Archive for October, 2006
Reflexivity Bleg
| Nicolai Foss |
While we can all agree that ideas matter, how much do they matter? Is much, and perhaps most, of social reality essentially bootstrap phenomena in which the Thomas Theorem (i.e., the “the situations that men define as true, become true for them”) holds true? Do the social sciences bootstrap much of social reality in the sense that social science decisively affects the agents that social scientists study? Or, are there constants, stable mechanisms, etc. that exist and work regardless of what social scientists believe about them (as, I suppose, many economists would hold)?
The idea that theorizing affects the objects of theorizing — that is, the notion of “reflexivity” — has been an important one in sociology for a long time (Thomas wrote about it in the 1920s; Merton in the 1940s). It has become a Leitmotiv in the sociology of knowledge. It has also been a recurring theme in economics (in connection with predictions and the modeling of expectations; e.g., the debate surrounding the Lucas critique), and it has been treated by philosophers as well (e.g. Popper). However, this literature has not discussed the extent to which reflexivity (in the above sense) obtains.
The issue is obviously very difficult to get a hold on. However, I also believe it is a crucial one, particularly in management where we have recently witnessed people essentially arguing that economics-as-applied to management is (nothing but?) a self-fulfilling prophecy (i.e., this paper). So, do any of our readers know of literature that can help to frame and answer the questions with which this bleg began?
Lessig on the Two Economies
| Peter Klein |
The Internet has given us an alternate, parallel economy, says Lawrence Lessig:
One economy is the traditional “commercial economy,” an economy regulated by the quid pro quo: I’ll do this (work, write, sing, etc.) in exchange for money. Another economy is (the names are many) the (a) amateur economy, (b) sharing economy, (c) social production economy, (d) noncommercial economy, or (e) p2p economy. This second economy (however you name it, I’m just going to call it the “second economy”) is the economy of Wikipedia, most FLOSS development, the work of amateur astronomers, etc. It has a different, more complicated logic too it than the commercial economy. If you tried to translate all interactions in this second economy into the frame of the commercial economy, you’d kill it.
Lessig is an articulate and passionate advocate for legal rules that favor this second economy. I think he tends to overstate the differences between the two economies, and that a single set of behavioral models, frameworks, theories, etc. works fine for both. Hence I’m not convinced that special rules are needed to promote what Lessig calls the “hybrid” economy, one that links the first and second economies. But his thoughts on licensing practices like FLOSS (not to be confused with Foss) that “inspire the creative work of the second economy, while also expanding the value of the commercial economy” are worth reading.
For alternative perspectives on the relationship between norms and law in cyberspace compare Lessig’s Code and Bruce Benson’s “The Spontaneous Evolution of Cyber Law.”
Bob Sutton Responds
A response, of sorts, to my post on Evidence-Based Management by EBM co-founder Bob Sutton:
Perhaps the term is doesn’t do much for you, but evidence-based decisions and implementations are the exception rather than the rule. It may sounds obvious, but few managers are masters of the obvious. It may sound like common sense, but common sense is in fact uncommon. I travel back and forth between the academic and management worlds, and evidence-based practice is rare — faith-based management is a lot more common and so are management decisions based on dangerous and powerful cognitive biases. Indeed, if you look at some of the work that Kahneman won the Nobel Prize for, you will see that humans in fact have trouble spotting and responding to accurate patterns. Look at the bad merger decisions that are made over and over again. Look at the belief in creating big gaps between the best and worst paid employees despite a huge pile of data showing that the opposite is true. Sorry if it seems trite, but like evidence-based medicine, it sounds trite until it is your money — or your life — that is on the line. People also laugh when I tell them that only about 15 to 20% of medical decisions are based on evidence — until they think of what it means for them and those they love.
I submit that, if the term bewilders and you believe that “What other kind of management is there?” it is a sign that you have no idea how most managers do their work, nor do you understand how most human beings make decisions. Start by reading Max Bazerman’s book on managerial decision-making.
This deserves a full-length rejoinder, but for now a few brief remarks will have to suffice. (more…)
Theorists Need History, But Historians Need Theory Too
| Peter Klein |
We have previously lamented the lack of interest in doctrinal history among contemporary social scientists (here and here). Wanting to be Real Scientists, economists and management theorists tend to focus on the latest trendy theories and empirical techniques, paying little attention to what prior generations of scholars might have thought. If this means occasionally re-inventing the wheel, well, that’s the price of being on the cutting edge.
It is often argued that the increasing marginalization of doctrinal history — and its transformation into a specialized field with its own associations, conferences, journals, etc. — may be harmful to current practice. I share this concern. At the same time, however, the emergence of doctrinal history as a self-contained field may also be harmful to doctrinal history. (more…)
Live Broadcasting the Nobel
| Nicolai Foss |
I am not quite sure, but it does seem that the Nobel Foundation is engaging in a new practice when they live broadcast this year’s Nobel Prize announcements (at this link). So be ready for the Econ Nobel announcement on Monday October 9, 1.00 p.m CET.
Chestnut Street: The First “Wall Street”
| Peter Klein |
Did you know that the US’s first financial hub was not in New York, but in Philadelphia? So says Robert Wright’s The First Wall Street: Chestnut Street, Philadelphia, and the Birth of American Finance (University of Chicago Press, 2005).
Here’s an interesting point made in Peter Rousseau’s review:
One point that Wright does not make explicitly, but which is nonetheless reinforced by his lively narratives, is the primal nature of real activity as the driving force behind the location and development of finance. At a time when colonial economic activity was more local in nature and commerce more international, Philadelphia’s position as an Atlantic port made it an adequate commercial center, especially since it was already a political center. It was therefore natural for the financial system to have its mainsprings there. A virtuous cycle of real needs leading to finance and promoting further real growth seems to have been the result. But as it became increasingly clear that the new nation and its large land mass was not a featureless plain, the move to New York might be seen as a classic example of Joan Robinson’s famous adage that “where enterprise leads, finance follows.” And follow it did in this case. As Chestnut Street’s best financiers headed off to New York, their expertise went with them. Only large sunk investments in plant and equipment for the Federal mint and the central bank could hold these institutions in the Quaker City, at least until political forces took care of the latter.
New Issue of the QJAE Out
| Nicolai Foss |
The Quarterly Journal of Austrian Economics is one of three existing periodicals that are 100% devoted to promoting Austrian economics. The other two are the Review of Austrian Economics and Advances in Austrian Economics. QJAE differs by having more of an emphasis on the hardcore Misesian stream of Austrianism. There is, therefore, a focus on the work of a single scholar (Mises) that is rather unusual for an economics journal (this is the one dimension in which the Journal of Post-Keynesian Economics is like the QJAE).
I have read the QJAE since its start nine years ago, and served on its editorial board since the founding of the journal. The most recent issue is, at least to this reader, the best so far. (more…)
Ghoshal on Economics — Cont’d
| Nicolai Foss |
Frequent readers of this blog will know that we have often posted on the bashing of economics that is going on in the management field (e.g., here and here). The bashing has been cumulating lately. A recent high point of management econ-bashing is the conferment of the AoM Prize for best paper in Academy of Management Review to Ferraro, Pfeffer, and Sutton’s adaptation of extreme and unqualified sociology of knowledge arguments in their “Economics Language and Assumptions: How Theories Can Become Self-Fulfilling.” (more…)
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