The Wealth of Ideas: A History of Economic Thought

system of concepts thus obtained isolates the elements of reality that are considered relevant to the issue under consideration. Finally, the third stage concerns the construction of ‘scientific models’. Let us also recall that the logical sequence of the different stages does not necessarily correspond to their actual sequence in the economist’s research activity. As we saw in the preceding section, the debate between contending approaches concerns above all the choice of the conceptual system to be used in representing economic reality. The history of economic thought plays a decisive role in this respect. Since it is impossible to provide an exhaustive definition of the content of a concept,20 the best way to analyse 20 Georgescu-Roegen 1985, p. 300, speaks in this context of a ‘penumbra’ that surrounds ‘dialectical concepts whose distinctive characteristic is to overlap with their opposites’. Sraffa’s critiques of Wittgenstein’s analytical positivism in the Tractatus logicophilosophicus are relevant here; on this, cf. below, § 16.5. 12 The Wealth of Ideas it is to study its evolution over time, examining the different shades of meaning it acquires in different authors and in some cases in the different writings of the same author. This is in fact the common experience of all studies in the humanities, from philosophy to politics. Furthermore, by utilising the history of economic thought for analysis of a concept (and of a conceptual system) we can investigate two aspects which are decisive for any line of research in economics: first, whether it is possible – and, if so, how far it is necessary – to adapt the content of concepts to the continuous changes in the reality to be explained; second, how the mechanism of interaction between the conceptualisation stage and the stage of model-building operates. The first point – the interaction between economic history and economic theory – is a well-known issue. The second point is rarely considered, but is crucial. In fact, the difficulties which arise in the stage of model-building and the analytical solutions to those difficulties often imply modifications in the conceptual foundations of the theories;21 in other instances, such modifications reflect the evolution of the real world to be analysed.22 The systems of concepts underlying any theory thus change continuously, which makes it impossible to conceive the evaluation of economic theories on a mono-dimensional scale. As a consequence, there can be no univocal measure of the explanatory power of the different theories. Theoretical advances may constitute scientific progress under certain aspects but not under others. Most importantly, the steps forward continuously made in the direction of a higher logical consistency and a growing use of more advanced analytical techniques do not necessarily imply a higher explanatory power: they may call for further restrictions to the meaning of the variables under consideration, excluding crucial aspects of reality from the field of applicability of the theory.23 When we are confronted with this problem, the history of economic thought, by concentrating attention on the shifts in the meaning of the concepts used in the 21 An example is provided by the changes in the heuristic power of general equilibrium theories when we move from Walras’s original formulation to the axiomatic construction of Arrow and Debreu (cf. below, chapter 12). This example shows, among other things, that the need to analyse the conceptual foundations of theories and their changes over time is not limited to an evolutionary view of the economy, which focuses on institutional changes and path-dependence, although obviously the interaction between theory and history is stronger within this latter approach. 22 An example (illustrated in Roncaglia 1988) is provided by the evolution in the classification of economic activity in sectors from Petty to Smith, via Cantillon and Quesnay. 23 For instance, as we shall see in chapter 10, the marginalist theory of consumer equilibrium certainly represents a step forward as far as logical consistency and the use of sophisticated techniques of analysis are concerned, but this is accompanied by the shrinking of the economic agent to a sentient machine. The history of economic thought and its role 13 theory, can help in evaluating the multifaceted path followed by economic