Economics as a science of human behavior has been grounded in a remarkably parsimonious postulate: that of the self-interested, isolated individual who chooses freely and rationally between alternative courses of action after computing their prospective costs and benefits. In recent decades, a group of economists has shown considerable industry and ingenuity in applying this way of interpreting the social world to a series of ostensibly noneconomic phenomena, from crime to the family, and from collective action to democracy. The “economic” or “rational-actor” approach has yielded some important insights, but its onward sweep has also revealed some of its intrinsic weaknesses. As a result, it has become possible to mount a critique which, ironically, can be carried all the way back to the heartland of the would-be conquering discipline. That the economic approach presents us with too simpleminded an account of even such fundamental economic processes as consumption and production is the basic thesis of the present paper.

General equilibrium analysis is a theoretical structure which focuses research in economics. On this point economists and philosophers agree. Yet studies in general equilibrium analyses are not well understood in the sense that, though their importance is recognized, their role in the growth of economic knowledge is a subject of some controversy. Several questions organize an appraisal of general equilibrium analysis. These questions have been variously posed by philosophers of science, economic methodologists, and historians of economic thought. Is general equilibrium analysis a theory, a paradigm, a scientific research program, or a set of interrelated theories? Is it not any of these but rather a branch of applied mathematics? Is GE analysis associated with the growth of knowledge, or does it waste intellectual resources? How is it related to other work in economics? Is it connected to, or is it apart from, the concerns of applied economists?

Moral philosophers are fond of the dictum “ought implies can” and even deontologists normally admit the need to take account of consequences in the design of social institutions. Too often, however, philosophers fail to take advantage of the knowledge provided by the social sciences about the constraints and consequences of alternative forms of social organization. By discussing ideals in abstraction from the problems of institutionalization, they fail at least to see some of the important consequences and costs of a proposed ideal, and sometimes they fail even to understand the ideal itself.

In Anarchy, State, and Utopia, Robert Nozick contrasts entitlement theories of justice and “traditional” theories such as Rawls', utilitarianism or egalitarianism, and advocates the former against the latter. What exactly is an entitlement theory (or conception or principle) of justice? Nozick's book offers two distinct characterizations. On the one hand, he explicitly describes “the general outlines of the entitlement theory” as maintaining “that the holdings of a person are just if he is entitled to them by the principles of justice in acquisition and transfer, or by the principle of rectification of injustice (as specified by the first two principles of just acquisition and transfer)” (Nozick, 1974, p. 153). On the other hand, his famous “Wilt Chamberlain” argument against alternative theories is first said to apply to (all) “non-entitlement conceptions” (p. 160), and later to any “end-state principle or distributional patterned principle of justice” (p. 163) — which amounts to an implicit characterization of an entitlement conception (theory, principle) as a conception of justice which is neither end-state nor patterned.

Discussions of Karl Popper's falsificationist philosophy of science appear regularly in the recent literature on economic methodology. In this literature, there seem to be two fundamental points of agreement about Popper. First, most economists take Popper's falsificationist method of bold conjecture and severe test to be the correct characterization of scientific conduct in the physical sciences. Second, most economists admit that economic theory fails miserably when judged by these same falsificationist standards. As Latsis (1976, p. 8) states, “the development of economic analysis would look a dismal affair through falsificationist spectacles.”

F. A. Hayek is uniquely responsible for his fellow economists grasping the importance of the decentralization of knowledge: as Hayek shows in his pathbreaking “The Use of Knowledge in Society,” knowledge nowhere exists as a coherent whole and to pretend otherwise is a most serious error. Hayek also shares responsibility for the popularity of a strong form of the methodological individualist research program which asserts that since collectives as such have no impact on the choices of individuals, investigators ought to purge any reliance on collectives from our analysis.

This essay is a review of Ronald Dworkin's recent essay on equality of resources (Dworkin, 1981b). Many of the ideas discussed by Dworkin have also been examined by economists with, I believe, considerable insight. Unfortunately, economists tend to write for economists, not for philosophers, and their insights are seldom communicated properly to noneconomists. Of course, the same criticism can be levied on philosophers! But perhaps legal theorists are less subject to this criticism. One of the great contributions of Dworkin is that he is very readable; and the quality of his exposition makes these ideas accessible to a wide audience of philosophers, lawyers, and social scientists in general.

There is a simple joy in finding that the emperor has positively no clothes and especially when the finger is pointed in ribald good English. Donald McCloskey does this service in “The Rhetoric of Economics”, where he argues with force and wit that “modernism” (meaning, roughly, positivism, as in “Positive Economics”) will do as an account neither of what economists do nor of what it makes philosophical sense for them to attempt. Instead they should recognize that models are always metaphors and should make a virtue of the literary devices, which they in fact rely on. Armed with the craft of rhetoric and a new “poetics of economics,” they will achieve better writing, better teaching, better foreign relations, better science and better dispositions.

Martin Hollis, in the introduction to the collection of Rationality and Relativism he edited recently with Steven Lukes, describes himself as the most arch of arch rationalists, “by which we mean, merely, that [we] reject the forthright relativization of truth and reason.” You might suppose that his self-description would place him unambiguously in the army of traditionalists arrayed against what Richard Rorty fondly calls the New Fuzzies (like himself and me). You might suppose, then, that Hollis would indulge in furious letter writing to, say, Harper's, telling us that “we need to stand shoulder to shoulder against the growing army of enemies of rationality. By that I mean the followers of the fashionable cult of absolute relativism, emerging from philosophy, linguistics, semiotics, and deconstructionism.” You might suppose that he would go on in this way equivocating between “rationality” and “rationalism,” identifying the people he dislikes with the enemies of civilization: fascists, Stalinists, bikers, bomb throwing nihilists — Richard Rorty and Wayne Booth and Stephen Toulmin riding into town on their Harley- (or Donald-) Davidsons, spurning warrants for belief and good reasons, reading pornographic comic books (the new literary canon), and snarling at the townsfolk huddled behind the local syllogism.