Academic journal article Journal of Emerging Trends in Economics and Management Sciences

Today's Social Dilemma: Does a New Paradigm in Economics Demand Higher Ethics or Wider Regulation

Academic journal article Journal of Emerging Trends in Economics and Management Sciences

Today's Social Dilemma: Does a New Paradigm in Economics Demand Higher Ethics or Wider Regulation

Article excerpt

Abstract

The authors of the article, processed with the contribution of funds from the institutional support to long-term conceptual development of research, development and innovation at the Faculty of Finance and Accounting of the University of Economics, Prague in 2013, point out that the theory of economics has failed to yield a solid theoretical background in such critical situations as the period of the current financial and economic crisis and the transformation period of post-communist economies. Mainly presents crisis open the question of unsatisfactory status of economic science. While classical liberal or Keynesian concepts are failing, theorists cannot look to mathematical modeling for help. It seems that traditional concepts malfunction; financial market is particularly predisposed for this process. Function of mathematical models is overvalued. The article calls attention on possible influence and adequacy of regulatory attitudes on return to equilibrium, particularly in the EU and in the Eurozone. It seems that the part of ethics (relation goods) must be upgrade decidedly. The challenge for today's theoretical economists is to find a new paradigm of economic science for today's global world.

Key words: paradigm of economics, crises of the Welfare State model, regulatory projects, ethics of economic interaction, eurozone debt problems.

INTRODUCTION

More than two decades ago, following the collectivist ideology erosion, the post-communist countries of Central and Eastern Europe embarked on a journey of transformation of their economies towards market economy. This unprecedented process was also accompanied with complex and, in many aspects, unique transition from authoritarian political regime to a democratic system in such countries. The transmission economic process was characterized by absence of any theoretical instructions or recommendations. Two decades later, in the midst of an extensive financial and economic crisis, we have been compelled to state that existing economic paradigms apparently fail during the complicated global era, that neither liberal nor Keynesian approaches to economic policy were able to identify emergence of significant imbalances of global and national economics in a timely manner - i.e. to prevent gradual accumulation of crisis-related effects or at least mitigate their destructive force. Experts were more and more voicing their opinions that the present economic science does not feature sufficient theoretical instruments to cope with ultimate state of the economic world. In this connection, the question of Hayek emerges once again, with great argumentation power, whether or not it is important to start over in respect of scientific economic, from the level of determinism of the present world, from elementary philosophical and methodological categories, and derive from the most fundamental and irrefutable axiom of Descartes: "I think, therefore I am". In any case, theoretical economists are faced with a task of implementing ethical dimension into economic categories and promoting the methodological foundation.

Economic Theory and the Crisis Origin

One of the major problems of today's economic theory, which has contributed to the economic imbalance and the birth of the crisis, seems to be a shift towards the mathematization of economic theory with an emphasis on a higher degree of accuracy of forecasts. Mathematics has been challenged by economists to function as a social science which does not correspond with its nature as a non-dialectic scientific discipline. Furthermore, economic theory has been struggling with unresolved issues in terms of general methodology of sciences, mainly their inability to forecast future developments of world phenomena and to move past and present conditions into the future. The current unsatisfactory state of the world economy proves that neither the neoliberal nor Keynesian approach provide theories, tools, and recommendations for the times of a deep economic imbalance. …

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