The mainstream of economics still stands on the elements of pure economics. On the contrary, new analytical tools outside the field of economics are thriving by focusing on the socio-economics system. We need examinations of new analytical tools and the ideas of equilibria. In modern times, socio-economic factors changing the economic system should no longer be regarded as negligible. The idea of reciprocity will urge to reconsider the traditional rationalism. In the depth of these objections against the mainstream, however, the so-called theological rationalism will be revealed. The bounded rationality principle then is not deviating from the track set by the traditional rationalism, but is rather an extended form of it. In this article, we will identify the mainstream of economics with a new form of scholasticism originated from Neo-Thomism based on the School of Salamanca rising during 16–18th century. Realities in general are distorted from the ideal state. Given such a distortion, in the scholastic view, human free will can be exerted in conformity with God’s will. The bigger the distortion, the more human free will can be justified. However, it requires a lengthier sufficiency proof with additional assumptions and conditions. The proof of ideal states may then require a more complicated modeling. The resulting fact that the degree of complication may be much greater in modeling is very welcome in the sense that this kind of work, occasionally involving mathematical refinements, could a fortiori provide economics with the ideal goal grounded by divine inspiration. The distortion should thus be spiritually purified. Moreover, we also provide a historical note on the formation of the mental sources of capitalism. Prior to the Austrian theory, the Salamanca school definitely took into account the harmony between reality and scholasticus. Here, an interesting pragmatic compatibility between the purity of God and the chaos fabricated by secular human greed arises, but it is well known that Weber (The Protestant ethic and the “Spirit” of capitalism and other writings. Penguin, Westminster, 1905) found the source of capitalism in Protestantism. In this context, however, we learned that another moral source of capitalism was found in Catholicism in the form of scholasticism, although it must be strictly suppressed the idea to summarize scholastic arguments as the main principle of Catholicism. Readers in advance must carefully keep from identify the modern Catholic School’s Charter of bonus commune (the common good) and the personalism with capitalistic individualism. Finally, we notice that bounded rationality is regarded as a sophisticated demonstration to vindicate rationalism in conformity with a traditional scholastic manner.
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See Aruka (2015a, 21–22) for detailed expositions on this issue.
Faith in the mainstream of economics (Hodgson 2012, 48) may be equivalent to reason here.
See Leijonhufvud (1973).
See Mainzer (2007, 28). See also Thomas von Aquin: Summa contra gentiles. Lat./dt. Übers. K. Albers et. Alt., Darmstadt 2. Aufl. 1987, III, 74, 3.
“The Second Lateran Council condemned any repayment of a debt with more money than was originally loaned; the Council of Vienne explicitly prohibited usury and declared any legislation tolerant of usury to be heretical; the first scholastics reproved the charging of interest” (Wikipedia, “School of Salamanca”: http://en.wikipedia.org/wiki/School_of_Salamanca.
Schumpeter wrote, “So far as our subject is concerned we may leap over 500 years to the epoch of St. Thomas Aquinas (1225–1274) whose Summa Theologica is in the history of thought what the South-Western spire of the Cathedral of Chartres is in the history of architecture” (Schumpeter 1954, 74). In contrast, he regarded Aquinas’s economics as “strictly Aristotelian.” Mueller (2014, Chapter 2) wrote, “the formula of Scholastic economics is Aristotle + Augustine = Aquinas.” St. Augustine suggested “the theory of personal gift.” However, Schumpeter never appreciated the theory in the context of economics. Hossein (2003, 29) also criticized Schumpeter to de-emphasize the rediscovery of Aristotle’s writings. Here, however, we will not discuss whether Schumpeter (1954) rightly recognized the essence of neo-Thomism or not.
“Diego de Covarrubias and Luis de Molina developed a subjective theory of value and prices, which asserted that the usefulness of a good varied from person to person, so just prices would arise from mutual decisions in free commerce, barring the distorting effects of monopoly, fraud, or government intervention” (Wikipedia, “School of Salamanca”: http://en.wikipedia.org/wiki/School_of_Salamanca).
An anonymous referee with super knowledge on Catholicism pointed out the big difference between the spiritual ideas of Catholicism and the so-called individualism demonstrated in economics. Some attempts are occasionally made to justify the notorious activities of the Jesus Society in establishing the foundation of capitalism. See Kuwabara (2009), 29.
The adjective “tropical” was coined by a French mathematician in honor of the Hungarian-born Brazilian mathematician Imre Simon, who pioneered the field. (Wikipedia: http://en.wikipedia.org/wiki/Tropical_geometry).
Sometimes, min-plus is substituted with max-plus or min-times.
We show an example later.
See Klein (2007), an enlightening book.
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See the “FuturICT” project led by Dirk Helbing: http://www.futurict.eu/the-project.
See Aruka (2015a), particularly Chapter 4: “Matching Mechanism Differences Between Classical and Financial Markets.”
The law of value has often been discussed with a similar meaning as the law of supply and demand in classical political economy.
It is not unusual that the highest price amounts to twice the lowest price.
Kakaku.com provides an environment for perfect competition.
The strict law indicates a strictly positive increase in demand as the price decreases. In contrast, the weak law includes a zero increase in reaction in terms of a non-negative increase.
It seems intuitively natural that the variance of expenditures among the richest is larger than that among average consumer because rich consumers are used to spending more for their particular purposes, such as purchasing ships or airplanes.
See Mainzer (2010, 219–219). See also Aruka (2015a, 29): “The smart grid system is managed by the negotiation algorithm, a kind of genetic algorithm, not by humans, as humans cannot operate at machine speed. But negotiation in a game theory situation is different from the negotiation algorithm by AI. Even if standard economics could include optimization in the negotiation process, its algorithm would require a loser, because the idea of optimization is not valid in the landscape of complex interactions of heterogeneous agents at high speed and/or frequency. The same problem also applies to the stock exchange.”
It arose from the productive methods and legal and organizational arrangements that we use to satisfy our needs. It therefore resulted from capturing of phenomena and subsequent combinations (Arthur 2009, 3).
Early technologies form using existing primitive technologies as components. These new technologies in time become possible components—building blocks—for the construction of further new technologies. Some of these in turn go on to become possible building blocks for the creation of yet newer technologies (Ibid, 21).
TFT, i.e., “tit for tat” is a strategy in which one cooperates on the first move and subsequently echoes (reciprocates) what the other player did on the previous move. The name was given by Anatol Rapoport when Rober Axelod organized the iterated prisoner’s dilemma tournament in 1984.
TFT moves on both sides will conform to a cooperative viscosity in a game through some experimental retorts or the incorporation of the “trembling hand.” Here, “trembling hand” refers to an intentionally erroneous move.
See Axelrod (1984) for an expanded, detailed version.
There exist 16 strategy combinations in the two-person, two-strategy game where an agent’s memory reaches the last two periods 2. Pavlov’s strategy is one of these 16 strategies. It is known that Pavlov’s efficacy can cover a broad range of two-person, two-strategy games with any memory.
Lorenz (1965) believed that self-sacrifice exists in nature.
Also see Gintis (2006, 4).
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This paper was supported by JSPS Grant-in-Aid for Scientific Research (B) No. 26282089. It is noted that this paper is an extended detailed version of Aruka (2015b) written in Japanese.
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The authors declare that they have no conflict of interest.
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Aruka, Y. The rise of pure economics under a new form of scholasticism in view of the present socio-economic system. Evolut Inst Econ Rev 12, 3–29 (2015). https://doi.org/10.1007/s40844-015-0003-4
- Pure ecomoics
- Bounded rationality