Advances in Economics and Business Vol. 6(2), pp. 90 - 98
DOI: 10.13189/aeb.2018.060202
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Causation, Capacities, Flow, Initiative and Power in the Economic System

Michael Joffe *
Department of Epidemiology and Biostatistics, Imperial College London, Norfolk Place, United Kingdom


Natural sciences such as biology and geology are characterised by empirically-based causal theories, which were developed by iteration between evidence and causal ideas. Economics could benefit from applying a similar methodology, given that it seeks to explain a similarly complicated, heterogeneous and open-ended reality. Causal accounts that correspond with the real world would replace "as if" theories, and the practice of seeking to explain the deviation of observed phenomena from standard theory rather than the phenomena themselves. As in those natural sciences, theory would be based on capacities - taking account of the human characteristics of interaction, incentive-following and initiative - and on flows and stocks, especially buying power (income and wealth). More generally, causal theories in economics should focus on power, in the sense of the ability to bring something about. This especially applies to the firm's authority structure (legitimate power), which arises from its ability to pay its workers, but more fundamentally, to successful investment initiative. Finally, human interaction needs to be incorporated, in the form of system causation. The "price mechanism" is one example, and there are other important examples of systems that display feedback, e.g. bubbles, as well as complexity.

Economic Methodology, Causal Theory, Agency Causation, Economic Power, Capacities, Flows, Stocks, System Causation

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Michael Joffe , "Causation, Capacities, Flow, Initiative and Power in the Economic System," Advances in Economics and Business, Vol. 6, No. 2, pp. 90 - 98, 2018. DOI: 10.13189/aeb.2018.060202.

(b). APA Format:
Michael Joffe (2018). Causation, Capacities, Flow, Initiative and Power in the Economic System. Advances in Economics and Business, 6(2), 90 - 98. DOI: 10.13189/aeb.2018.060202.