THE GENETIC-CAUSAL TRADITION AND MODERN ECONOMIC-THEORY

This paper is an analysis of a specific tradition of causal thinking i n economics: the genetic-causal tradition. (This concept has nothing t o do with the science of genetics but with origins or genesis.) The tr adition was most self-consciously followed in the work of the Austrian School, but spilled over into other approaches. Causes are viewed as forces that originate change ('originating causes') rather than simply sustain a current state of affairs. Hence, in this view, causation, c hange, processes and time are interrelated. Thus genetic-causal explan ations place emphasis, inter alia on temporal processes resulting in c hange and emanating from changes in agents' desires and beliefs. The a uthors present a brief history of this approach, demonstrating its roo ts in the works of Menger, Bohm-Bawerk, Keynes, Mayer and Hayek, as we ll as in the competition theory of the classical school. The authors a lso outline the major characteristics of genetic causes among which ar e that they are real mental events with a forward-looking perspective, are generally neither necessary nor sufficient for their consequences , may produce unintended consequences, and are embodied in non-determi nistic processes. Furthermore, distinctions are drawn between genetic causation, on the one hand, and functional dependence, predictive capa city and logical implication on the other. The genetic-causal approach is then illustrated in a number of different areas: Mises's theory of the value of money, Keynes's theory of interest, the modem theory of search, choice-of-technology literature, and arbitrage or discovery dr iven processes.