The Ills of Disembodiment and Abstraction in Economics

Departing from its Smithian origins, with the development of marginalism and its mathematization in the 1930s, economics has developed disembodied theories, abstracted from human and social realities. Disembodiment is characterized by the use of the computer metaphor for both agents and markets defining economic action as abstract processing of information. This was underpinned by three main motivations: Achieving disciplinary autonomy from psychology and sociology; formalizing the normative presumption of individual freedom; and employing a reductive explanatory approach to the complex behavior of large agent populations. The standard disembodied model treats prices as carriers of information and parameters of rational decisions, whereas the argument presented here is that prices become information only when interpreted by living human beings in social contexts. New approaches seem to re-embody economics, namely, behavioral, experimental, and neuroeconomics. However, they remain incoherent and inconclusive regarding embodiment because economics follows a deductive nomological understanding of explanation, as does physics.