Max Weber Was Right

As far as I know, the sentence that is mentioned on a T-shirt I got from some of my students as a farewell gift a couple of years ago is from me. Honestly, I have always been a great fan of his, but now I take his thoughts more relevant than ever.

Recently a lot of efforts have been put into the critique around mainstream economics underlining its alleged irrelevance on the basis of the simple fact that mainstream models use ideal-types in a Weberian sense. Weber (Hungarian readers can find a great summary here), who was a great economist and historian of his time and one of the founding masters of sociology, in several places gave a comprehensive idea of the division of labour among the various disciplines on the one hand and, on the other hand, the essence and purpose of using ideal types in social-scientific understanding. For my current purpose this latter view is the more important aspect.

To put it shortly, we need a Weberian account on the current state of mainstream economics. For Weber, creating ideal-types, that is, creating a theory of economics on mathematical foundations in order to catch the ultimate laws of economizing behaviour was only the very first step in the process of understanding our social environment. The most important part of this job is only due and possible after this phase. We can only comprehend the mess of the chaotic realm of socio-economic reality in a comparison to our ideal-typical concepts, that is, to mainstream economics. There is a twofold lesson to learn eventually. First, mainstream economics has been relevant in grabbing the fundamental economic laws and, second, economics in a broad sense should not be confined to mainstream theorizing. It should include the study of the role of social institutions for example. Mainstream economics is a useful device in our hand, but this is not the only device of ours.

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One thought on “Max Weber Was Right

  1. Pingback: You Can’t Model – Peter Galbács – Intellectual Adventures in Mainstream Economics

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