The Economics of Empiricism and Relation Exchange

초록

Orthodox economics is built on the assumption of the premise that any economic instance can be consistently measured in the value-cost index. Upon the measurement of values and costs, the optimization-equilibrium algorithm builds the analytical architecture of the orthodox economics. It is the closed/determinate system because every instance of the economy is recognized as the outcome of the optimization-equilibrium algorithm. However, the behavioral actions of individuals take place in the state of nature, that is, particular personal conditions without the screening of the state of nature through the veil of ignorance. The historical coincidence and path dependence give rise to particular personal conditions, which are unable to be sorted out by the optimization-equilibrium algorithm of the orthodox economics. Human life abides in the realm of the empiricism, not of the rationalism (Hume, 1739, 1748). It is the open/indeterminate system. The scientific method of inductive reasoning works in the open/indeterminate system, whereas deductive reasoning holds in the closed/determinate system. The sympathy-consent process is the method of epistemology which leads to the action of relation exchange, which is deemed the most primitive works of our daily life. The paper verifies the fundamentality of relation exchange vis-a-vis value exchange of the orthodox economics. The sympathy-consent process is path dependent, which leads to the path dependence of relation exchange. The prominent finding of the research is that the price determination becomes path dependent in the sympathy-consent dimension. It is denoted as inductive price.

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