Selecting Social Goals: Alternative Concepts of Rationality: Both the Orthodox and the Heterodox Must Be Able to Explain the Origin and Significance of Values

. The differences between the neoclassical concept of substantive rationality and the recently proposed alternative, procedural rationality, is clarified. It is demonstrated that abandoning neoclassical rationality does not, in itself, provide a rational basis for evaluating alternative institutional or policy goals. Hayek contradiction‐resolution model is examined as one way to evaluate such goals. The possibility that ends must be based on explicitly ethical criteria, selected according to the concept of “ontological rationality,” is considered. It is argued that economic analysis employing either substantive or procedural rationality of evaluate alternative goals is inadequate since both take institutional and policy ends as givens. Both the orthodoxy and its critics must be able to explain the origins of values, and to provide criteria for evaluating alternative values before any policy proposals can be defended as rational or progressive. Tillich, Galbraith, Hodgson and Dewey are considered.