Western thinking has been deeply influenced by Descartes’ dual substance approach, distinguishing mind and matter, hence creating the infamous ‘mind-body’ problem, which was simply meaningless, for example, in Chinese philosophy (and hence led disciplines such as medicine on a very different track in East and West). Economics is also infected by Cartesian dualism, and the notion of ‘rationality’ is, as I said in the introduction, a ‘mathematical Geisteswissenschaft’ concept. This is why economics is struggling with the newly emerging subdisciplines of behavioural economics, and, in particular, neuroeconomics. What are the alternatives? Standard economics actually considers ‘minds’, such as in the theory of expectations or in game theory. Neuroeconomics studies brains. So, we stumble into the trap of brain/mind dualism, and those who claim that minds are brains challenge standard economic approaches to rationality. If you think that minds are brains, you might even claim that economics is ‘mindless’, in order to keep economic 'normal science' running!
All these difficulties implode if we adopt the Hegelian alternative: Minds are not co-extensive with brains, and not even with ‘individuals’, so Hegel’s ‘Geist’ is translated into English as ‘spirit’, which I find very misleading because it suggests as if there were a difference between ‘mind’ and ‘spirit’. That seems outrageous to most economists, but today reflects the growing consensus in the cognitive sciences: Minds are ‘extended’ or ‘distributed’ across systems of interacting human individuals, they involve social networks and artefacts. This is what defines us as human beings and makes our brains work differently than neuronal systems of other animals. The medium that enables minds is semiosis, in particular language, but also all kinds of symbolic systems, such as the arts, dance or music. Hegel called this ‘objective spirit’. This is why Hegel is so important in my theoretical edifice.
This view is called ‘externalism’ in the modern philosophy of mind. It has extremely broad implications for economics, especially for the entire approach to individual choice. Externalism means that there is nothing ‘inside’ us that we can use as a causal explanation for our actions, such as ‘preferences’ or ‘intentions’. In fact, this is what the theory of revealed preferences also suggests, but because it relates with the doctrine of methodological individualism, economists could never reach the full conclusions. ‘Preferences’ are mere mathematical descriptions of actions. As such, they can refer to whichever entity in the real world, individuals, parts of individuals, groups etc. As Don Ross suggests, in neuroeconomics ‘preferences’ in the sense of the standard utility model apply for certain mechanisms in brains, but never for entire brains. Entire brains become operative as wholesome entities aka minds only in semiotically interconnected populations of brains.
In my applied work, I combine this basic theory with a ‘dual selves’ approach as the most simple model for individual decision making that has been proposed, most interestingly, by the sociologist James Coleman in terms of the dualism of ‘object self’ and acting self’. The acting self is the decision maker, the object self is the recipient of the action consequences and evaluates them. Information flows between the two are asymmetric and incomplete. For the acting self, both the body and the external world are part of its environment, and it learns from its own actions about preference patterns that are sustainable through time. In this approach, preferences are always adaptive and social, and contra Becker never stable and individual. Following Don Ross, I think that the testing ground for the alternative models of individual behaviour is consumption disorders and addiction in particular. I elaborated on this, also drawing on Peircian semiotics, in my paper:
- Towards an Externalist Neuroeconomics: Dual Selves, Signs, and Choice, Journal of Neuroscience, Psychology and Economics 5(1), 2012: 38-61. (pdf)
From the Hegelian perspective, institutions are part and parcel of minds. So, it comes as a great surprise and even annoyance, I believe, to many economists that Hayek was a true Hegelian in this respect. Hayek argued that institutions are the result of human action but not of human design, and that they carry knowledge that transcends individuals. This is what my Hegelian theory explicates in much detail.
For a condensed summary of the Hegelian approach to individual choice and action, see the paper co-authored with Ivan Boldyrev:
- Hegel’s ‘Objective Spirit’ and the Institutional Nature of Economic Action, Mind & Society, Vol. 12(2), 2012: 177-202 (pdf)
Ivan Boldyrev and I have also published a monograph on this:
- Hegel, Institutions and Economics: Performing the Social, Routledge, 2014
For a book review in the Erasmus Journal of Philosophy and Economics written by Don Ross, see (pdf)
Beginning in 2016, as one of the principal investigators, I cooperate with colleagues from Witten/Herdecke University, from Helsinki and Louvain in the ERANET-NEURON ELSA project on 'The integration of cross-disciplinary research in neuroscience and social science – a methodological case study on economic policies and the neuroscience of agency'. In this project, we apply the methodological approach of 'constitutive explanations' on tha transdisciplinary integration of neurosciences and economics, also aiming at practical consequences for regulatory design of financial markets. For a glimpse of things to come, see my first contribution to the project, the paper:
- Constitutive explanations in neuroeconomics: Principles and a case study on money, forthcoming, Journal of Economic Methodology (pdf)