====================== HES POSTING ================== 
 
[NOTE: Julian Lamont asked me to post this again because he needs a  
commentator before the end of October. -- RBE] 
 
 Dear All, 
 
We are looking for a commentator for a paper to be presented at the  
International Economics and Philosophy Society Session at the 1998 Pacific  
Division Conference of the American Philosophy Association. The conference  
will be held at the Westin Bonaventure Hotel in Los Angeles, March 25 to  
March 28, 1998. The commentary will be 5-10 minutes long. An abstract of  
the paper appears below. If you are interested in being considered as a  
commentator for this paper please send a brief CV including your research  
interests to me ASAP because I have to have the program together by  
October 31. 
 
best, 
 
Julian Lamont 
Centre for the Study of Ethics 
Queensland University of Technology 
 Email: [log in to unmask] 
 
 
"Meta-Economic Principles" 
 
K. R. Sawyer* 
University of Melbourne 
Clive Beed 
University of Melbourne(Retired) 
H. Sankey 
University of Melbourne 
B. Ellis 
University of Melbourne 
 
 
Abstract 
In this paper we consider meta-economic principles, those principles which 
underscore the theoretical thinking of economics. Meta-economic principles 
are different from laws; they relate to the principles of theory 
construction, to the assumptions which are implicit in theory, to the 
constraints imposed on theories and to the analysis and scope of theories. 
 
The paper suggests that the evolution of core economic principles follows 
a branching process, where the state of thought of generation n+1 is 
determined by a transitional probability function which reflects the 
experience of generation n, and the history of all generations up to and 
including n-1. Meta-economic principles determine the transitional 
structure for the evolution of these principles. 
 
We identify seven meta-economic principles. These are not mutually 
exclusive, and do not necessarily exhaust the set of possible 
meta-economic principles. The principles identified are: 
 
1. The principle of self-interest or perceived self-interest which 
underlies utility maximisation in microeconomics and expected utility 
maximisation in portfolio theory. 
2. The principle of incentives and disincentives which is the basis of 
cost-benefit theory and is used to assess the benefits of public 
infrastructure theory. 
3. The minimisation of transactions costs, which has become a cornerstone 
of the economics of time-saving technology, the static efficiency of 
markets and the economics of choice. 
4. The principle of rational expectations and time consistency, which has 
become the basis of expectations theory. 
5. The principle of economic versus social man, which has meant that all 
decisions are represented by economic agents, and ignores individual 
specific attributes and the interactions of individuals. 
6. The principle that everything can be priced, not only goods and 
services, but concepts, goodwill and values. This has permitted the 
extension of economics to areas as diverse as religiosity, crime and 
marriage. 
7. The principle that markets tend towards completion, in that the number 
of assets increases to satisfy the potential payoff and risk structures in 
the economy. 
 
These seven meta-economic principles are inherent in much of economic 
theory. But curiously, they also become embedded in economic practice. For 
example, a common assumption of economic theory has been to ignore 
transactions costs, effectively minimising their impact. In subsequent 
evolutions of the economic system, transactions costs have tended to 
decline, so that the results of economic theory are better approximates of 
reality. The convergence of economic system behaviour in generation n+1, 
n+2,.. to the meta -economic principles in generation n is an issue 
explored in the paper. 
 
To illustrate the role of meta-principles in economic theory, we consider 
a number of contemporary articles from the Journal of Political Economy in 
areas as diverse as trade wars, asset pricing, hedonic models of air 
quality and the macroeconomics of the French Revolution. In each case, we 
examine the incidence of the above meta- economic principles, and the 
effect these principles have on the analysis. The purpose of this casual 
empiricism is to suggest a model for the use of meta-economic principles. 
 
In section 4 of the paper, the testability of meta-economic principles is 
examined, both in terms of the normative principles adopted in economic 
theory, and the observed economic system behaviour. The testing of such 
principles requires both heterogeneity in the type of economic study, and 
heterogeneity in economic thinking. We discuss the testability in terms of 
the indirect constraints imposed on economic analysis. 
 
In the final section of the paper, a utility based model is developed, 
whereby meta- economic principles are embedded in a framework of analysis. 
Formalising the utility function permits a fomalisation of the effect of 
meta-economic principles, in particular, the effect on the first order 
conditions in the optimisation problems which underpin most economic 
analyses. This consideration of meta-economic principles is not dissimilar 
to the ancillary hypotheses of the Duhem-Quine thesis in that the testing 
of economic hypotheses cannot be disentangled from meta-economic 
principles. By embedding them within a utility function, the jointness of 
economic hypotheses and the meta-economic principles can be better 
defined. 
 
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