Islamic Economics Studies Bi-quarterly Journal

Soros Reflexivity Theory From Economic Methodological Point of View: A Critical Analysis of Popper’s Falsification Theory with an Emphasis on the Difference between Economic and Physical Sciences

Document Type : Research Paper

Author

Assistant Professor, Faculty of Economics, Allameh Tabataba`i Universirty

Abstract

This paper is the first attempt in economic literature in Iran toward the analysis of Soros Reflexivity theory from an economic methodological point of view. In this paper, the basic differences between economic and physical sciences are examined using a comparison between this theory and the prevailing approach in the mainstream economics. Reflexivity theory is based upon Popper’s falsification model, and at the same time criticizes strongly its application in economic analysis. Reflexivity in economic analysis leads to a unique and irreversible model, hence does not render economic behavior to fixed and rigid schemes. This is in sharp contrast to the behavior of economic agents in mainstream economics, which are reduced nearly to observers dealing with cost-benefit analysis of their decisions based on rational evaluations of markets. Despite the impassive attitude of economists in general to the reflexivity theory, this paper underlines the fact that Soros’s attempts, as the greatest speculator in the history and the most prosperous trader in financial markets, in writing a number of books in criticizing capitalism especially with regard to its methodological shortcomings, has produced new directions in the critical analysis of capitalism.

Keywords

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Islamic Economics Studies Bi-quarterly Journal
Volume 6, Issue 1 - Serial Number 11
November 2014
Pages 7-34