Why economists do not convince folks?

Tom­ma­so Ostil­lio
Uni­ver­si­ty of War­saw
Kozmin­s­ki Uni­ver­si­ty

Why econ­o­mists do not con­vince folks?

Abstract. This paper argues that eco­nom­ics is epis­te­mo­log­i­cal­ly lim­it­ed in at least two main ways: first, eco­nom­ics fails at man­ag­ing uncer­tain­ty as effec­tive­ly as nat­ur­al sci­ences do; sec­ond, eco­nom­ics assumes that ratio­nal pat­terns of util­i­ty max­i­miza­tion are real just to ensure deduc­tion with­in eco­nom­ic mod­els. Hence, this paper main­tains that the high lev­el of abstrac­tion from real­i­ty of eco­nom­ics lim­its its expla­na­tions of its con­stant­ly chang­ing ontol­ogy, i.e. mar­kets. In par­tic­u­lar, this paper shows that the epis­te­mo­log­i­cal lim­i­ta­tions of eco­nom­ics become evi­dent once two exam­ples from today’s world are con­sid­ered, name­ly: the sub­sti­tu­tion of phys­i­cal labor with AI-pow­ered machines; and the intro­duc­tion of the so-called Uni­ver­sal Basic Income (UBI), i.e. gov­ern­men­tal stipends paid to those cit­i­zens whose job has been replaced by machines. Impor­tant­ly, this paper argues that if an econ­o­my were to reach to the point where machines run any sort of pri­vate or pub­lic busi­ness and humans earn only the UBI, then such a sit­u­a­tion would rep­re­sent a lim­it case for eco­nom­ics. Indeed, this paper finds that although machines would rep­re­sent the per­fect exam­ple of ratio­nal util­i­ty-max­i­miz­ers, in such a lim­it sit­u­a­tion stan­dard eco­nom­ic the­o­ry would most like­ly fail at pre­dict­ing long-term eco­nom­ic out-comes.

Key­words: UBI, gen­er­al equi­lib­ri­um the­o­ry, eco­nom­ics, neo­clas­si­cal eco­nom­ic the­o­ry, ratio­nal­i­ty

DOI: 10.5840/dspl20192459

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