| The thesis defended is that macroeconomic controversy since Keynes is nothing less than a debate over the appropriate world view for economics. In other words, the microfoundation of macroeconomics which is so important for interpretations of Keynes, the Keynesian Revolution, and economic policy is also a debate over the philosophical, psychological, and scientific foundations of economics. This is clearly seen in the most recent episode in macroeconomics, "the rational expectations revolution." The rational expectations hypothesis and the view of economic science on which it is premised, viz, positive economics, are the most consistent manifestation of the Newtonian world view in macroeconomics. Since a new world view is emerging in the latter half of the twentieth century, at the very least, we argue that the rational expectations hypothesis must be reconsidered and its most significant implications rejected.; More specifically, we argue that the question of the appropriate world view for economics can be focused on two issues, mind and rationality. These two issues are mirror images of each other, i.e., they are inherently the same issue. For richer theories of mind and rationality, we look to philosophy of science and modern science itself. A richer, process conception of rationality for complex decision-making (nonjustificational rationality) is now apparent in the work of Karl Popper, Thomas Kuhn, and Imre Lakatos. A richer theory of mind and the universe is now apparent in physics and cognitive psychology. This is the holographic theory of David Bohm and Karl Pribram. The views of rationality, reality, and knowledge found in the preceding views are taken as components of a "structural philosophy of science." From this structural philosophy of science, we argue for a structural view of economic science.; With respect to recent macroeconomics, we believe that a concern for expectations per se is evidence of the psychological, philosophical, and scientific incompleteness of positive economics and rational expectations. However, even more specifically, we argue that a theory of mind is implicit in rational expectations. The mechanisms of expectation in rational expectations are nothing more than the utilitarian theory of mind, associationism, which most economists have forgotten. This gives added support to our contention that the rational expectations theory is essentially Newtonian in outlook.; Lastly, we attempt to give a simple analytical formulation which encapsulates our view of economic processes. This analytical device is called the Principle of Processing Complexity (PPC). It has the same integrative and interpretative role as Walras' Law in neoclassical economics. The PPC is formulated as a dualism, which simultaneously contrasts the nominal, tautological equivalence of monetary transactions with pervasive disequilibrium. But disequilibrium and indeterminacy are precisely the circumstances for human cognition and creativity to enter processively as determining factors. Thus, real human beings do have an essential and central role in our resulting, wholistic conception of economic processes. |
