(1) Historical (empirical) vs. (2) logical factor in the developmant of of economic science

1. Challeges to contemporary economics: modifications of the paradigm and collaboration with other sciences

2. I. . Introductory remarks – selected elements of general philosphy of the development of economic science • (1) Historical (empirical) vs. (2) logicalfactor in the developmant of of economic science 1. Development (evolution) of economics as the „respond” to changing (over time) conditions (technological, institutional and others) of economic performance 2. Devlopment of economics as the critical reflection on and synthesis of its former accomplishments and as the need of improvement of research method and precising the research domain (with tendency to widen the latter the so called economic imperialism) • Interdependence of both factors

3. I. . Introductory remarks – selected elements of general philosphy of the development of economic science Criteria of progress/development of economic science • 1. Criterion of capability to explainthenature of economicphenomena and processes (criterion of the so calledscientific realism) • 2. Socialutilitaritycriterion • 3. Criterion of predictivitypower (Friedman) • 4. Mongin’s – Laudan’scriterion of effectiveness (the so calledinstrumentalrealism): criterion of higher (increasingwithrespect to „competitivetheories” ) effectivenessinsolving scientific problems

4. II. Key problems in and challeges to the development of economic science 1. Continuation or looking for a new paradigm 2. Significance of NIE for increasing cognitive value and widening research domain of economic science 3. Does the NIE define a new paradigm

5. II. Key problems in and challeges to the development of economic science – cont. 4.Economics and other social sciences:economic imperialismvs.the need ofcooperation 5. Economics and management science 6. Economics and new economic, technological and civilization trends and new social ideas

6. 1.     Continuation or looking for a new paradigm • Defence of research methodology of mainstream economics • Methodological individualism is funadamental for keeping the methodological identity of economics as science • Critique of cognitive individualism by the so called cognitive realism (Lawson, Lewis): social-economic reality can not be reduced to the sum of HOes). It also comprises structures whose nature can not be interpreted in terms of economic individual rationality

7. 1.     Continuation or looking for a new paradigm • Assumption on commonmicroeconomicrationality (and UMH): maindirections of critiqueand earlymodifications • Critique: changingcharacter of preferences (of consumers’ inparticular), imperfectinformationorknowledgeabout market conditions, occurrence of altruisticbehavior (empathy), ignoringsociological and, inparticular, psychologicalconditions of economicchoices, incompleteknowledge of alternativesolutions and theircosts (opportunitycosts) and benefits • Earlymodifications : selectiverationalityorx-inefficiency (Leibenstein), concept of satisfycingbehavior (H.Simona), REMM approach

8. 1.     Continuation or looking for a new paradigm • Furthermofifications • Monetarism: due to incompleteknowledge, expectationsorforecasts of economicentitiesare not perfect. Since , however, thereoccurstheprocess of learning by doing of humanbeings, itispossible to avoidor to minimizesystematicerrors (failures) • New classicaleconomy: hypothesis of rationalexpectations (development of formerconcept: learning by doingprocessenables market agents to adjustbettertheirdecisions to changing market and tecghnologicalconditions and acting under conditions of imperfetinformation)

9. 1.     Continuation or looking for a new paradigm • New KeynesianEconomics: possibility of non-maximizingbehavior of enetrprises(in order to minimizeadjustmentcosts under conditions of unpredictability of market and technologicalchanges) • Finalconclusion: Non to reject but to modify and enrichmicroeconomicfoundations of mainstream economicsthroughitsopening for achievements of behavioraleconomics and complexityeconomics

10. 1.     Continuation or looking for a new paradigm • Behavioral economics Main feature: „fusion” of psychology and economics in order to better explain market behavior of economic agents (also acting on financial markets) • Bahavioral economics as distinct but not homogenous stream in modern economics: • H. Simon and Carnegie School • Psychological economics (Kahneman, Camerer, Thaler) • H. Leibenstein and x-efficiency theory • Evolutionary economics (Nelson, Winter); evolutionary development theory (references to Schumpeter and New Austrian School) and evolutionary teory of firm • Experimental economnics (Vernon, Kahneman, Tversky) • Behavioral finance

11. 1.     Continuation or looking for a new paradigm • Behavioral economics and the so called Pareto revolution • Nature of the Pareto revolution • Psychological economics as the anti-Pareto revolution ( contributions of psychologicial decision making theory : Tversky/Kahneman) • Fundamental assertions of psychological economics 1. Dual concept of the man as economic entity (closely relating to A.Smith’concept in the Theory of Moral sentiments): not only maximizing the wealth, but also showing solidarity (empathy) with others and driven by volitional motives and common human instincts

12. 1.     Continuation or looking for a new paradigm • Fundamental assertions of psychological economics –cont. 2. Risk aversion as main economic motive of economic action: people tend to higher evaluate losses then gains 3. People strive for minimizing losses or maximizing gains at a given point of time and not for optimizing welfare within a certain time horizon 4. Intertemporal choices: PE opposes neoclasical economics assuming that people’s behavior is consistent (coherent) in time which occurs through exponental discounting of future time periods. According to PE, future time periods are either equally valued or discounted in hyperbolic manner 5. Altruism as inherent motive of people’s economic action 6. Numerous empirical (experimantal) verifications of main PE assertions

13. 1.     Continuation or looking for a new paradigm • Complexity economics; Beinhocker, Colander • Attempt at a new synthesis based on accomplishments of not only psychology, but also neurology, antropology, theory of evolution and general systems theory. • Conglomerate comprising : psychological economics, evolutionary economics, ecological economics, experimental economics, and many specific subdisciplines: evolutionary game theory, computer simulations, non-linear general equlibrium theory and others • Transition from the ortodox triad: completerationality – egoism - equlibrium towards an ecclectic triad: intentional behavior – „self-constrained” individual interest – sustainability of development

14. 2.     Importance of NIE for increasing the cognitive value of economic science and widening its research domain • Significance of historical factor (differences in growth rates vs. economy’s institutional endowment) and logical factor (critique of „institutional deficit” of mainstream economics) for the emergence and development of NIE • Major acomplishments of NIE 1. Working out numerous generalizations concerning the interdependencies between neoclassically understood growth and institutional environment of economy (the needof institutional equilibrium) 2. Highlighting the importance of non-material capitalforms (social capital, moral capital and political capital)

15. 2. Importance of NIE for increasing the cognitive value of economic science and widening its research domain 3. Working out categories and manners of analysis that are useful for theoretical reflection on the transformation process, i.e. transition from C&C economic system to a market economy • New Institutional Economy as mostly continuation and enrichment of mainstream economics and not a current in the development of economic thought based on new paradigm

16. 4.      Economics and other social sciences: economic imperialism versus cooperation • Social character of economics as a science versus the need of formal-deductive modelling • Fundamental question: should the relation of economics to other social sciences consist in specific imperialism(as in the csae of NIE), i.e. in appriopriating their domains, or shouldit consists in the cooperation with other social sciences in cognitive and methodological terms. • Thesis: there exists a big and already partially used field of cooperation with other social sciences, as well as some experimental and behavioral sciences; e.g with psychology and evolutionary biology (behavioral economics and complexity economics)

17. 5. Economics and management science • Maincognitive and methodologicaldifferences (overview) • Economics: mostly (1) theoretical and deductive, (2) positive and (3) momological 2. Management science: mostly (1) empirical and inductive, (2) normative, (3) descriptive and applied • Twoareas of controversies : • Whatistheactual and desiredscope of distinctness – withrespect to subject and methodology – of economics and management science • Whatistherelation of management science to othersocial sciences: psychology, sociology and anthropologyinparticular

18. 5. Economics and management science • Integration of economics and management science through widening in both disciplines (and in economics in particular) of empirical and exeperimental research • Managerial economics as the area of potential synthesis of economics (micreconomics) and management science (strategical managment) Microeconomics and management L. Robbins: economics as a science dealing with the analysis of human being understood as his/her relation between realized and unrestricted goals and scarce resources needed for the achievement of those goals and having alternative uses W.R. Grifin: management as a science dealing with such choosing and coordination of resources (human, financial, physical and others ) which enable business organizations to achive their objectives

19. 5. Economics and management science • Theories of the firm/organization as the most importantarea of bothconvergence and divergencebetweeneconomics and management • Maintheorieschieflyreferring to (neoclassical) microeconomics: managerialmodels of enterprise, bahavioral model of enterprise, model based on thetheory of agent and principal, allocativetheory of enterprise, model based on theconcept of x-inefficiency of Leibenstein • Maintheoriesbased on management science: praxeologicalorganizationtheory, classicaltheory of organization, psychologicalorganizationtheory, sociologicalorganizationtheory, concept of learning organization, conceptbased on strategical management • Resources basedtheoryof the firm/organization as a „convergencecase”

20. 5. Economics and management science 3. Resources based theory of the firm/organization as a „convergence case” • Resources owned by the organization should be characterized by features postulated by economic theory: scarcity, diversified productivity and possibility of alternative uses (applications) • One assumes that the enterprise has organizational structure which develops on the base of its unique resources and core competences • Individual firms can succesfully compete with other enterprises due to quicker accumulation of resources and concentration on few products and markets, as well as owing to taking advantage of synergy effects in the use of available resources • Achievement of big competitive adavantage is also possible due to cooperation between firms (important source of potential synergy effects) • Following the concepts of evolutionary economics, it is emphasized that specific (unique) non-material resources are essential for the economic and market success

21. 6.Economics and new economic, technological and civilization trends and new social ideas • Historical factor in theevelution of economics, as well as the need of its social utility, make it necessary that in the development of both economics and management science the following problems have to be taken into theoretical considerations: . 1. New important phenomena, processes and trends in contemporary economy and civilization 2. New (vis-a-vis ortodox economic theory in particular) social ideas

22. 6.Economics and new economic, technological and civilization trends and new social ideas • Fundamental challenges : 1. Emergence of the so called New Economy and Knowledge Based Society, along with growing role of education and innovation in socio-economic development 2. Globalization of world economy and accompanying process of deepenig civilization and income disparities in the world 3. Ecological and energy constraints to and consequences of hitherto prevailing development patterns 4. Impact of cultural and religious distinctnesses upon microeconomic behavior patterns and models of socio-economic development

23. 6.Economics and new economic, technological and civilization trends and new social ideas • Economics and potential challenges brought about by contemporary financial and economic crisis • Increasing significance of MNCs in the globalizing world economy • Process of virtualization of capital and the so called financialization of economy • Autonomization of financial markets with respect to real economy • Globalization of international (world) financial markets • Crisis of fundamental values defining the economic culture and ethos of free market economy (real foundation: ongoing process of spliting of ownership and management in big enterprises) • Implicit fundamental question: do those challenges mean the necessity of global governance and what is the political feasibility of this concept