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Smith: Constructivist and ecological rationality in economics

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Smith. 2003. Constructivist and ecological rationality in economics. American Economic Review 93 (3): 465-508.

There are two forms of rationality.

Cartesian (=Decartes) constructivism assumes that we use reason and rationality to construct our modes of behavior.

Ecological rationality says that we don't always deliberate. Some norms just emerge through trial and error until one helps us survive.

The end lists several conclusions. Some big ones: Markets require rules. Although some of these rules might be the result of deliberate (Cartesian) reasoning, many are simply the result of trial and error (ecological rationality). Even deliberate rules evolve over time through ecological processes. Thus, the rules of exchange derive from both Cartesian and ecological rationality.

Free exchange does not require selfishness (as many say). Rather, the point of Adam Smith and the other Scots was only that one does not necessarily have to be "good" to contribute to a socially good outcome.