Re-thinking Economics
Prof. Peter Róna, Research Director for Economics as a Moral Science
Why has classical economics failed us? How do we put morality at the heart of economic reasoning?
Grave errors in policy-making, the regulation and conduct of economic life can be traced back to deep-seated misconceptions in economic theory. Economics remains overly attached to an outdated and overly abstract theoretical model. This paints an unrealistic picture of economic phenomena determined by perfect rationality, utility maximisation, and equilibrium. These and other concepts enable neat mathematical formulation of economic theorems, but ignore key non-mathematisable forces and factors behind them.
The Economics as a Moral Science project identifies the misconceptions of economic dogmas, explains and illustrates why they are unhelpful and damaging in practise, and offers alternative ways to conceive of economic problems in light of what we know from other disciplines such as philosophy, sociology, anthropology and theology (in line with how economics was perceived before and in the era of Adam Smith). The key to a better understanding of economics is a serious engagement with the reality of the human person and human interactions which shape the complexity of the micro- and macroeconomic environment. Click here to see what we have done so far.
Since 2013 we have organised a number of international symposia with eminent representatives of humanities, natural and social sciences, who critically discussed the methodological traps that mainstream economics had built for itself. [Click here for list of topics and participants]
Conference proceedings have been published by Springer Publishing in the Virtues and Economics series
In the second stage of the programme we aim to explore possibilities of reforming ways in which economics is taught and practised. We want to build a community of like-minded scholars who are interested in the topic. If you want to learn more about our activities, please consult our on-line resources.
The Problem with Conventional Economics
There are grave problems with Economics as it has typically been taught in universities and business schools around the world. In a modern age when science and technology have done so much to generate wealth and improve dramatically the lives of so many people, a misconceived ‘science’ of economics has often led to badly informed and hugely destructive decision-making in politics and business.
Damage inflicted on the economy has also caused grave harm to individual lives and to our planet. The various economic and financial crises, including the collapse of 2007–8, have clearly shown the inability of modern Economics reliably to predict – let alone avoid – such major events.
Solving the Problem?
Economists have attempted in recent years to ‘refine’ this or that element of existing economic theory, but without addressing the more fundamental issues. A far smaller number of leading economists, and indeed philosophers, have engaged with the deeper problems (Amartya Sen, Charles Taylor, Alasdair McIntyre, Margaret Archer, and Tony Lawson). Such thinkers have questioned some of the fundamental assumptions of Economics, such as the nature of economic agents (i.e. human beings, working individually and collectively), how they make their decisions, and the relation of mathematical models to the real world.
Such advances urgently need to be underpinned by, firstly, a thorough critique of where mainstream economic theory has gone wrong; and secondly, the construction of a comprehensive new economic science. Our project addresses both needs.
‘Economics as a Moral Science’: Foundations of the Project
- Identifying the Problem. Work already undertaken by our project since 2013 has identified the fundamental mistake of mainstream Economics in modelling itself upon the natural sciences. Inspired by Physics and Mathematics, modern economists have attempted to predict the course of economic activities and describe mathematically the underlying ‘mechanisms’. As has been seen, however, such models fail to account for the unpredictability of human behaviour, and often lead to destructive outcomes.
- A New, More Human Science of Economics. Modern economists typically insist that ethics cannot be a part of the science of Economics: Economics must be concerned with what is rather than what should be. However, the work we have undertaken to date has persuaded us to the contrary. Economics needs to be put on a new footing: economic activity is the product of conscious human choices, therefore understanding it properly must necessarily involve the consideration of moral and social questions, and requires a more complex, richer notion of what constitutes human well-being. Our project is contributing to the development of a new economic science that – in sharp contrast with the present model – sees moral judgment as an integral component of economic life.
Methodology and Outcomes
The project is multi-disciplinary in nature, and re-examines economics in the light of philosophy, sociology and anthropology. The tradition of thought from Aristotle through to Thomas Aquinas and beyond illuminates our understanding of moral philosophy, as do later developments reflected in the body of work known as ‘Catholic Social Teaching’.
Our fruitful method of working has been to initiate a series of international conferences [click through to list of participants for each] at the University of Oxford, hosted by the Las Casas Institute at Blackfriars Hall. These allow us to share insights, challenge assumptions, and promote joined-up thinking.
Publications
See the link below for the series of books published as outcomes of our work.
Sponsors
The Las Casas Institute is grateful to the Malinckrodt Foundation and to Porticus for their generous support for this research project.