ABSTRACT OF PAPER
Title: The Economy as an Open System
Author: Cangiani Michele
Michele Cangiani The Economy as an Open System. The Political Relevance of Economic Knowledge The need for purposefully directing the economy on a large scale, on State scale, was experienced during the First WW. It was thus no longer possible to avoid the basic questions of the effectiveness of the economic system, when it is not considered as a closed system, but its interrelation with its environment is included in the scope of economic science. John Stuart Mill’s statement, that “political economy has nothing to do with the comparative estimation of different uses”, was challenged: it became, indeed, the divide between two methods, the neoclassical-formal, and the institutional. Max Weber’s distinction between “formal” and “material” (or “substantive”) economic rationality is an unavoidable point of reference for understanding the terms and the stake of the “struggle on methods” in the 20th century. The paper deals with the meaning of that distinction and its relationship with Weber’s attitude towards neo-classical economics, which he largely makes use of, but also criticizes. Karl Polanyi’s “substantive” definition of the economy, as opposed to the “formal” one, implies the two most important features of the institutional method: 1) the priority object of the economic theory is the social-historical organization of the economic system as a whole; 2) the problem of the interrelation between the economic system and its environment is a central problem. Several years before the Great War, Thorstein Veblen used to distinguish, in this sense, the “vendibility” and “profitability” of commodities from their “serviceability”, and Friedrich Wieser the “objective” from the “natural” value. The War dramatically reveals the theoretical and political relevance of the issue of the object and scope of economics. The reference to Weber’s distinction is illuminating to understand the contrasting solutions Lionel Robbins and Adolf Löwe proposed to that issue in the first half of the 1930s.
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