Reflexivity as a Source of Paradox in Political Economy : Analysis and Consequences for Economic Methodology

In economic methodology reflexivity in theorizing is mostly related to the relation between scientist and theory, such as in the application of economics on economics. This paper explores internal reflexivity of economic concepts, such as when economic action is directed at institutions which in turn determine economic action. I show that reflexivity in Political Economy in the sense of endogenous politics gives rise to a series of paradoxes, some of which have been already intensively discussed in the literature, such as the determinacy paradox. These paradoxes are an engine for the generation of growing complexity of economic theories and, hence, even of new branches of economics, yet at the same time they cause an increasing indeterminacy of measurement. In particular, reflexivity destroys any base for a context-free rank-order of institutions. I demonstrate this result with a number of recent contributions to international Political Economy. From this I conclude that economics needs to move back towards ordinary language theorizing and to eschew the idea of achieving an integral and complete formal system to describe real-world economic systems