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From Rational Choice to Reflexivity: Learning from Sen, Keynes, Hayek, Soros, and most of all, from Darwin

Alex Rosenberg

Abstract

This paper identifies the major failings of mainstream economics and the rational choice theory it relies upon. These failures were identified by the four figures mentioned in the title: economics treats agents as rational fools; by the time the long run equilibrium arrives, we are all dead; the social, political and economic institutions that meet most urgent human needs most effectively could not have been the result of rational choice, but their ‘spontaneous order’ needs to be explained; human uncertainty and reflexivity prohibit a predictively useful rational choice approach to human affairs, and even limit its role in institution design. What unifies the perspectives of all four of these critics of neoclassical economics, however, is their implicit reliance or on need for a Darwinian perspective on human affairs.

Published on 25 Mar 2014 in Economic Thought Vol 3, No 1, 2014