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Smith: Constructivist and ecological rationality in economics

Disclaimer. Don't rely on these old notes in lieu of reading the literature, but they can jog your memory. As a grad student long ago, my peers and I collaborated to write and exchange summaries of political science research. I posted them to a wiki-style website. "Wikisum" is now dead but archived here. I cannot vouch for these notes' accuracy, nor can I even say who wrote them. If you have more recent summaries to add to this collection, send them my way I guess. Sorry for the ads; they cover the costs of keeping this online.

Smith. 2003. Constructivist and ecological rationality in economics. American Economic Review 93 (3): 465-508.

There are two forms of rationality.

Cartesian (=Decartes) constructivism assumes that we use reason and rationality to construct our modes of behavior.

Ecological rationality says that we don't always deliberate. Some norms just emerge through trial and error until one helps us survive.

The end lists several conclusions. Some big ones: Markets require rules. Although some of these rules might be the result of deliberate (Cartesian) reasoning, many are simply the result of trial and error (ecological rationality). Even deliberate rules evolve over time through ecological processes. Thus, the rules of exchange derive from both Cartesian and ecological rationality.

Free exchange does not require selfishness (as many say). Rather, the point of Adam Smith and the other Scots was only that one does not necessarily have to be "good" to contribute to a socially good outcome.

Research on similar subjects

Tags

Smith, Vernon (author)Political ScienceEconomicsRational ChoiceMarketsAllocation

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