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Embedding theories in history

from Asad Zaman and the WEA Pedagogy Blog

Based on my analysis of Polanyi’s methodology, I have come to the conclusion that a radical economics textbook for the twenty first century can be based on a single CORE principle, which REVERSES conventional methodology. Conventional methodology, both heterodox and orthodox, considers economic theories to be a means to understanding economic events. INSTEAD, we should look at how theories emerged as people searched for explanations for emergent historical events. In particular, different theories would favor different group interests and the dominance of one theory over others would be dictated by the political power of the different groups For example, Polanyi shows how theories are generated by historical process — the emergence of the possibility of large scale production led to the emergence of market friendly theories.

This idea was lost from view because of the empiricist illusion that the facts by themselves are sufficient to determine theories. A great deal of creative energy goes into weaving a narrative around any given collection of facts, leaving a great deal of room for human agency, and for blending in class interests into a theory. Instead of using theories to understand economic processes, I would like to use historical context to understand the formation of economic theories. For example: read more


  1. March 30, 2016 at 3:45 pm

    A good example would be the emergence of neo-classical economics as a response to the rise of socialism, but in particular, to the development of the land tax movement focused on Henry George in the last third of the nineteenth century. An excellent account in Mason Gaffney and Fred Harrison, *Corruption of Economics* (1994). Mason will send you his text if you ask.

    • March 30, 2016 at 6:53 pm

      thanks for the reference — i have just sent him an email with a request seems very interesting

  2. March 31, 2016 at 5:24 am

    You talk about economic theories emerging as responses to changes in economic
    context, and the relationship of these theories to the interests of the various social groups. This is too narrow. Economic theories are often created to serve or help prevent attacks on or defend from attack for non-economic purposes. I suggest this is a common origin for economic theories, For example, neoclassical economic theory benefits, purposely I think the ability of neo-conservative groups (read fascist) to undermine democracy and assert control over larger aspects of life. Economic theories are also created to benefit their creators, economists. See the book “Do Economists Make Markets?” edited by Donald MacKenzie, etc.

  3. March 31, 2016 at 11:28 am

    I think this idea is similar to many others. I think Marx could be viewed to have a version of this idea—ideologies or ‘class consiousness’ are determined by economic class relations in society—mind is determined by matter. Hence any analyses, such as Smith;s theory of capitalism, is not really objective, but rather is biased by the subjects (such as Smith and Marx) who produce it. (I actually see capitalistic analyses to be almost a rewording of marxism, and the reverse—-one group sees profit as goof, and self-interest as rational and optimal; the other sees profit as exploitation, and self-interest as greed, and non-optimal because it leads to immiseration. )

    An extreme version of this kind of argument is by Eric Lerner, who has a physics background, but is viewed as a ‘crank’ , and is also a Marxist of some sort. He wrote ‘the Big Bang Never Happened’— a dissident theory of physics, based on H Alfven’s ‘plasma cosmology. . For a while this theory was taken seriously, and some still keep it in mind. Alfven did have a Noble prize in physics, and there are other respected physicists who dissent from the consensus views on evolution of the universe—R Laughlin ‘A different Universe’ (noble prize in condensed matter physics) is another one.

    Lerner’s view was that big bang cosmology was not really an objective scientific theory, but rather a construction created by physicists in response to financial and other crises in the west during the 70’s (iranian revolution, formation of OPEC, watergate, Vietnam, etc.),
    They sort of projected things like ‘stock market crashes’ into their equations. (In more recent econophysics literature this sort of thing is still done, though just as an analogy or metaphor — ojne can find patterns in economic time series which are similar to ones in cosmological time series).

    Karl Mannheim’s writings on the sociology of knowledge, and other books such as ‘sociology of philosophy’ , evolutionary epistemology, and even Thomas Kuhn’s ‘structure of scientific revolutions’ also make the point that theories (or paradigms) emerge in changing social contexts.

    Also the popularity of theoies seems to oscillate. One can witness debates in biology over genetics versus environmental effects, group selection vs selfish genes, genetics of iq and diseases, GMO foods, etc. The fact that Bernie Sanders has made socialism a common meme is interesting (see Lipset on ‘why it didn’t happen here’) along with Trump on immigration . free markets, etc.

  4. peter
    April 5, 2016 at 10:30 pm

    The economist Stephen Stigler once applied mainstream economic theory to the production and consumption of economic theories. Who demands such theories? Well, both rich and poor people do, but only rich people have the money to pay for them. Hence, the effective demand is for theories that justify the continued presence of a rich class. Is it any wonder, Stigler asked, that the vast majority of economic theories produced support capitalism and the already-wealthy?

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