree. Such is a philosophical debate
over ethics, and not merely one of an empirical, social scientific nature.
Fourth, economists make epistemological assumptions in their methodologies. For
example, what are economic “facts”? How do we know that something is a “fact”? Those are
philosophical, epistemological questions that philosophers of economics might also ask.
Furthermore, the epistemological, methodological questions of economics cannot be
separated from ethical questions; facts cannot be separated from values, although most United
States economists think that they can. They imagine economics to be a science of pure facts.
Such a conceptions is an impossibility. For example, what are the most important and relevant
economic facts for us to gather? What is the best way to organize our economic data? Such
questions are both epistemological as well as ethical questions.
I am a social economist. “Social economics” is not well-known in the United States, but
I understand that it is common among Mexican economists. Social economists define “social
economics” in various ways, but I understand it as entailing two central features.1
1
See my "Moral Sensibilities for the Social Economy: The Challenges Facing Social
Economists in the Twenty-First Century---A Philosopher's Perspective," Review of Social
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First, social economists sees economic systems as “embedded” in larger cultural contexts
and as essentially connected with other social institutions, such as family, religion, law, and
education, and with moral, social, and political traditions. By contrast orthodox economists in
the United States abstract their principles from other social, cultural factors and treat these
principles as trans-cultural and universal. Economics in the United States is thus imperialistic
because it projects United States forms of economy upon the rest of the world as universally
normative and assumes that its forms must apply to everyone. Orthodox U.S. economists often
speak of “the economy” and “the market,” as though there were only a single universal economy
and market, without any cultural, historical context. For social economists, by contrast, there are
only particular economies and markets, tied to specific people and their cultures and histories,
and one must always speak with great caution when making trans-cultural generalizations; to talk
as orthodox economists talk, is to speak of mere abstractions and of nothing concrete or real.
Second, social economists see economics both as an empirical social science and as part
of moral philosophy, or ethics. Orthodox U.S. economists, by contrast, see economics as
ethically neutral and as value-free.2 They see economists only as gatherers of empirical facts
about economic behaviors and as describers of the laws of such behaviors and of the principles
for efficient production and distribution of goods. Social economists see this orthodox view of
economy as impossible: there are no “value-free” facts, and one cannot study the efficiency of
means without ethical consideration of the appropriate outcomes or ends of economy.
From these two features of social economy, two general criticisms of economics as it is
studied and taught in the United States follow: the latter tries to abstract economy from culture
and history, and it wrongly has tried to separate itself from ethics. Questions for us to discuss
are: how is economics in Mexico like orthodox U.S. economics and how is it like what I have
described as social economics? Is it more like one than the other?
I have described broadly what I understand by philosophy of economics and my work
generally as social economics, but let me now describe more specific interests of mine in
philosophy of economics, which will subjects for our later seminars.
Much of my research is historical: I want to understand how economics as an academic
discipline separated from philosophy and how economists, especially in the United States, came
to imagine that they could study economy without also concerning themselves with a range of
philosophical matters, especially ethical ones.
Ancient thinkers, such as Plato, Aristotle, and Xenophon (who wrote the first book on
Economy 51 (Winter 1993): 441-54.
2
Lionel Robbins, An Essay on the Nature and Significnce of Economic Science (London:
Macmillan and Co., 1932), perhaps more than any other work established among economists this
notion of economics as an ethically neutral, positive science and the fact-value dichotomy. See
in this regard Hilary Putnam, The Collapse of the Fact/Value Dichotomy, and Other Essays
(Cambridge, MA: Harvard University Press, 2002), especially pp. 53-64.
2
“economics”), as well as medieval philosophers, such as St. Thomas Aquinas, all understood
economics, along with politics, as a branch of ethics, as applied or practical ethics, and as
concerned largely with virtue (arete) and justice (dike), and not with utility. Economics was
concerned with such questions as, what kinds and amounts of material wealth best promote
excellence of human character? Such a questions would appear strange if raised in a present-day
economics classroom or at a meeting of professional economists. As Aristotle wrote,
“Economics attends more to … the excellence of persons (arete) than to the excellence of
property, which we call wealth.”3 Even more recently, all the great economic thinkers prior to
the twentieth century--Adam Smith, Jeremy Bentham, John Stuart Mill, Karl Marx--were
moral/political philosophers. There were not yet any faculties of economics.
So, how did it happen that economists in the United States, but also in Great Britain,
Austria, and elsewhere, began to imagine that they could study economy without considering
important philosophical questions in both their theorizing and their empirical data-gathering?
That has been one of the central questions that has most concerned me.
A second major concern of mine is the identification and criticism of the most elementary
philosophical assumptions underlying orthodox economics in the U.S. For this analysis I am
interested in the economies of non-European cultures that do not share the same anthropological,
metaphysical, and ethical assumptions as those held by economists from European cultures. I am
especially interested in the economies of the indigenous peoples of the Americas, for example,
the Lakota, the Navajo, and the Inuit.
For example, orthodox U.S. economists assume that a) human desires are naturally
unlimited, and that assumption is an anthropological one, a philosophical assumption about
human nature. b) Orthodox U.S. economists then assume that economic goods are scarce, at
least relative to presumably unlimited human desires, that human beings always want more than
what is available. That assumption is a metaphysical one, an assumption about the nature of
“reality,” about the fundamental character of the world. c) Orthodox economists then infer, from
a), the anthropological assumption, and from b) the metaphysical assumption, that human beings
must compete with one another for relatively scarce goods, that competition is natural and
normative, and this third assumption is an ethical one.
Many non-European cultures--Asian, Pacific Islander, African, as well as indigenous
American--do not share the same assumptions as those held by many European and EuropeanAmerican economists. People of many cultures experience nature as bountiful and generous, as
providing more than we desire, and in their cultural practices, especially their religions, they
celebrate that bountifulness and give thanks to Nature, to the Great Spirit that animates Nature,
or to their gods, for their generosity. Furthermore, if one experiences Nature as generous, rather
than as niggardly, then it seems inappropriate and even morally offensive to desire more. If
someone is generous to me, it would be wrong, it would be rude, to want still more and to
3
Aristotle, Politics I, 13, 1259b17-20.
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complain that what one has received is not enough. So we find in many world cultures not
competition for scarce goods but emulation of Nature’s generosity through the sharing of what
one has with other members of one’s tribe but also with strangers.
For such cultures, whose economies I call “economies of gift and thanksgiving,” 4 the
value of goods lies not so much in the personal utility that they provide as in what their sharing
does to strengthen interpersonal relations. If all share, then the bonds of friendship will be
strong, and together, in cooperation, there will always be enough to eat. If someone selfishly
hoards goods for oneself, however, and refuses to share, then enemies are created, and one can
no longer depend upon others in the community for help in times of need. Food, for example,
certain can provide personal nutrition and pleasure--personal utility--but when it is shared it also
creates friendly feelings among people. If one refuses to share one’s food, then, in many world
cultures (East Indian and indigenous American) the food is said to be “poisoned.” Although the
food might continue to provide personal nutrition, it now begins killing the community and will
eventually kill the individual members.
Such is but one example of how I, as a philosopher of economics, identify and critically
examine the elementary philosophical assumptions of economic theories, using cultural
anthropology for such purposes: examining the economic practices of foreign cultures makes
clearer one’s own philosophical assumptions regarding economy, and it frees one’s imagination
to consider possibilities for economy that more conventional economic theories cannot even
conceive.
Freeing the imagination to consider new possibilities for economy is especially important
in the United States, where economic thinking and policy-making are largely frozen by false
ideological dichotomies, such as, conservative-liberal, capitalist-socialist, and right-left. That so
many in the United States criticize President Barack Obama as a “socialist” is evidence of the
absurdity of such false ideological dichotomies.
Finally--and this third point continues the second one--I am interested in economic
models that help indigenous peoples resist economic oppression, whether it be in the form of
colonialism or global capitalism, and the development of such models requires that we free our
imaginations from the harmful false, ideological dichotomies that plague so much economic
thinking today, especially in the United States.
I am especially interested in various cooperative economic models, going all the way
back to the sixteenth-century “redactions,” built by the Jesuits in Paraguay to help indigenous
peoples resist the slave trade, but also in the first industrial, workers’ cooperative established by
Robert Owen in nineteenth-century England, the Topolobampo utopia that Robert Kimsey Owen
attempted to build in Sinaloa, and present-day cooperatives throughout the world, especially the
See “Economies of Scarcity and Acquisition, Economies of Gift and Thanksgiving:
Lessons from Cultural Anthropology for the Philosophy of Economics,” at the end of this
volume.
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most successful cooperatives in Mondragon, Spain. (Here we should note that the United
Nations has designated 2012 as the “Year of Cooperatives.”)
The three interests that I delineated above will be the topics for our next three seminars.
In our second seminar I will sketch my understanding of how economics severed itself from
moral philosophy to become an academic discipline unto itself. In the third seminar I will
examine critically the philosophical assumptions underlying utilitarianism and how it became
the main ethical theory used by economists for measuring the performance of economies, and I
will suggest some alternative, non-utilitarian measures of economy. In our fourth seminar I will
briefly review some of the highlights in the history cooperatives and identify some of the lessons
they offer orthodox economics.
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