Bringing Weber Back into Economics: Introduction

In their attempt at aping the physical sciences, the neoclassical economists have reduced man to an automaton. His actions are entirely dependent on variables in a set of simultaneous equations. Actually, the neoclassical agent’s actions are not actions at all, but merely reactions. After ridding ourselves of the predilection to formalize, we find ourselves attempting to theorize about a world of striking complexity. It may never be possible to understand all the relations between institutions and man as well as inter-institutional relations. How then, are we to understand human action in our own dynamic world? For a partial answer, we can look to Weber’s method of Verstehen (interpretation) and his ideas on understanding the structure of the social world. We can try to understand the intentions of the heterogeneous agents that inhabit society and the praxeological relevance of institutions for these individuals.