It is useful to divide philosophy of economics in this way into three subject matters which can be regarded respectively as branches of action theory, ethics (or normative social and political philosophy), and philosophy of science. Economic theories of rationality, welfare, and social choice defend substantive philosophical theses often informed by relevant philosophical literature and of evident interest to those interested in action theory, philosophical psychology, and social and political philosophy.
The question usually addressed in any subfield of philosophy (the philosophy of X) is "what is X?" A philosophical approach to the question "what is economics?" is less likely to produce an answer than it is to produce a survey of the definitional and territorial difficulties and controversies. Similar considerations apply as a prologue to further discussion of methodology in a subject. Definitions of economics have varied over time from the modern origins of the subject, reflecting programmatic concerns and distinctions of expositors.
Ontological questions continue with further "what is..." questions addressed at fundamental economic phenomena, such as "what is (economic) value?" or "what is a market?". While it is possible to respond to such questions with real verbal definitions, the philosophical value of posing such questions actually aims at shifting entire perspectives as to the nature of the foundations of economics. In the rare cases that attempts at ontological shifts gain wide acceptance, their ripple effects can spread throughout the entire field of economics.
An epistemology deals with how we know things. In the philosophy of economics this means asking questions such as: what kind of a "truth claim" is made by economic theories – for example, are we claiming that the theories relate to reality or perceptions? How can or should we prove economic theories – for example, must every economic theory be empirically verifiable? How exact are economic theories and can they lay claim to the status of an exact science – for example, are economic predictions as reliable as predictions in the natural sciences, and why or why not? Another way of expressing this issue is to ask whether economic theories can state "laws". Philosophers of science and economists have explored these issues intensively since the work of Alexander Rosenberg and Daniel M. Hausman dating to 3 decades ago.
Rational choice, decision theory and game theory
Philosophical approaches in decision theory focus on foundational concepts in decision theory – for example, on the natures of choice or preference, rationality, risk and uncertainty, and economic agents.
Game theory is shared between a number of disciplines, but especially mathematics, economics and philosophy. Game theory is still extensively discussed within the field of the philosophy of economics. Game theory is closely related to and builds on decision theory and is likewise very strongly interdisciplinary.
The ethics of economic systems deals with the issues such as how it is right (just, fair) to keep or distribute economic goods. Economic systems as a product of collective activity allow examination of their ethical consequences for all of their participants. Ethics and economics relates ethical studies to welfare economics. It has been argued that a closer relation between welfare economics and modern ethical studies may enrich both areas, even including predictive and descriptive economics as to rationality of behavior, given social interdependence.
Utilitarianism, one of the ethical methodologies, has its origins inextricably interwoven with the emergence of modern economic thought. Today utilitarianism has spread throughout applied ethics as one of a number of approaches. Non-utilitarian approaches in applied ethics are also now used when questioning the ethics of economic systems – e.g. rights-based (deontological) approaches.
Many political ideologies have been an immediate outgrowth of reflection on the ethics of economic systems. Marx, for example, is generally regarded primarily as a philosopher, his most notable work being on the philosophy of economics. However, Marx's economic critique of capitalism did not depend on ethics, justice, or any form of morality, instead focusing on the inherent contradictions of capitalism through the lens of a process which is today called dialectical materialism.
The philosophy of economics defines itself as including the questioning of foundations or assumptions of economics. The foundations and assumption of economics have been questioned from the perspective of noteworthy but typically under-represented groups. These areas are therefore to be included within the philosophy of economics.
The ethics of economic systems is an area of overlap between business ethics and the philosophy of economics. People who write on the ethics of economic systems are more likely to call themselves political philosophers than business ethicists or economic philosophers. There is significant overlap between theoretical issues in economics and the philosophy of economics. As economics is generally accepted to have its origins in philosophy, the history of economics overlaps with the philosophy of economics.
_____ (1983). "If Economics Isn't Science, What Is It?" Philosophical Forum, 14, pp. 296–314.
_____ (1986). "What Rosenberg's Philosophy of Economics Is Not", Philosophy of Science, 53(1), pp. 127–132. JSTOR187927
Douglas W. Hands (1984). "What Economics Is Not: An Economist's Response to Rosenberg", Philosophy of Science, 51(3), pp. 495–503. JSTOR187496
Bruce J. Caldwell ( 1994). Beyond Positivism: Economic Methodology in the Twentieth Century, 2nd ed. Routledge. Preview.
Daniel M. Hausman (1980). "How to Do Philosophy of Economics", PSA: Proceedings of the Biennial Meeting of the Philosophy of Science Association, 1, pp. 353–362. JSTOR192578
_____ (1983). "The Limits of Economic Science", in The Limits of Lawfulness: Studies on the Scope and Nature of Scientific Knowledge, N. Rescher, ed. Reprinted in D.M. Hausman (1992 Essays on Philosophy and Economic Methodology, pp. 99–108.
Downie, R.S. (1987). "moral philosophy," The New Palgrave: A Dictionary of Economics, v. 3, pp. 551–56.
Hands, D. Wade, ed. (1993). The Philosophy and Methodology of Economics, Edward Elgar. 3 v. Description and Table of Contents links.
Davis, John B., Alain Marciano, Jochen Runde, eds. (2004). The Elgar Companion to Economics and Philosophy. Description & Table of Contents links and Introduction and ch. 1 previews via sidebar scrolling. Articles from 1925 & 1940–1991.