Cover

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Frontmatter

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Contents

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pp. iii-iv

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Preface and Acknowledgments

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pp. v-viii

Except when interrupted by academic appointments at UCLA and Harvard and adjunct teaching at the Johns Hopkins School of Advanced International Studies, my career as an economist was in institutions enmeshed in real world policy problems. Economics training was indispensable, but experience taught that to be useful it had to be greatly modified from ...

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1. Introduction

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pp. 1-6

There is a growing perception that a new approach is needed in economics if it is to be a useful branch of learning and provide the explanatory power and guidance needed for policy. Frey and Eichenberger concluded from their survey of economics and economists that with economics’ continuing emphasis on formalized, abstract, and institution-nonspecific research, its ...

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2. Limitations of Economics

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pp. 7-21

The conscious or unconscious view that many economists have of economics as a science comparable to physics tempts them to expect that it can aspire to explaining economic reality with the same precision and predictability that they believe physics has been able to achieve in explaining and predicting phenomena in the universe. ...

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3. Self-Interest

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pp. 22-44

A fundamental assumption of economics is that the dominant drive in individuals is a rational striving to maximize self-interest. This behavior is in essence a constant in all human nature: it is inherited in our genes and is a characteristic of the human biogram. “It makes possible the mathematical modeling of economic problems” (Samuelson 1947, 21). Theoretical structures, rigorously worked out and using this assumption as axiomatic, ‹ll the economic journals and innumerable texts. ...

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4. Reason and Rationality

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pp. 45-67

The second element of the fundamental assumption is that every individual acts rationally in making choices to maximize his or her self-interest. This “rationality principle” (as Popper has called it) is a foundation of mainstream economics and a canonical hypothesis of economic theory (Kreps 1997, 59).1 ...

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5. Ethics and Economics

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pp. 68-85

Even as early as Aristotle, it was axiomatic that man is a social animal. This is a universal human and historical truth. In an environment dominated by animals, which were stronger, faster, and fiercer, human beings survived and prevailed through cooperation in social groups. The Bantu-speaking peoples of Africa say, “Umuntu ngumuntu ngabantu,” that is, “A human being is a human being because of other people.” ....

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6. Markets

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pp. 86-110

Markets are institutions that evolved from human action in the past without initial conscious planning by anybody. As a result, there is a great deal about markets that we have tended to take for granted without being aware of what is involved. This we have learned from the attempts of the former centrally planned countries to create markets from scratch. The market is a ...

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7. Change and Growth

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pp. 111-130

Equilibrium is a concept of statics (a branch of Newtonian mechanics), which is concerned with bodies at rest or moving at a constant velocity. It is a condition in which all acting influences cancel each other out, resulting in a stable, balanced, or unchanging system. Equilibrium is a polar word - there is more than a whiff of something desirable about it. ...

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8. Predators and Parasites

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pp. 131-172

Goods and services may be bought in the market as exchange transactions or may be secured by the exercise of coercive power through predation and parasitism (P&P). P&P are transactions in the economy that are as driven by self-interest, as conventional theory assumes, but are dominated by power relationships. ...

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9. Summing Up

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pp. 173-176

Unless economics explains how the real economy works, it is not a science. Science is concerned with reality. To the extent that economics is a successful practical art it is, in fact, economic science. Empirical economists have often acquired a better understanding of the economy by dealing with the problems of the real world than can be gained from current economic theory. ...

Notes

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pp. 177-182

References

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pp. 183-210

About the Author

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pp. 211-212

Index

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pp. 213-224