We argued that institutionalists can benefit greatly both from the philosophical framework of systemism and the application of ABMs as one possible operationalization of this general framework. In some classic methodological research, institutionalist authors identified holism, systemism, and evolution as the cornerstones of institutionalist analysis. Bunge’s concept of systemism ties together all these ideas in one coherent framework, labeled systemism. We tried to show that this systemist perspective on the economy aligns well with a conception of the economy as a complex system. Building upon the definition of organized complexity due to Weaver (1948), we argued that there are considerable complementarities between complexity economics and original institutionalism, which are easily accessed from a systemist viewpoint. Finally, we illustrated our claims by referring to a simple ABM (Hodgson & Knudsen, 2004), which incorporates some of these complementary aspects. The above said, of course, does not meant that ABMs substitute a broader analysis, but have to be embedded into an adequate institutionalist process story in order to get epistemic meaningfulness.
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Chapter 3
The micro-macro link in heterodox
economics
Chapter Abstract
This paper provides an introduction to a unifying heterodox approach to the micro-macro link in economics. It emphasizes the analytical problems that may arise from popular misunderstandings about the relationship of individual and aggregate level and thereby illustrates why a thorough understanding of aggregation and aggregates in science is necessary.
In particular, we show that existing heterodox approaches to the micro-macro link in economics are not only consistent, but complementary to each other. We then propose a ‘systemist’ frame- work and show that heterodox economic theory and research practice can be substantiated and summarized by a more general, philosophical framework on aggregates and aggregation in science.
We argue that such a general philosophical framework will be helpful in advancing heterodox theory because it allows scholars from different heterodox starting points to relate their theories to each other via a consistent meta language and to explore the commonalities and differences in various heterodox approaches to the micro-macro link in economics.
Such a practice will facilitate a ‘heterodox convergence’, as in the case of evolutionary- institutional and social economics (Elsner, 2014), or help to ensure a transparent relationship in the form of productive disagreement, rather than a unreflected co-existence of the different approaches.
A productive scientific endeavor requires a common denominator for the different approaches enabling mutual communication and comparability. We argue this missing component is exactly what systemism can supply.
This chapter is going to be published in the Handbook for Heterodox Economics, edited by Lynne Chester, Carlo D’lppoliti, and Tae-Hee Jo. The handbook will be published by Routledge and will appear in late 2016.
3.1
Introduction
Any discussion of the micro-macro link in heterodox economics entails two main questions. The first question is relevant for social sciences in general and asks for the correct or adequate treatment of aggregates and aggregation in social theory. Any answer to this general question incorporates a series of diverse philosophical viewpoints, including ontological claims (e.g. do social and economic aggregates exist?), epistemological questions (e.g. which role is played by aggregates in aggregation in the context of economic theory?) and methodological aspects (e.g. how to adequately model processes of aggregation?). Given that economics abounds in problems of aggregation – as in the case of market interaction, macroeconomic aggregates or interpersonal coordination and contracting - the aim to provide suitable theoretical tools to adequately address aggregates and aggregation is of special interest to economists of different persuasions.
The second major question is more specific and asks for similarities and differences in the treatment of aggregates and aggregation among heterodox economists. From a traditional viewpoint one might question the idea that there is something like a consistent vision of the micro-macro link in heterodoxy, since different interpretations of the micro-macro link have been attributed to various heterodox strands of research. While some heterodox economists may prioritize either micro- or macro-level analysis, others emphasize the necessity to concentrate on the meso-level as a decisive intermediate layer between the more traditional approaches focusing on either microeconomic or macroeconomic aspects.
Against this backdrop this paper provides an introduction to a unifying heterodox approach to the micro-macro link in economics. In doing so, we first emphasize the analytical problems that may arise from popular misunderstandings about the relationship of individual and aggregate level and thereby illustrate why a thorough understanding of aggregation and aggregates in science is necessary (section 3.2). In a second step we show that the different heterodox approaches to the micro-macro link in economics are not only consistent, but complementary to each other and allow for a concise treatment of the micro-macro link in economics based on a set of shared fundamental principles (section 3.3). Eventually, we embed the heterodox economic view on aggregation in a ‘systemist’ framework and show that heterodox economic theory and research practice can be substantiated and summarized by a more general, philosophical perspective on aggregates and aggregation in science (section 3.4). We argue that such a general philosophical framework will be helpful in advancing heterodox theory because it allows scholars from different heterodox starting points to relate their theories to each other via a consistent meta language. The final section offers some concluding thoughts.
3.2. AGGREGATES AND AGGREGATION IN SCIENCE: AN ILLUSTRATION OF