Philosophy of Economics: A Contemporary Introduction, by Julian Reiss

Routledge, 2013, xvi + 331 pp, 0 415 88116 6, hbk, £75, 0 415 88117 3, pbk, £22.99

‘Philosophy’ means ‘the love of wisdom’, and although Reiss does not put it like this, throughout his book he seeks wisdom in relation to the social science that we call ‘economics’, and particularly in relation to economic theory, the methods of such practical branches as econometrics, and the ethics of welfare and behavioural economics, markets, and redistribution.

The philosophy of economics can be approached from two very different directions. It can start from the theory and practice of economics, ask questions, and explore possible answers; or it can start from a philosophical tradition (and since it is economics as practised in the West that is in view in this book, the Western philosophical tradition would probably be the most appropriate), and then ask how that tradition might be relevant to the study of economics. Reiss takes the former approach. It would be interesting to see a further volume that took the latter. This could perhaps begin with a discussion of how we might view the ontological status of money in the light of Plato’s Theory of Forms ( – is money better understood as a universal, like Justice or The Good, or as a complex phenomenon of the sensible world in which we live?); it could understand the laws of economics as regulative principles through which we understand the world around us, as Kant might have done; and it could ask, with Wittgenstein, whether every use of a word such as ‘transaction’ is different from every other use of it, with the different meanings bearing only family resemblances to each other. As it is, Reiss’s book contains no discussion of the nature of money, or of what we might mean when we use such words as ‘money’, ‘theory’, or ‘ethics’. This is a pity, as a study of the ways in which such words are used would have enabled him to ask some fundamental questions, the variety of possible answers to which would have laid a useful foundation for the rest of the book, and would have given to it a coherence that it sometimes lacks.

But having said that, the book does tackle many of the questions that might be asked in relation to the theory, methods and ethics of economics, and it offers thought-provoking commentary both on the questions and on possible responses to them. The first section on economic theory asks whether theory can explain economic phenomena, how we might understand the ways in which individuals make economic choices, how we might explain an individual’s choices in the context of other people’s choices (a study of game theory), whether and how we might be able to speak of causation, and how understandings of economic mechanisms and models might contribute to the debate on causation.

In the book’s middle section on methodology, Reiss discusses the difficulty of measuring such variables as consumer price indexes, whether statistics can prove generalisations, what we can learn from practical experiments, and whether random controlled trials are relevant to the real world. The third part of the book is entitled ‘ethics’, but it could equally well have been ‘political economy’. In it we find discussions of welfare, well-being, inequality, redistribution, and justice; of the morality of markets of various kinds; and of some of the ethical issues raised by practical applications of behavioural economics.

Readers of this Newsletter will find all three sections of the book useful. Much of the material in the first section would be relevant to a study of such relationships as that between marginal deduction rates and labour market behaviour; material in the second section would contribute to a discussion of the difficulty of costing tax and benefits reforms; and in the third section the material on the meaning of wellbeing and on the principles of distributive justice would be relevant to any discussion of the ethics of a Citizen’s Income.

The book contains relevant case studies, clear and accessible discussion of theory and practice, and at the end of each chapter questions for study and suggestions for further reading. It will prove to be a most useful textbook, not only for courses called ‘the philosophy of economics’ but also for a wide variety of other courses on aspects of economics.

Now all we need is a companion volume starting from the other end.