INTEG 420 Thesis Progress Report
Topic: Value, cognition and the integration of information in society

Disciplinary Lens: Philosophy of Economics


  1. Introduction ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
  2. Approach ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
  3. Current Status & Conceptual Development Winter 2014 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
  4. Next Steps: Plan for summer/fall term ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
  5. Preliminary Findings ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
  6. Current Outline of Thesis ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
  7. Current Bibliography (with selected annotations)
  8. Appendix ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
    1. Preliminary Thesis Proposal ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
    2. Thesis Proposal ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­
    3. Raw notes from meetings this term ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­

Geoff Evamy Hill | 31MAR14 ­ updated & submitted 11APR14 Supervisor: Dr. Patricia Marino, Associate Professor, Philosophy


1. Introduction

This progress report is meant to be a reflection of the work done this term on my thesis project. The overarching question I seek to answer by undertaking this project remains the same as in early February: “How are perceptions of value integrated to form prices within an economy?”. The approach is still broken down into two sub­questions in order to specify the approach.

  1. By what mechanisms are prices formed and how well do those mechanisms allow prices to track perceived value?
  2. What interventions might be useful to improve how well prices track perceived value?

Over the course of the term, the project has become a reflection on economics in a broader sense. This is

mainly due to the influence of my supervisor, Patricia Marino, and her class I am currently taking (PHIL 371: Philosophy of Economics). To begin with the focus was a very much an analysis and criticism of a particular idea by a particular economist: Friedrich Hayek. At this point, I see the project as a broader critique of economics as a whole with the value/price relationship as a conceptual focus. It is my belief, shared by many others within and around the discipline (Foster, 2004), that economics is due for a paradigm shift. That is why my approach very much has avoided looking at the problem from a traditional disciplinary point of view. The perspectives that I am trying to integrate mainly come from academics and practitioners ranging from cognitive science, sociology, evolutionary psychology, finance and investment, science journalism, the fringes of the economics discipline, computational modeling, semiotics, business and entrepreneurship, information theory, rhetoric, complexity theory, and the alternative ideas of core economic thinkers like Marshall, von Mises, Marx, and Keynes.

Looking at this question through a transdisciplinary lense requires significant conceptual jumps in order to make connections. At this point in time, I can’t say I have any definitive theory that comes anywhere close to answering the above questions. The past term has mostly been a divergent process of expanding the possibility space of the approach. What I do have is a fairly clear idea of some of the alternatives to work from to integrate my own theory, and a sense of an appropriate structure for a 30 or so page thesis report that synthesizes this research. I will discuss these briefly in the latter pages of this report as well as my proposed strategy to ensure the synthesis is a success.

Overall, it has been confirmed for me that this is an important question. The understanding of the interrelationship between pricing and valuation is weak. (Beckert & Aspers, 2013) This is a perennial problem that deserves constant re­evaluation.


2. Approach

For this progress report I wanted to think about why I am doing this project. I will outline motivation for this project as a way to describe the approach. This will help as a record to keep up the enthusiasm for the next months.I want to note that the point of this section is to outline my motivation and biases and not to conjure messianic inevitability as the reason for the topic.

Upon reflection over the last few weeks, the interest in the topic is deeper than the positioning of a good question in January. This project is driven out of a love of the idea of understanding economies and a distaste for the discipline of economics. I have essentially dropped out of as many economics courses as I have finished (3 finished / 2 dropped), and have performed at a mediocre level in the ones I have finished. Despite my initial love of the explanatory potential of the graphs of ECON 101 (see Figure 1 ), I found the structure of the knowledge to be

counterintuitive. I eventually found the supply and demand curves
to be particularly puzzling. Looking back, I think I felt that the price mechanism it demonstrated was suspect in its explanatory power and was not particularly useful as a metaphor for further exploration. I love the concepts, but I don’t have the mind for the mathematized discipline.

Figure 1. an initial interest in the tropes of economics for their explanatory power (GCEH, 2o11)

My general feeling towards learning about the discipline was settled

after talking to an alumnus from the University of Calgary Economics program. He graduated in the early 1980’s and has since been a successful entrepreneur. He noted to me that he felt

he didn’t learn any of the really interesting concepts of economics until well after he graduated (noting the concept of moral hazard and externalities in particular). Since that conversation, the core of my economics education since has been self­driven.


The book Nudge by Thaler & Sunstein was particularly influential because of its suggestion of a merger of psychology and economics. It led me to listen to a few dozen economics podcasts at work in the summer between second and third year. The particular series that stuck with me were The Invisible Hand by CBC radio and Econ Talk hosted by Professor Russ Roberts at George Mason University. The Invisible Hand approached economics from a conceptual level with episodes examining homo economicus and the paradox of thrift. Econ Talk interviews economics experts from around the world on particular issues in a more academic manner. An Econ Talk episode that stood out for me was the interview with Ronald Coase. He is a British Economist born in 1910 who came up with the Coase Theorem of Externalities and won of the 1991 Nobel Memorial Prize in Economics. In this particular episode, “Coase on Externalities, the Firm, and the State of Economics”, Coase repeatedly states his disapproval of the current state of economics and the emphasis on what he calls “blackboard economics”. Blackboard economics to him is economics that is not empirically based, that relies on thinking about imaginary transactions and is heavy on mathematics and statistics. This quote from Coase sums up his position:

“I don’t know that you couldn’t end up with the policy unless you study how things actually happen in the real world. And that’s what I’d like to see people do. Not all this abstract theorizing, all this mathematics. I’d like to see people go study how things actually work. Then you would learn something. Because by and large, that’s what economists do. That’s why I call it blackboard economics. It’s abstract.”

That podcast stuck with me. After a false start with an economics minor and a decision to not continue with it, I purchased The Economics Book: Big Ideas Simply Explained and found their conceptual approach to the history of economics to be particularly refreshing, keeping my interest in the discipline. It alerted me to the fact that economics education could be done better.

Over the course of this term, that observation has turned into a broader realization that the entire study of economies could be done better. Particularly through discussions and readings in Phil 371 and explorations done for this thesis, I have found compelling arguments and counter arguments. There seems to be an opportunity for a paradigm shift away from the current neo­classical core of economics. The financial crisis of 2008 seemed to affirm this opportunity after what was perceived to be a general failure of prediction by the current model and unsatisfactory explanation. The fundamental principles of economics are being questioned and deserve re­examination. (Nicholas, 2011) Take the candid remarks of Alan Greenspan, former Chairman of the US Federal Reserve, for example:


I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works. That’s precisely the reason I was shocked… I still do not fully understand why it happened, and obviously to the extent that I figure it happened and why, I will change my views. (Testimony to the Congressional Committee for Oversight and Government Reform, 28 OCT 08) (Nicholas, 2011)

The surprise and failure of economic models shows the problems with economics in its current state are perhaps intractable. Joseph Stiglitz, winner of the 2001 Nobel Memorial prize in economics, seems to think that a paradigm shift is necessary:

Too many have invested too much in the wrong models. Like the Ptolemaic attempts to preserve earth­centric views of the universe, there will be heroic efforts to add complexities and refinements to the standard paradigm. The resulting models will be an improvement and policies based on them may do better, but they too are likely to fail. Nothing less than a paradigm shift will do. (Financial Times, 19 AUG 10)

All this is to say, this is a project that seeks to find a cursory survey of alternatives for a particular problem in the study of economies. The approach is transdisciplinary and generally avoids disciplinary economics sources for this reason. The bottom line is that there is an opportunity to take new inspiration and look at the problem in unconventional way. My leaning is to tie our understanding of economics more closely to neurological and psychological foundations.

It is important to ask why answers to the questions I have posed are important. The motivation originally, and still, is looking at issues around climate change. I am interested in the price of oil in particular and implications it has for carbon emissions. Understanding of the relationship between price and value has huge implications for the means and ends of economic interventions used to mitigate and adapt for climate change. The biggest examples would be guiding the choice between implementing (or the possibility of blending) carbon taxes or a carbon credit market. Richer understanding into the price/value relationship would lead to deep insights into which to choose, or could inspire new and more effective approaches.

I am particularly lucky to have some expert guidance on this particular example. Dr. Jason Thistlethwaite, the Director of the Climate Change Adaptation Project at the Balsillie School, has provided feedback on the mispricing of carbon (notes available at the end of appendix C, I have not integrated them into this report) . He is an expert on the financial aspect of climate change. I met Jason after he participated in a panel on decarbonizing Canada’s economy in March. He caught my attention after he mentioned that he had started his current pursuit after observing that the mispricing of housing commodities led to the 2008 Financial Meltdown and making the connection that a similar event may be happening with hydrocarbon.

The project has come a long way between the preliminary proposal (appendix A), the full proposal (appendix B), and where it is now. In the preliminary proposal, I had considered the question in terms of value as strictly an aggregation of knowledge within the Hayekian framework. It was mainly a question of an institutional versus individualist framework. The questions were mainly around the epistemology of value and price, which was unstable. Through reflection and discussion with Patricia I came to see the problem through the question “how are perceptions of value integrated to form prices within an economy?”, interpreted in the following way:

  • By what mechanisms are prices formed and how well do those mechanisms allow prices to track perceived value?
  • What interventions might be useful to improve how well prices track perceived value?

This approach accommodates for the metaphysical nature of value and the mechanistic nature of price. It is the tension between these two where the complexity lies, and where more simplistic models fail to provide adequate explanation. The interesting aspect of the second part of the main question, “What interventions might be useful to improve how well prices track perceived value?”, is ‘improve’ for whom and ‘improve’ compared to what? The idea that these are systems, created with ideology, is particularly important. Exploring this question in terms of mechanisms, and with a philosophical foundation, allows for a deep contemplation of the structure. This has allowed for a broad approach to explore the relationship of many different perspectives. Patricia’s mathematical background has been very influential to shed light into the type of models that are at work in economics. Part of the emphasis on more complex math is because the math used in prior conceptions of economics has only been able to model simplistic assumptions and processes. If they don’t work well to explain or predict, then their use is marginal. The core questions that Patricia helped me developed have proved to be very fruitful. At it’s core, this is about “what forces make people put a certain price on things to make things happen, and why?”.

This completes the rationale for the overall conceptual approach to the topic. I hope this captures also the reasons general excitement surrounding the project. In the next section I will discuss the particulars of development over the last semester.


3. Current Status & Conceptual Development Winter 2014

I was warned by Darlene McGeer, the academic advisor for Knowledge Integration, that taking on the thesis project while finishing the KI museum project would be a bit much. She was right. The demands of working as the artistic supervisor, doing a major chunk of the visuo­spatial design work, for the iExpress exhibit took up a substantial amount of my attention. This came at the expense of my work on my thesis. I needed to engage more thoroughly with the texts I was using, create better summaries of research over the course of the term, and engage with the development of the idea more rigorously. I think that this report gives away the relative superficiality of the project so far.

That being said, I don’t think that this is catastrophic. The term has allowed for huge leeway in the development of the ideas and the acceptance of new potential avenues. There has been little consolidation of ideas, but the divergent process and breadth of ideas will prove to be useful. I am fortunate to have the summer to engage
in more depth with a selection of sources from my current bibliography, to summarize general themes more accurately and to gestate a useful synthesis of the knowledge encountered. This will prepare me well for the final writing in the fall. I will discuss this plan later in the report.

I have created a timeline that specifically tracks the work done this term. It doesn’t track decision points per se, as I haven’t formally outlined any thesis, but points of inspiration that significantly altered my perception of the topic. I have included as many as I can recall or find in my notes, and have highlighted the ones that I think are particularly important. I have a brief commentary of these after the table in the next pages.
Timeline of Conceptual Development ­ Fall 2013 / Winter 2014

Important Readings and Milestones


Milestone/Reading (Bolded if very influential)

August 2013

Dropped two online Athabasca Courses, decided not to pursue UW economics minor

September 2013

Read The Economics Book: Big Ideas Simply Explained

November 2013

Queen’s Conference on the Business Environment Today: Case competition on how to expand the market share MIO Squirt water flavour product “selling more unnecessary things to more people for more money”


November 2013

New York City: thought a lot about supply chains

December 2013

Two weeks on my own in Japan looking at a very different system

January 5

Discarded thesis idea of “Comparative Frontiers”

January 8

Discarded thesis idea of “Socio­Technical Systems: combining lessons of Meiji Japan and the Global Village Construction Set”

January 9

Rediscovered Hayek’s “The Use of Knowledge in Society” and my 2013 paper “Price is to value as science is to ‘reality’”, wrote preliminary thesis proposal

January 14

Spoke to Prof. Thagard, suggests readings and direction, to focus on psychological dimensions of bubbles

January 20

Confirmed Dr. Patricia Marino as supervisor, Professor for Phil 271 Philosophy of Economics

January 30

Read Cottrell and Cockshott’s “Information and Economics: A Critique of Hayek”

February 5

Read Nietzsche’s “On Truth and Lies”

February 8

Current Thesis proposal submitted

February 15

Read Arthur’s “Complexity Economics: A Different Framework for Economic Thought”

February 20

Visited the Salton Sea, California and learned about water history and economics in the US southwest

February 22

Read Ball’s “Critical Mass: How one thing leads to another”

February 26

Spoke to Prof. Michael McDonald, Rhetoric ­ suggests “mind as commodity”

February 28

Played “Banished”, city­building game with unusual agent­based system and disequilibrium economy

March 5

CIGI lecture, Bill Janeway “What I learned from doing Capitalism”

March 6

Progress Report meeting with Patricia

March 7

Finished paper on “Rhetorical Superprojects”

March 14

KI Lecture, Jennifer Clapp, “The Real Hunger Games: The Challenge of Embedding Equity and Sustainability into the Global Food System”, hunger as a distribution, not a production, problem

March 18

Finished making a perceptron for psych class, read Axelrod’s “The Dissemination of Culture”­ renewed computational modelling ideas

March 20

Thesis structure meeting with Patricia

March 20

Waterloo Institute for Sustainable Energy Panel, “The Future of Energy Decarbonization in Canada”, spoke to Dr. Jason Thistlethwaite about thesis, economy


massively mispricing carbon as it did housing in global financial crisis

March 26

Read Baudrillard’s “Consumer Society”

March 28

Begins writing progress report

As shown by the table, the term has been filled with diverse learning experiences around the topic. I won’t speak to each item in detail, but the I will note the main implications of each of the highlighted events.

Cottrell and Cockshot’s 1990 response to Hayek made me aware of an extreme alternative to the original view. Their idea that an economy could be computed, that it is not hyper­computational, really expanded my view into the possibilities for more precise and enlightened economic interventions. Nietzsche’s “On Truth and Lies” introduced me to the idea of the structure of meaning in language. I think this is metaphorically useful for this exploration in that value probably has roots in physical “reality”, but grows into massive symbolic networks with endogenous logic systems. Reading Brian Arthur’s primer for complexity economics introduced me to a topic I had been aware of but hadn’t engaged with. I found the approach to be particularly inspiring and opportune, and thus decided to pursue the topic through this lens. Complexity economics particularly questions the core economic assumption of equilibrium and instead embraces the idea of disequilibrium. I find this to be intuitive. It supports a new discussion of the nature between price and value beyond the neoclassical intersection of supply and demand.

Philip Ball’s grand review of the pursuit to create a “science of society” is a very helpful social science primer. It explains the fundamentals of chemistry and physics and subsequent philosophers’ (like Hobbes) attempts to apply the analogical knowledge of these disciplines to understand people and societies. It helps to situate
attempts to understand group behaviour. It supports the idea that the mechanisms of perceived value to price conversion are an emergent property of group dynamics. Discussions in complexity economics and systems thinking suggest that these emergent properties can be part of feedback loops that in turn influence the systems they were borne from. Bill Janeway, a venture capitalist and professor at Cambridge, had a talk at CIGI in March that was profoundly influential. He was arguing that bubbles are a product of government intervention, that venture capitalism is secondary, and that bubbles can have profoundly positive or negative effects. Janeway cited the dotcom bubble
as something that was net positive( in the impacts to technological development) and the housing bubble as something that was net negative. What are the philosophical dimensions of assessing ‘good’ and ‘bad’ bubbles?


Most interestingly, he adopted the Keynesian bridge to make his arguments. Janeway proposed that there is much to learn from the ideas of the old economists ( like Keynes and Marshall) that were not assimilated into the neoclassical core that economics uses today. Finally, my experiences in PSYCH 420: Computational Neuroscience has taught me a lot about computer modelling and about understanding mathematics in a more holistic way. An assignment to build a perceptron, a single node in and artificial neural network, and an exploration of the Dissemination of Culture model by Axelrod alerted me to possibilities of modelling the question posed in this project. In particular, it gave me ideas about systems that could bridge the differences between perceived value in agents of an economy and prices. Overall, there was a large chunk of diverse reading done over the term. This still needs to be synthesized on and some of the sources and ideas examined in more depth. I will discuss this in the next section.

4. Next Steps: Plan for summer, fall term

I need to have a first draft of this thesis by mid­October so that I can have enough time to reflect on the ideas and substantially rewrite it. This project is something that I care deeply about, that I think will be a useful contribution, and that has already proven to be a very meaningful learning experience for me. I want the final result to be strong enough to help me apply to graduate school and to potentially be a useful springboard upon which to engage in further studies in this area.

This is my general strategy for the next seven months:


  • April/May/June ­
    • Consolidate existing research into summaries with key points, specifically the variousalternatives that the disciplines and perspective represent
    • Replace older sources with newer ones
    • map out the intellectual history of answers to the question
  • ○  July/August
    • Synthesize research into a number of possible theses
    • Evaluate options and decide, begin to apply model to specific examples ­ generate


numerous possibilities
■ Finalize writing structure

  • September ­ Write first draft of thesis
  • October ­ Rewrite thesis
  • November ­ create conference paper/ submit final copy


5. Preliminary Findings


“Value is a process of valuing”
­John R. Commons, Legal Foundations of Capitalism


“Nowadays people know the price of everything and the value of nothing.” —Oscar Wilde, The Picture of Dorian Gray (1891)

Those two quotes capture what I feel has been the theme of reading this term and will be the essence of the thesis and . From reading Robinson’s Economic Philosophy, Foster’s “Why is Economics not a Complex Systems Science?”, and Schumpeter’s “Science and Ideology”, I have come to see economics as ideological. This is in the sense that all sciences are ideological, that social perspective influences how data is collected and how theories are formed. As Schumpeter states, “perception of a set of related phenomena is a pre­scientific act”(Schumpeter 350), and economics is not exempt. The positive and the normative are often intertwined. Economics is not the definitive study of the phenomenon of economies, it is value­laden in its approach. This must be taken into account when analyzing the topic, and when reflecting on my own approach.

I think that Commons captures the procedurality of it: value is generated through processes. This processes are not exogenous, they are not gifted to us by a calculator in the sky. Because it is dependent on processes, it is highly subjective and temporally contingent. Value never stays constant, but it does inform price. Wilde’s quote demonstrates to me that the price generation is a product of a system separate from value. It is a system conceivable to human minds, we can track the prices and know them in lists but we cannot know their values. The mechanisms that bridge the two are interesting. Value perhaps is psychological, a product of dynamic minds, and price is a product of socio technical structures created by and governing those minds. Each system on its own is extremely complex, and the the feedback interrelationships necessarily are hard to track. That is the core purpose of this thesis, to explore that space in between. It seems to me now that the problem must be approached with sophisticated analytical techniques and appreciation of plurality and ambiguity.

Below are the main themes encountered over the research so far. I have expanded on each very briefly to specify what they are. I will need to expand on each with an in depth and clearly cited account over the summer after more reading.


Price formation by masses of emotional individuals engaging in decision making:

A key part of this research is tying economics to cognitive science, and academic research suggests this connection is worthwhile. “Economics, dealing with mental processes of decision makers, is part of cognitive
science; conversely, cognitive science, faced with constraints on informations processing, is part of economics.”(Bourgine et al, 1991) This is basically that decision making is a combination of people’s “animal spirits”, as Keynes puts it, and decision heuristics as explored by Kahneman and Tversky. Emotions and biases might explain why we intuitively see optimism and pessimism in markets. The idea leads to the kind of description of prices as information borne out of an aggregation of decision situations that Hayek suggests. There are obvious problems
with the idea that price formation is directly based off of individuals if one looks at collusions or the role of institutions. Nonetheless an exploration of mechanisms at play could contribute to a fuller understanding. I’ve found the Keynesian Beauty pageant to be an interesting example of aggregations of value judgements that simultaneously include and anticipation of others decisions. Paul Thagard has written some interesting papers on economic crises as collective representations. He describes attributions of beliefs or emotions to organizations like banks or
governments as metaphorical pointers, building on his semantic pointers work. This could be an option to synthesize psychological and social decision making leading to collective representations of value.
Price Formation as Computation / Procedurality:

The core of the Hayekian critique of socialism assumes that an economy is a set of processes that would be too computationally intensive to model fully enough to engage in economic planning. Cottrell and Cockshott counter this, arguing that with modern computation this could be done. This dialogue is incredibly interesting to me. To generalize, this is viewing an economy as a set of processes. These processes would be the mechanisms by which value perceptions become prices. The problem of computation is called the Economic Calculation Problem, really starting from Marx and his Transformation Problem. I need to look more at both sides of this debate. The book The Economy as a Process of Valuation by Samuels et al. is a very interesting introduction to all of this and centres the discussion broadly. It looks at the valuational process as something that goes far beyond the economy, which I believe is important. With this broad conception, though, it may be difficult to develop theories with specific predictive or explanatory power. There is a deep problem I’m encountering of scoping the issues. Joan Robinson mounts an interesting question of whether there is any operational content in any definition of value. Hers is an interesting objection and might suggest that value is strictly endogenous to an ideological system. It will be important to develop particular definitions of price and value for the thesis in order to frame the arguments and the scope of the discussion. An alternate way to look at economies as procedural is to look at it from a symbolic perspective. I have just begun to read Baudrillard’s The Political Economy of the Sign and perhaps a semantic approach to how people view the world and perceive value should be taken. Viewing the economy as existent because of a system of ideologically driven social rules follows from his framework. Prices as symbolic pointers to direct investment in the economy could be an answer. Perhaps we can look at random mutations as an inspiration for the processes of innovation.


Price Formation in Complexity:

The complexity framework borrows from complexity science in general. For economics, it sees the economy as something “perpetually constructing itself anew” through radical changes of innovation and is in constant disequilibrium (Arthur, 2013). This framework excites me. I’m not sure exactly how it applies to my specific question yet. The complexity framework posits that there is a meso­level between the traditional micro­macro divide. It states that this is where the the dynamics and rules of the system are borne from. The complexity approach stresses the historical contingency and cultural aspects of the economy. This is where sociological and historical approaches come in to play. It will therefore provide a frame to look at the history of money and value in certain social contingencies. The idea of cost as a foundational economic concept is discussed also in this approach and should be explored as well. A common criticism from the complexity and evolutionary economics approach is that the economics discipline became mathematized for ideological reasons. It suggests a rereading of the ideas of traditional economics thinkers like Marx, Schumpeter, and Keynes for the broader ideas they proposed. It is interesting to look at a history of the development of the discipline to find out why it is not a complexity science as many key economic thinkers of the past had ideas that would now be considered to be under that domain. (Foster, 2004)

Below are some of the key terms that I will need to develop definitions for my own use for consistency in writing the thesis. These definitions would likely just be used for my reference and not explicitly in the thesis. The terms are: economics, value, price, complexity, externalities, reduction, emergence, cost, commensurability, computation, procedurality, bubbles, semantic/metaphorical pointers, intersubjectivity. It may also be valuable to create a common sense list of things people value.


6. Current Outline of Thesis

The idea with the thesis is to explore a number of possibilities to answer the question I have posed. My goal is to present diverse possibilities, a unique synthesis, and a wide ranging examination of implications. I want it to be a divergent exploration of the possibility space within a framework of the key themes I discussed above. At this point, the thesis will be structured into three parts.

Part 1 ­ Analysis and evaluation of alternatives

Part 2 ­ Synthesis of alternatives to new theory

Part 3 ­ Application of synthesis to numerous cases

The first section will deal with an overview of the general themes and ideas I have discovered over the course of my research. I imagine that this may look like a much extended version of the preliminary findings I have above.

The second section would be my thesis: my own synthesis of the alternatives and an attempt to answer the question posed. I’m not sure what this theory looks like yet, I hope to have a much closer after the summer or at the very latest after writing the first section of the report. What will be important is not to attempt to develop an all­encompassing theory since I think the research is generally showing that the future of the discipline is very distributed. The goal of this thesis will be to make a pointer of strongest possibility of an answer to the question. Jason Thistlethwaite has given me some good suggestions on how to do the first two sections of the report which I have not integrated into this report. The notes from that meeting are at the bottom of appendix c. In my end of summer progress report will have a full plan for all components.

The third section will be an application of the second section to a number of examples and ideas. I have selected a some general areas of exploration below. These are areas where I think that the relationship between value and price is particularly interesting and that will illustrate the second thesis question of “What interventions might be useful to improve how well prices track perceived value?”. Otherwise they are ideas for studying value/price relationships in general or intervening in in economies. My idea is to go wild with the divergent thinking in terms of brainstorming how these areas are related to the thesis. I am going to use the content of my synthesis to come up with some wild ideas for interventions. Given a different way of perceiving how price formation tracks value, how might we approach these applications? I am particularly excited about this section.

These topics are:

Bubbles: Looking at economic bubbles seems to be the ultimate common understanding of when price and perceived value significantly and rapidly inflate and deflate. Extensive data and commentary is available in the wake of the 2008 crisis. Other bubbles to compare and contrast to may be the late ‘90’s dotcom bubble or Tulipmania in the Holland in the 1600s. Bill Janeway’s lecture was influential for me on this topic in the claim that bubbles, their growth and crash, can potentially have net positive effect and are essentially kickstarted by governments. The main example he gave was how DARPA kickstarted what would become the internet. This created a path which allowed the dotcom bubble to grow, eventually crash, but start the information age. I’ve been particularly interested in the idea of influencing the growth of bubbles to enact massive change, ideally for green energy transition. The rhetorical dimension of how these super­projects are started and how the bubbles they lead to play out is interesting. How might we inflate value perceptions to meet perceived costs, thereby influencing decisions and history? How has this been done before? I can think of things like the Apollo project or the global war on terror as immediate examples. It would come under the lens of philosophy of economics as a framework to decide what bubbles are “good” and what are “bad”, or if such a thing could exist.

Externalities & Hydrocarbons: Externalities represent the difference between the perceived value of a thing and its price. For instance, the price of oil historically has not captured the value of preventing pollution or increases of the greenhouse effect. In recent years, it has been very difficult to quantify these values and how to price oil accordingly. This is an area of particular interest to me and I think alternate perspectives on the price/value relationship would help to inform decisions about whether to implement carbon taxes or carbon markets (or inspire the design of something entirely different).

Computations: I’ve been very interested in the work of Cottrell and Cockshott and economic computability. I think one could make some kind of artificial neural network that learns from a data set that would make corrective “micro­regulatory” changes to pricing “intelligently” that could help to avoid crises. There could be adaptive systems to regulate economies in more optimal ways. Again, this requires a discussion of what optimality might be. A large part of the entire thesis will be devoted to the importance of economics as mainly explanatory, and as a discipline that helps to see certain ideologies realized.


Entrepreneurs & Business Experiments: I haven’t looked into this deeply, but the idea is to look at or to do a study on entrepreneurs to figure out how they priced services or products that were newly developed. Did they use economic principles to implement them? How do you price an iPad or airline route when it’s the first ever? I recently spoke to a friend who is a chartered accountant about this topic. She told me that I current issues in the field is accounting for company culture and high turnover. Looking at the discipline of accountancy might be a way to explore this. It would be interesting to see how the price and value relationship is navigated by practitioners and businesses. Is price setting in businesses emergence? I’ve also been thinking about experiments you could run by setting up temporary businesses that experiment with pricing. In particular, I’ve been thinking of an art project on hyper­consumerism: a small restaurant selling bowls of ramen noodles that are dynamically priced with huge differentiation based on time of day, time taken to eat, and closeness of customer arrival time to an optimal customer arrival time. Basically, one where the novelty (and satire) is that customers are fully integrated into the supply chain. I think there is an opportunity to gather interesting data from such an experiment.

In­game & In­app purchases: I’ve spent a lot of time this term thinking about economic systems in virtual worlds. It could be interesting to look at how people value purchases of virtual items whose value is endogenous to the game. This might be an easier thing to study.

Art: Price dynamics in the art market are interesting because of the traditional viewpoint of art as being intrinsically valuable. Why are prices of works by some artists or genres greater than others and why do have we seen huge bubbles in contemporary art from the 1990s to today? (Kazakina 2014) Combining a study of art prices, focusing on particular pieces over time (art sales), provenance, a study in the rhetoricsurrounding art, and the sociology of influence in the art world might illuminate particular insights about value perceptions and price. Some work has been done around impressionist paintings. (Ashenfelter et al. 2001)


California Water & Economic Development: Water is a critical issue around the world and in the southwestern United States, especially this year. The history of how this arid region became one of the most agriculturally productive is fascinating. The kind of feedback loops in effect that create a particular perception of value out of nothing to eventually produce things with price is interesting. From an economic history perspective, it also demonstrates that the perceptions of value that spur developments belong to a certain ideology and don’t accommodate for indigenous beliefs. (Hanak et al. 2010) This is a very interesting case of public and private interaction.

Meta­studies of psychological and other experimental data: This is pending a deeper look into the data from experiments about behavioural economics and psychology around valuing in general. I might look to interpret a vast range of data surrounding pricing and valuing to see how it fits with the theories. I think that there may be strong connections between concept­formation, value and price. Looking at the data from the bottom up would be another way of approaching the question.

I could see the thesis being similar in structure to the dissertation Motors of Sustainable Innovation. I have listed this at the end of the bibliography. I am going to explore this over the summer because of the similarities to the structure I proposed.

7. Current Bibliography (with selected annotations)

This is the state of my current research. It is a long list but one I have cut down significantly on the past few weeks. I have reviewed these works and feel they will be useful to support my inquiry. There are some sources that provide a valuable perspective but that are older. I will need to trace the citation history to find more recent works on those particular topics. I have noted with an asterisk the especially important sources that I will need to read in depth

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over the summer for the project. Each of these are rationalized with a short explanation. These sources come from a variety of disciplinary perspectives including: behavioural economics, business, cognitive science, complexity science, economic history, feminist epistimology, finance, information theory, marketing, mathematical modeling, philosophy, rhetoric and semiotics.

The strategy for going through this list this summer is to start reading with the sources with asterisks. I think that these will be the most valuable. After doing this by the end of June, thinking about these sources, and consolidating their information, I will re­evaluate the approach to decide what other sources I have found will be necessary. I will use reviews and search results to determine which of the other sources is most relevant and significant.

People Consulted this term:

Dr. Patricia Marino ­ Philosophy
Dr. Michael McDonald ­ English
Dr. Jason Thistlethwaite ­ Political Science Dr. Paul Thagard ­ Cognitive Science

Categorized Bibliography

Bullet points for readability.

7.1 Behavioural Economics

  • ●  Frantz, R., & Leeson, R. (Eds.). (2013). Hayek and Behavioural Economics. London: Palgrave MacMillan.
  • ●  *Gul, F., & Pesendorfer, W. (2005). The Case for Mindless Economics. Princeton University.

○ I had a lot of difficulty with this text, but it provides a good counterpoint for including a more accurate model of brain/mind in economics.

● *Hammerstein, P., & Stevens, J. R. (Eds.). (2012). Evolution and the Mechanisms of Decision Making. Cambridge, Mass.: MIT Press.

○ If pairing economics and psychology should be bound and we take a historically contingent approach, then evolution must be considered

● Kahneman, D., & Tversky, A. (Eds.). (2000). Choices, Values and Frames. Cambridge, UK: Cambridge University Press.

○ A more general/recent overview of experimental decision making research may be needed. ● Ranyard, R., Crozier, W. R., & Svenson, O. (Eds.). (1997). Decision Making. London: Routledge.

7.2 Business

● *Beinhocker, E. (2006). The Origin of Wealth: Evolution, Complexity and the Radical Remaking of Economics. Boston, Mass.: Harvard Business School Press.

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○ Excellent primer for complexity economics in general. Will help immerse me further.

  • ●  Kazakina, K. (2014, February 17). The Art of Art Flipping. Bloomberg Business Week.
  • ●  Murphy, R., & Narkiewicz, V. (2012). Are Price, Quality and Value Mutually Exclusive? The Journal ofGlobal Business Management, 8(2), 40–48.7.3 Cognitive Science
  • ●  Bourgine, P., & Walliser, B. (Eds.). (1992). Economics and Cognitive Science. New York: Pergamon Press.
  • ●  Silberstein, M., & Chemero, A. (2011). Complexity and Extended Phenomenological­Cognitive Systems.Topics in Cognitive Science, 4, 35–50.
  • ●  *Thagard, P. (2010). Explaining Economic Crises: Are there collective representations? Epistime, 7(3),266–283.

○ Thagard has a really interesting integrative perspective on the topic

  • ●  Thagard, P. (Forthcoming). Economic Explanations. In in M. Lissack & A. Graber (Eds.), Modes of Explanation. London: Palgrave MacMillan.
  • ●  Thagard, P., & Shroder, T. (Forthcoming). Emotions as Semantic Pointers: Constructive Neural Mechanisms. The Psychological Construction of Emotions.

○ May be a good metaphor for how/if value perceptions get integrated.

7.4 Complexity

● *Arthur, W. B. (2013). Complexity Economics: A different framework for economic thought. Santa Fe Institute.

○ Arthur is a key theorist on the subject.
● *Ball, P. (2005). Critical Mass: How One Thing Leads To Another. London, UK: Arrow Books.

○ Must finish this, ties the subject closer to natural sciences.

  • ●  Barnett, W., Geweke, J., & Shell, K. (Eds.). (1989). Economic Complexity: Chaos, Sunspots, Bubbles, andNonlinearity. Cambridge, UK: Cambridge University Press.
  • ●  Dopfer, K., Foster, J., & Potts, J. (2004). Micro­meso­macro. Journal of Evolutionary Economics, 14,263–279.
  • ●  *Foster, J. (2004). Why is Economics not a Complex Systems Science? Presented at the 336, School ofEconomics, University of Queensland.

○ Alternative history of the discipline

  • ●  Gottinger, H. W. (1983). Coping with Complexity (Vol. 33). Dordrecht, Holland: D. Reidel Publishing Company.
  • ●  *Meadows, D. (2008). Thinking in Systems: A primer. White River Junction, Vermont: Chelsea Green Publishing.

○ Handy guide to systems thinking. The final report may have many diagrams.

7.5 Economics

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  • ●  Allingham, M. (1983). Value. Hong Kong: MacMillan Press.
  • ●  Brinkman, H.­J. (1999). Explaining Prices in the Global Economy. Cheltenham, UK: Edward ElgarPublishing.
  • ●  *Clements, K. (2013). Currencies, Commodities and Consumption. Cambridge, UK: Cambridge UniversityPress.

○ Most recent overview of economic processes

● *Hayek, F. (1945). The Use of Knowledge in Society. The American Economic Review., 35(4), 519–530. ○ Need to engage with original arguments around the economic calculation problem more deeply,

particularly with von Mises, Trotsky, as well as direct responses by Robinson, Schumpeter &


  • ●  Kishtainy, N., In Abbot, G., In Farndon, J., In Kennedy, F., In Meadway, J., In Wallace, C., & In Weeks, M.(2012). The economics book: [big ideas simply explained]. Delhi: DK.
  • ●  Kurz, H. (2013). The Theory of Value and Distribution in Economics: Discussions between PierangeloGaegnani and Paul Samuelson. London: Routledge.
  • ●  *Lin, S. (Ed.). (1976). Theory and Measurement of Economic Externalities. New York: Academic Press.

○ Need to read more about externalities and find updated volume.
● *Mantzavinos, C., North, D., & Shariq, S. (2004). Learning, Institutions, and Economic Performance.

Perspectives on Politics, 2(1), 75–86.
○ Fascinating perspective, need to explore author more.

● *Nicholas, H. (2011). Marx’s Theory of Price and its Modern Rivals. New York, NY: Palgrave MacMillan. ○ Excellent overview.

● *Samuels, W., Medema, S., & Schmid, A. (1997). The Economy as a Process of Valuation. Cheltenham, UK: Edward Elgar Publishing.

○ Excellent perspective.
● *Westra, R., & Alan, Z. (2003). Value and the World Economy Today: Production, Finance and

Globalization. New York: Palgrave MacMillan.
○ ­important collection of works from modern economists revisiting the concept.

7.6 Economic History

  • ●  *Davies, G. (1994). A History of Money: from ancient times to the present day. Cardiff: University of Wales Press.○ A history of currency will be useful for the approach. Currency is what allows prices to manifest. Need to be more familiar with its origins.
  • ●  Gamble, A. (2006). Hayek on Knowledge, Economics and Society. In The Cambridge Companion to Hayek. Cambridge.
  • ●  Marsh, L. (Ed.). (2011). Hayek in Mind: Hayek’s Philosophical Psychology (First., Vol. 15). Bingley, UK: Emerald.
  • ●  Melitz, J. (1974). Primitive and Modern Money. Reading, Mass.: Addison­Wesley Publishing Company.
  • ●  Morgan, V. (1950). The Study of Prices and the Value of Money. London: Historical Association. 7.7 Feminist Epistemologies

● Longino, Helen E. “Subjects, Power and Knowledge: Description and Prescription in Feminist Philosophies of Science.” Feminist Epistemologies. New York: Routledge, 1993. 102­20. Print.

7.8 Finance

● *Janeway, W.. (2012). Doing Capitalism in the Innovation Economy: Markets, Speculation and the State. Cambridge, UK: Cambridge University Press.

○ Need to understand the ins and outs of Janeway’s perspective beyond the lecture.

7.9 Information Theory

● *Cottrell, A. F., & Cockshott, W. P. (1994). Information and Economics: A Critique of Hayek. Retrieved from

○ ­Need to engage with this work further to deal with economic compuation.
● Erill, I. (2012, April 25). A gentle introduction to… Information content in transcription factor binding sites.

Retrieved from:

7.10 Marketing

  • ●  Anderson, J., Thomson, J., & Wynstra, F. (2000). Combining value and price to make purchase decisions in business markets. International Journal of Research in Marketing, 17, 307–329.
  • ●  Dodds, W., Monroe, K., & Grewal, D. (1991). Effects of Price, Brand, and Store Information on Buyers’ Product Evaluations. Journal of Marketing Research.
  • ●  Leszinski, R., & Marn, M. (1997). Setting Value, Not Price. The McKinsey Quarterly, 1, 98–115.
  • ●  Zeithaml, V. (1988). Consumer Perceptions of Price, Quality and Value: A Means­End Model and Synthesisof Evidence. Journal of Marketing, 52(3), 2–22. 7.11 Mathematical Modeling
  • ●  Axelrod, R. (1997). The Dissemination of Culture: A model with Local Convergence and Global Polarization. Journal of Conflict Resolution, 41(2), 203–226.
  • ●  Imbert, C. (2012). Models, Simulations, and Representations. (P. Humphreys, Ed.). New York: Routledge. 7.12 Philosophy

● *Commons, J. R. (1957). Legal foundations of capitalism. Madison: University of Wisconsin Press.
○ Discovered this later on in the research process and feel like its legal systems approach will be


  • ●  Marino, P. (Forthcoming). The Cold­Blooded Economist Is a Dangerous Figure.
  • ●  Neitzsche, F. (1989). On Truth and Lies in an Extra­Moral Sense. In Friedrich Nietzsche on Rhetoric andLanguage (pp. 246–257). Oxford University Press.
  • ●  Schumpeter, Joseph A. “Science and Ideology.” The American Economic Review 39.2 (1949): 346­59. JSTOR. Web. 11 Apr. 2014.

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7.13 Rhetoric

● *Baudrillard, J. (1981). For a Critique of the Political Economy of the Sign. St. Louis, MO.: Telos Press. ○ Discovered this later on in the research process and feel like its symbolic systems approach could

be useful.

  • ●  Baudrillard, J. (1988). Consumer Society. In Jean Baudrillard: Selected Writings (pp. 29–56). StanfordUniversity.
  • ●  Gilb, S. (n.d.). On Truth and Lies in an Extra­Moral Sense, Friedrich Nietzsche. The Modernism Lab at YaleUniversity. Retrieved from­Moral_Sense
  • ●  Robinson, J. (1962). The Classics: Value. In Economic philosophy. New Brunswick, USA: Aldine Transaction.7.14 Semiotics

● Schinckus, C. (2010). Semiotics of Financial Marketplace. The Journal of Interdisciplinary Economics, 22, 317–333.

7.15 Sociology

● *Beckert, J., & Aspers, P. (Eds.). (2011). The Worth of Goods: Valuation and Pricing in the Economy. Oxford, UK: Oxford University Press.

○ This is an excellent synthesis of work done on the topic that claims that the topic is not very well understood. Lots of case studies. A must read.

My prior work

I will likely build on some of the ideas I’ve been thinking about over the past year.

  • ●  Evamy Hill, G. (2013, February). Price is to value as science is to “reality”: Thinking about economicsystems with feminist empiricism.
  • ●  Evamy Hill, G. (2014, March). Understanding the Rhetorical Super­project: Mapping Foundations andMeasuring Impacts.
  • ●  Evamy Hill, G. (2014, April). This Procedural Life: Socio­cultural systems and Rhetoric.References specifically for this report:Ashenfelter, O., Graddy, K., & Stevens, M. (2001). A Study of Sale Rates and Prices in Impressionist and Contemporary Art Auctions. Retrieved from, Lund, & et, al. (2011). Floods, Droughts, and Lawsuits: A Brief History of California Water Policy. In Managing California’s Water: From Conflict to Reconciliation. Sacramento: Public Policy Institute of California. Retrieved from

    Roberts, R. (n.d.). Coase on Externalities, the Firm, and the State of Economics. Retrieved from

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Stiglitz, J. (2010, August 19). Needed: A new economic paradigm. Financial Times. London. Retrieved from­abc2­11df­9f02­00144feabdc0.html
Suurs, R. A. A. (2009). Motors of sustainable innovation : Towards a theory on the dynamics of technological innovation

systems. Utrecht, NL: Utrecht University. Retrieved from
Thaler, R. H., & Sunstein, C. R. (2009). Nudge: Improving decisions about health, wealth, and happiness. New York:Penguin Books.