True knowledge derives from existing things -- Epicurus
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One of the stranger tasks that can fall only to Philosophy is the division and organization and classification of all human knowledge. This is, of course, a thankless and on-going labor made necessary by philosophy's current servitude to the great and expansive scientific-paradigm (which more or less forces philosophy to be much more "scientific" in all its aspects and functions). Thus we have the chief division of human knowledge into the two main groups of the hard and soft sciences. Philosophy and Economics both fall under the latter category; and so it should come as no surprise that both studies have some shared points of contact where ideas converge and intersect, thereby making economics, at least in part, a matter of significant philosophical interest.
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Economics began its career as an identifiable field of inquiry just as scientific knowledge was taking great strides forward in the western world. Science was the fuel powering the industrial revolution and the cultural upheavals that went with it. Scholars of all sorts were looking for new facts, new areas of study, new fields for scientific inquiry, and new books to be written that would shake the world. And so the borders between the various soft-sciences were still flexible enough to allow intelligent and exceptional scholars to work through several related areas.
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Thus a philosopher (like Adam Smith say) could be interested in history, psychology, sociology, political-theory, anthropology, and other similar sciences, absorb and incorporate all this knowledge with his own thinking, and then find a blank spot overlooked by other investigators: a new topic for scientific discussion; namely, how various peoples and societies actually behave, and why. Smith looked at the 18C (edited by fan) English society around him closely, through the eyes of a philosopher, presented a snapshot of that society, and analyzed and explained how and why it all works, and where its all going. Thus did 'Wealth of Nations' become the first great textbook in economics!
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But perhaps you disagree? ... How, you may ask, can Philosophy and Economics be bound together in any significant or meaning way? Philosophy is just nonsense dressed up as science, while economic-theory is a rigorous, statistical, and methodological scientific-discipline utterly lacking in the "hot air" that comprises the bulk of philosophy! Hey, I know exactly what you mean. Perhaps its best to just keep these two soft-sciences as far apart as possible. Perhaps. But this attitude does not, in and of itself, nullify the plain and obvious facts available to all the sciences.
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Thus there is one area of thought where all the soft-sciences gather and meet, and that is the not-so-small matter of their working conception of human nature, and the qualities that define humanity so as to be of service to the varying needs and objectives of this or that science. Sociologists and anthropologists, for example, will not share the same definition or conception of humanity. So of course, different economists see people in different ways according to their often unstated assumptions and varying visions of the goal and nature of economic-theory.
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What, for example, are 'sheeple' if not a functional philosophical concept of considerable utility to many economists. If you go walking through the streets of any major city, you will not see any 'sheeple' as such, but rather only many individuals going about their daily business. And yet the concept of 'sheeple' is a very flexible one. For some economists it can be the bourgeois/proletariat hybrid, while at the same time (for other economists) it indicates the material substance of things like 'the invisible-hand'. And so on.
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Anyway, back in Victorian England economic-theory was all the rage among intellectuals and academics, and much ink was spilled in the production of many pages falling under the rather general category of "economic-literature". So the new study of economics soon became a popular pursuit that anyone could participate in; with or without gusto and enthusiasm, with or without passion, with or without scientific rigor, and even with or without insight into the workings of humanity as a functioning collective. Amidst all the uproar one shy and quiet scholar released the results of his labors in 1881 in the form of a little-book entitled 'Mathematical Psychics'.
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In this document one professor F.Y. Edgeworth forwards the observation that the science of economics deals with known quantities. Moreover, any study that deals with quantities can be translated into mathematics! And these numbers can then be used to construct a more or less accurate mathematical-mirror of the world. It is 'more or less' because a *useful* economic-model obviously must simplify and ignore much of the complexity and variety inherent within reality as it is lived by actual individual persons. But for economic-theory it is the collective that has primary importance, and the individual is simply meaningless when 'out-of-context'. Meanwhile, existentialism might have something to teach economic-theorists about this little over-sight and logical-contradiction.
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But what is this "reality" that economists constantly refer to anyway, if not that small slice of the cosmos that actually impinges upon the human mind? And if that is so, then reality is, at least in part, created by the human mind (individually and collectively), such that reality is largely a social-construction built up over many generations of collective and individual efforts (which is manifested physically in the form of books, art, architecture, etc, that the various cultures and civilizations leave behind them as the planet travels through space/time). History then is a primary element of whatever it is that is meant by the term 'reality'.
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Moreover, the fact that reality is partially created both collectively and individually means that it is necessarily flexible in *some* respects, such that some few individuals can (if they will it with considerable determination) define *some* aspects of reality in their own terms in order to better suit themselves (see Alexander the Great for a classic example of this). The point is that ideas do indeed shape reality (to some extent), and while this may sound odd to most pragmatic-minded people, the importance of this detail is that applies on both the individual and collective levels of human-reality. So you see then how *important* certain individuals are to the larger historical process (being the ongoing development and rationalization of civilizations). Moreover, certain individuals are very important; even to economists (see the pioneers of economic theory for many examples).
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After all, a man is what he thinks about all day long (Emerson). But even so, most people remain a lot like machines anyway; some folks have even taken to calling them 'sheeple' (see wiki for more details). W. James once observed that only philosophy makes men, everything else makes machines. Thus we have Aristotle's 'rational-man' appearing in various forms under different categories. There is man the social-animal, man the political-animal, man the war-making-animal, the slave-man and his master-man, the aristocratic-man and the criminal-man, man the sexy naked ape, and so on and so forth, etc etc. And now something new: man the economic-animal; the machine-man that doesn't even know he's a machine!
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And thus does the mighty rational-man fall to his knees in abject defeat ... only to arise anew as something completely unexpected, the new-fangled and high-tech economic-man; whereby all people everywhere are pleasure-calculators (of varying quality and effectiveness), and most of whom are chiefly machines of one sort or another, bearing different skill-sets and resources, etc (ie. mere cogs in the wheels of the great market-machinery driving onward, ever (blindly) onward, towards ... what? towards progress and a better world? ... I think maybe NOT the best of all possible worlds. Yet this is the world that Aristotle's Bastards have managed to build for us all. The 21st century is what ... the Age of Uncertainty? ... Thanks a lot there Mr Aristotle!
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And so the 'Age of Uncertainty' is certainly a very good description of 21st century society; our ever-shrinking and hi-tech global-village made up of countless cities grouped into competing nations now forced to cooperate and work together for the greater good, in spite of overwhelming local concerns. But in the general climate of uncertainty, it is exceedingly difficult for all these sovereign (ie. supreme and autonomous) nations to get their act together enough to even get on the same page. Page one is now being written in Europe, regarding the Greek debt/default crisis. Whether or not there will be a page two is anyone's guess. But uncertainty is also a problem outside the markets and the general economy.
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As in Philosophy, for example; see Russell and Wittgenstein for more details. Indeed, some even go so far as to suggest that if philosophy cannot achieve even a modicum of success in its efforts to gain some certainty about something, then it is utterly and completely useless; and therefore worthless. There is really no answer to such extreme skepticism and cynicism; other than to point out that science and philosophy both have a very long way to go before they're finished their jobs, and that they are really just getting started. The last twenty-five centuries have seen enormous strides taken by philosophy, but for every step forward the world demands that philosophy take two steps back.
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The result is that more time and effort are spent on reviewing and criticizing previous mistakes (and almost-good ideas) than anything else. Thus philosophy is really in no position to conjure up massive doses of certainty 'on demand', as it were. And in any case, uncertainty is not the absolute-destroyer of philosophy (and maybe everything else too) that it is made out to be by some. Rather, uncertainty is simply a part of human life, and must therefore be given its due: "The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next" (U.K.LeGuin ).
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Anyway, the mathematical-mirror of the living and dynamic world of collective human activity and behavior is simply a conceptual tool-set for economic study and analysis. And as such, the process of translation from world to mirror clearly requires abandoning the grand and melodramatic visions of the world (and its ultimate goals) that most previous economists (eg. see Smith and Marx) described and analyzed:
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.Heilbroner say: To build up such a mathematical mirror of reality, the world obviously had to be simplified. Edgeworth's simplification was this assumption: every man is a pleasure machine. Jeremy Bentham had originated the conception in the early nineteenth century under the beguiling title of the Felicific Calculus, a philosophical view of humanity as so many living profit-and-loss calculators, each busily arranging his life to maximize the pleasure of his psychic adding machine. ... in a world of perfect competition each pleasure machine would achieve the highest amount of pleasure that could be meted out by society. -- page 173-4
Of course, the idea of 'men as machines' goes back even further, but Edgeworth pushed this idea to its logical limits and came up with his "algebraic insight" into the deep springs of human activity (and its motivations), thus carrying it to almost mathematical precision. And yet the model (or conceptual mirror) also contains a built-in adaptability which allows the model to be modified and corrected by events and activities in the real-world. This necessary flexibility stems from the observation that all men are not created equal, and are not endowed with glorious rights and talents. Men are simply pleasure-calculators ...
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BUT some are much better pleasure-calculators than others, and some even have an innate knack for it, while others do not. So this tremendous variety in the all-important skill of being a successful pleasure-calculator explains the wide variety in societies and their economic systems. For example, inequalities in the distribution of wealth vary from culture to culture, and economy to economy, because they result from the basic inequalities (in intelligence, skills, knowledge, authority, temperament, etc) among the teeming hoards of pleasure-calculators that make up ALL of humanity.
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Now you might think that such bizarre thinking is surely a modern invention, and in large part this is true, but things are rarely so simple in the vast timeless world of philosophy. So even these mathematically inspired notions of modern economic theory can be traced back through history (and philosophy) to the great nation of Greece in its glory-days (where science, philosophy, art, history, literature, etc, were birthed out of the "collective mind" of the ancient bronze-age peoples).
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