Friday, September 11, 2020

492. Rationality and morality

Recently, I was asked to contribute an article to a special issue of a scientific journal, on the occasion of the decease of the Nobel prize winning economist Oliver Williamson. I have used his work succesfully, but we disagreed on the role of trust in markets, on which we had debated several times at conferences. His claim was that if trust does not go beyond calculative rationality, it does not add anything new to economics, and if it does go beyond it, it is not viable in markets, because it cannot survive under competition, where one needs to take every opportunity at gain, even to the detriment of others. I argued that to survive in markets one needs to innovate, which necessitates collaboration with others, to arrive at the ‘novel combinations’ of innovation, that this entails non-calculative uncertainty, which requires trust as a partially non-calculative ‘leap of faith’. I discussed that debate in the article, and it was then rejected because two reviewers had judged my paper ‘unscientific’ for coming up with that claim of the need for partially non-calculative trust. To a traditional economist everything has to be explained as individualistic, calculative rationailty. The possibility that the leap of trust is partially non-calculative, and is based on a moral instinct of empathy went against that dogma.

I argued that trust as a partially ingrained , unconscious instinct had arisen in evolution because it is ‘adaptive’, conducive to the survival and procreation, of the group (clan, tribe, community). In debates on this, economists have used the following argument: Since this instinctive drive is conducive to the survival and evolution of the group, it is rational. My rejoinder is that while the ‘remote’ cause of survival of the group is rational, in the sense of being adaptive, the ‘proximate’ cause of the motivation of people, is instinctive, subconscious, and cannot be called calculatively rational. rational. If you reject theory that claims this, you must also deny the ‘behavioral economics’, imported and accepted in economics from social.psychology, which claims that many decisions are taken subconsciously, and hence are not or only partially deliberative, let alone rational. I have not yet received an adequate answer to this.

I appealed to the verdict of the journal’s editor, saying that I thought the journal would agree with me. He replied that he agreed with me, but surely I appreciated that he could not wave aside the verdict of two referees. I replied that I did not appreciate that, and that an editor should stand by his conviction. Apparently he had chosen inappropriate reviewers, and in any case he could have communicated his argument tot hem. He did not reply.

This case shows that science at times is not as impartial as many people make it out to be, and is driven by theoretical ideology, with the bias of dogma. The dogma that economics is driven by rational, individual rationality is ineradicable, even among enlightened economists

I grant that sometimes moral judgement and pleas for moral improvement constitute an easy way out in exolanation. Not leaving it at that, one can analyse underlying causes, in an analysis of selfish motives, in terms of economic concepts such as prisoner’s dilemma’s and other games, monopolies, collusion, reputation and so on, and on how to employ economic notions to find ways of moral improvement, for example in that it can be in the interest of shareholders to maintain a firm’s reputation of ecological responsibility or fairness.

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