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TitleTransforming Economics: Perspectives on the Critical Realist Project (Economics As Social Theory)
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Table of Contents
                            Book Cover
Transforming economics? On heterodox economics and the ontological turn in economic methodology
Transforming Post Keynsian economics: critical realism and the Post Keynesian project
Macroeconomic theory, (critical) realism and capitalism
Critical Realism and Transformational Growth
Critical realism and econometrics: an econometrician's viewpoint
Critical realism and feminist economics: how well do they get along?
The agency-structure model and the embedded individual in heterodox economics
Critical realism and the heterodox tradition in economics
Economics as Social Theory and the New Economic Sociology
The really real in economics
Addressing the critical and the real in critical realism
Economics as symptom
The Economics of Institutions and the Institutions of Economics
A note on critical realism, scientific exegesis and Schumpeter
Transforming methodology: critical realism and recent economic methodology
Document Text Contents
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dxt dxt

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Transforming Economics

Economics has become polarised. On the one hand, orthodox economists
attempt to advance their discipline via an increasing use of mathematical
modeling. On the other hand, heterodox economists argue that if
economics is to progress and to be useful, then, rather than relying on the
unthinking application of mathematical modeling, economists must tailor
their analytical tools more closely to the nature of their subject-matter
than has hitherto been the case.

The contributors to this book fix their scholarly gaze on the heterodox
section of economics, and in particular upon critical realist approaches to
the subject. Experts from a variety of perspectives have come together in
these pages to examine the impact and usefulness of critical realism in
relation to the different spheres within economics.

Notable for its contributions from such distinguished figures as the
latest winner of the Nobel Prize for Economics, Clive Granger, Edward J.
Nell and Peter J. Boettke, this book deserves to find a ready audience
across the economics spectrum.

Paul Lewis is a Newton Trust Lecturer in the Faculty of Economics and
Politics and the Faculty of Social and Political Sciences, Cambridge
University, and a Fellow of Selwyn College.

Page 163

more developed understanding of embedded individuals and subjectivity
adds to the explanatory power of the model. Since this chapter seeks to
use the agency–structure model to help develop a conception of the
embedded individual for heterodox economics, I do not attempt here to
further elaborate or defend this interpretation of the model, but rather
now turn to a classification of heterodox economics schools both
according to their apparent reliance or emphasis on institutions and/or
social values as means by which individuals and society influence one
another, and according to their associated conceptions of the embedded

V Six heterodox schools: concluding remarks

The six schools of heterodox economics I address, roughly according to
their order of emergence in contesting post-war orthodox economics, are:
institutionalist economics, social economics, radical/Marxist economics,
Post Keynesian economics, feminist economics, and ecological economics.
None are explicitly understood by their proponents in terms of the
agency–structure model, but all arguably rely on the principal tenet of the
model, namely, that agency and structure, however identified, are
dependent upon one another. Thus all generally avoid the (twin but
opposite) errors that face social science and social theory, voluntarism and
reification/determinism, and accordingly all are neither methodological
individualist nor methodological collectivist in orientation. First, then,
how may these schools be classified according to their emphasis on
institutions and/or social values as the means by which agency and
structure influence one another?

Institutionalist economics and social economics are relatively easy to
characterize in that traditionally the former has emphasized institutions
and the latter social values as the chief means by which agency and
structure influence one another. Institutionalism does not ignore social
values, but largely treats them as reflecting institutional relationships.
Social economics does not ignore society’s institutional structures, but
generally explains them as reflective of social value attachments. In
contrast, radical/Marxist and Post Keynesian economics seem to involve
conflicting views regarding the roles of institutions and social values.
Radical/Marxist economics emphasizes the institutionalized nature of
class relationships underlying labor exploitation and capital
accumulation, but also emphasizes the role of class consciousness in
revolutionary and liberation struggles, which involves social values. Post
Keynesian economics emphasizes the institutionalized nature of liquidity
and uncertainty in a capitalist market economy, but on the social value
side also emphasizes investor animal spirits and the question of public
commitment to demand management. Finally, feminist and ecological
economics seem to have evolved in the weight they assign to institutions

148 John B. Davis

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and social values, though in different directions, with feminist economics
now placing greater weight on social values and ecological economics
now placing greater weight on institutions. Feminist economics originally
gave greater weight to laws and institutionalized systems of
discrimination in the economy in explaining gender inequality, but has
increasingly emphasized gendered social attitudes, as are for example
manifested in household relationships and child-rearing, as important.
Ecological economics originally emphasized public consciousness
regarding the environment, but has given increasing weight to changing
legal frameworks limiting corporate activities.

What, then, may we conclude from this regarding different conceptions
of the embedded individual in these heterodox schools? In
institutionalism, individual embeddedness is understood chiefly in terms
of the institutions/individual interaction reciprocal processes relating
agency and social structure. That is, individual activity is influenced by
institutions (agency depends on structure), and individual activity
changes institutions (structure depends on agency). In social economics,
individual embeddedness is understood chiefly in terms of the social
values/shared personal values reciprocal processes relating agency and
social structure. That is, social values and shared person values influence
and depend upon one another. In radical/Marxist and Post Keynesian
economics, individual embeddedness can be explained on both bases. On
the one hand, this produces richness in explanation across these two
schools when each is taken as a whole. On the other hand, since the two
schools tend to be divided between those giving greater emphasis to
either the institutions/individual interaction or the social values/shared
personal values processes, general conclusions within the two schools
about individual embeddedness are difficult to achieve. In feminist
economics, individual embeddedness is increasingly explained in terms
of the social values/shared personal values processes, though with the
institutions/individual interaction processes as a framework within
which this occurs. Similarly, in ecological economics, the
institutions/individual interaction processes are explained within the
social values/shared personal values processes. These two latter schools
perhaps offer the most explanatorily powerful accounts of individual
embeddedness in their implicit integration of both sets of processes in
overall agency–structure analyses.

What these differing emphases suggest is that a general account of the
individual as socially and economically embedded for heterodox
economics could be based on a critical realist agency–structure model
enlarged with social psychology thinking about the self-concept. Different
heterodox schools give different kinds of emphasis to institutions and
social values, but the agency–structure model can make use of both types
of means in terms of two reciprocally occurring processes,
institutions/individual interaction and social values/shared personal

The agency–structure model 149

Page 325

Smart, J.J.C. 189
Smelser, N.J. 168
Smith, A. 59, 61, 110, 124, 125, 238, 245
Smithin, J. 19, 55–72
Smolensky, E. 57
social activity see transformational

model of social activity
social age 135
social construction of economic

institutions 173–5
social economics 2, 148, 149, 150
social hypocrisy 239–41
social life 161
social order 13
social psychology 21
social science 97, 253–4
social structure 4, 5–10, 13, 17, 18–19,

21–4; economics of institutions and
institutions of economics 252, 253,
257, 259; Economics as Social
Theory and New Economic
Sociology 167, 175, 176, 177, 180;
economics as symptom 228, 229,
236, 240, 241; feminist economics
111; heterodox tradition 155, 157;
macroeconomic theory and
capitalism 56, 60, 61, 62, 65, 67, 69,
70; methodology 293; Post
Keynesian economics 38, 39, 49;
really real in economics 193, 195,
196; transformational growth 76, 83,

social values 133, 142–3, 144, 145, 149
socialism 210; centralised 282
socialization institutions 88
society 107, 121–3
socio-economic world 3–26; closed-

system models 11, 19; deductivism
11–16, 18, 23–5; Economics as Social
Theory and New Economic
Sociology 169, 171, 173, 174, 176,
180; embeddedness 20–1; human
agency 4–10, 13, 18–19, 21, 23;
natural sciences 16–18; open-system
models 14, 18–19; orthodox
economics 1–2; really real in
economics 188; social structure
5–10, 13, 17, 18–19, 21–4;
transformational model of social
activity 4, 6, 8–9, 19, 20–1, 24

Solomon, M. 294
Solow, R. 36
Spinozism 244

Sraffian economics 288
state, role of 64–5
Stigler, G.J. 268, 272–4, 281
Stove, D. 189
Strassmann, D.L. 14–15, 17–18
Strober, M. 115
structural transformation 281
structuralism 81, 235
structuration theory 137
structure 77, 216
structured reality 253–4
structures 154
subjectivism 187, 193, 195
subjectivity 143, 144, 146, 148
Sugden, R. 157–9
Suppe, F. 289
Swedberg, R. 168, 169–70, 172, 173, 175
symbolic exchange 239–41
Sztompka, P. 5

tacit consciousness 140
Takeuchi, H. 179
tendencies 78–9, 216, 295
tensions 268, 274, 276, 279
Thatcher, M. 58
third-order model 80
Thomsen, E.F. 194
Thornton, H. 63, 71
time 45, 118
Tobin, J. 55, 57
Tonkens, E. 114
training institutions 88
transactions cost economics 168, 169,

170, 173–4
transcendental realism 101, 111, 230,

231, 233
transformation 112, 139–42, 144, 146,

281, 295–6
transformational growth 76–94;

institutional development 86–91;
institutions and existence 84–6;
outline of critical realism 76–8;
realism and determinism 78–81;
uniqueness and change 81–4

transformational life cycle 84
transformational model of social

activity 4, 6, 8–9, 19, 20–1, 24
transmutability 39–43
trust 22, 170, 172, 175, 177–80
trustified capitalism 269, 272
truth 240, 241
Turnovsky, S.J. 56
type 85

310 Index

Page 326

Uebel, T. 289
unbounded rationality assumption 255
uncertainty 45, 47–9, 50, 51, 282;

radical 18
unconscious level 159
unemployment 46, 100
uniqueness 81–4
United States 97, 147; Constitution

universalisation 107, 114
utilitarianism 279

value-neutrality 125
values 150, 169; personal 143, 145–6,

147; social 133, 142–3, 144, 145, 149
van Eeghen, P.-H. 295
Varela, F. 228
Varoufakis, Y. 162
Velthuis, O. 168
violence 236–7, 241
vision 275–6
volatility measures 104
voluntarism 4, 139, 148, 188, 253

wage labor 64, 71
Walras, L. 59, 230–1, 244, 259, 274, 278,

Weber, M. 48, 71, 235, 278
Weigert, A. 171
Weintraub, S. 57
Western Male Subject 125, 126
Western Modernist Subject 110
Western subject, impact of 118–19
Wible, J.R. 291
Wicksell, K. 71
Williamson, O.E. 173
Wilson, E.O. 80
Winslow, T. 62
Winter, S.G. 272
Wittgenstein, L.J.J. 157
Woolgar, S. 290
Working, E. 79
Working, H. 79
Wray, L.R. 65

Zannoni, D.C. 4
Zarnowitz, V. 103

Index 311

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