The Evolution of Moral Science: Economic Rationality in the Complex Social System

Abstract

Economics in the early 20th Century established distributive justice as the marginal productivity theory of income distribution. As the system has evolved, however, the distributive principle has been lost as a result of the structural change of the production process. Faced with “casino capitalism” or the “winner-take-all” society, instead of the classic distributive justice, a lottery system dominates income distribution. Orthodox economics prefers a set of particular rationalities, e.g., the so-called game theoretic views, instead of the general rationality. These particular rationalities are examined in some detail and their failures are argued. Rationality, either in general or in a particular form, is not to be regarded as a panacea in the complex socio-economic system.

This paper proposes the use of the utilitarianism of heterogeneous interacting agents. This new utilitarianism may easily be applied to the transition rates of the master equations, i.e., the probabilistic Markov process. Furthermore, a new method to reconstruct economic science is also suggested: constructing methods derived directly from new ideas in statistical physics and combinatorial stochastic process.

In sum, individualistic rationality must be replaced with the utilitarianism of heterogeneous interacting agents. In this new framework, solidarity formation among the heterogeneous interacting agents should be the most important matter. Finally, a deeper consideration on the utilitarianism of heterogeneous agents is explored.