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The views expressed by thus author are tremendoudly valuable. I have similar concerns about the “scientific” attributes of economics, by which lecturers steeped in neoclassical ideologies have elevated this subject within the family of social sciences. In light of the meteor of economic turmoils, why are we still lugging the old ball and chain? If so-called theories and laws have proven (dare I say) false, why are they still being taught and with such rigour to boot!?
It was, least to say, an initially bewildering experience when I commenced post graduate studies in Development economics to have much of the so-called theorems taught to me in undergrad turned on their heads. Thank God for one of my very radical lecturers. This allowed me to see economics not as the “sin qua non” solution to human development challenges, but as a part (and not necessarily the most important part) of the solution.
I have given up expectations of working at my country’s Central Bank. I have not been sufficiently indoctrinated and my brain does not allow me to confine my thinking to the countless models and useless conditionalities that certain international lending institutions impose on my country, which have no means of resolving the woes (economic and otherwise) which we presently face.
If institutions of learning are desirous of graduating economists who are impassioned to work to ameliorate human suffering, then engendering critical thinking must be the first order of business and this cannot not be through forced/robotic familiarisation with economic models and theories.
Don’t throw the baby out with the bath water!
As an applied economist I have found that much of the neoclassical framework is still very relevant. Rather than trying to be all things to all people and having a single monopoly on “the solution”, economists should work more with other disciplines. Rather than capturing political science and sociology ideas within economics, work with social scientists and political scientists. This will quickly find any holes in the neoclassical framework (as well as holes in the other disciples’ thinking – they also are not immune to criticism), and together a good solution can be found that draws on the best of all of the disciplines. The debate across disciplines gives a better outcome than any single viewpoint.
The main strength of (neoclassical) economics is the theoretical foundation. This is a starting point however, not necessarily the final word. The main problem with neoclassical economics is not the subject matter, but the practitioners who are in-transient and hence give the subject the unsavoriness that is apparent in the article. “Real world economists” (as the article calls us) are by necessity flexible and adaptive – recognizing when neoclassical models work and when they don’t. Discarding the foundations, however, leave us in a vacuum where there is nothing solid to start from. So I argue that neoclassical economics is a fundamental part of any economics degree. University degrees are too short to cover everything a “real world economist” needs to know, so the best thing we can teach our students is to be receptive to other ideas, and not get trapped in a dogma if it doesn’t work.
I completely agree with you about economists working with other disciplines and with respect to economists being flexible. However, I’m curious as to which parts of the neoclassical theoretical foundations you think we should be careful not to throw out.
You say that scrapping the neoclassical framework “would leave us in a vacuum where there is nothing solid to start from”. We have the world to start from, that’s a lot more solid than the assumptions that underpin neoclassical economics and would be a terrific place to start building a new theoretical framework.
Economic welfare is a deeply flawed concept that more or less underpins the entire neoclassical enterprise. The efficient market hypothesis is in tatters. Even the elegant theory of supply and demand is full of holes in any real world application. Neoclassically derived monetary theory is failing to comprehend, let alone fix, the current financial woes. Trade theories of absolute and comparative advantage are farcical in a rapidly changing world and, if seriously applied, would lead economies into disasterous dead ends.
Don’t get me wrong, I realise that grains of truth lie in many of the above but I don’t think that’s enough to suggest we should keep them as the building blocks of a theoretical framework. I believe that economics needs to become more scientific. We need to openly acknowledge the values that underpin our goals and then use a scientific approach to find the best ways to achieve those goals.
The neoclassical system buries the ideologically driven goals deep inside the theory (as assumptions about economic welfare) and then pretends that what is built on top is scientific. When data from the real world clash with the theory, instead of modifying the theory, neoclassical economists say there is something wrong with the world (ie government interference, not enough competition, too many trade barriers etc etc).
Anyway, that was a bit of a rant framed at the beginning as a question but I am genuinely interested in which parts of the neoclassical framework you think we should keep and why.
> The main strength of (neoclassical) economics is the theoretical foundation.
Actually, the main and only real strength of neoclassical economics is that its assumptions, its definitions, and consequently its conclusions and policy prescriptions serve the financial interests of the wealthy, privileged, and powerful. It is on that strength alone that neoclassical economics has become the prescribed and unquestionable doctrine.
> The main problem with neoclassical economics is not the subject matter, but the practitioners who are in-transient and hence give the subject the unsavoriness that is apparent in the article.
On the contrary, the main problem with neoclassical economics is that it was never intended either to be or to aid a genuine empirical science of economics. From the outset, it was intended primarily to provide plausible rationalizations and justifications — based on efficiency, productive merit, legal necessity, mathematical convenience, or anything at all, really — for the massive, systematic, institutionalized, and wholly unnecessary economic exploitation and injustice that is the universal characteristic of capitalism, and which is only prevented from forcibly starving millions of innocent people to death by the massive interventions of advanced nations’ governments, at consumer and taxpayer expense, in the form of minimum wage laws, labor standards laws, welfare, publicly funded education and health care, union monopoly laws, publicly funded old age and disability pensions, etc.
> Discarding the foundations, however, leave us in a vacuum where there is nothing solid to start from.
On the contrary, discarding the foundations of neoclassical economics leaves us something much more solid to start from than its fallacious, absurd, and dishonest assumptions and definitions: the world as it actually is.
> So I argue that neoclassical economics is a fundamental part of any economics degree.
Similarly, before Kepler, most astronomers would have argued that epicycles were a fundamental part of any astronomy degree.
> University degrees are too short to cover everything a “real world economist” needs to know, so the best thing we can teach our students is to be receptive to other ideas, and not get trapped in a dogma if it doesn’t work.
The latter certainly describes neoclassical economics, which doesn’t work for anyone but the wealthy and privileged — and of course their hired lickspittles, the neoclassical economists.
I agree with much of what Mr. Reardon says and applaud his candor in saying it out loud and in public. Having come to economics from philosophy, however, and feeling convinced that economics’ main purpose should be to inform good public policy decision making, I have a slightly different solution to offer. My sense, when I was first exposed to microeconomics in the course of my graduate work in public policy, was somewhat incredulous. Economics appeared to be an edifice of thought built on demonstrably false assumptions using bad logic, posing as a useful science. I went on reading and educating myself in the subject and found that this is exactly what it is. Virtually none of its basic assumptions – about people, about the purpose of the economy, about how the world works – are correct. It denies many things that are obviously true: non-transitive preferences, the diminishing marginal value of money, the economy is a subsystem of the ecosystem on which it depends, etc., etc. I came to believe that nothing short of a complete overhaul would be adequate. We need – and I’m looking for other people who’d like to help with this – an entirely new way of conceiving the economy and new ways to understand and talk about its purpose and workings. To this end, I have drafted a paper on what could form the foundation of a new way of thinking about economics which I would be happy to share with anyone who is interested. Essential to this way of thinking are definitions of what the economy is, what it is for, what elements it is made up of, and how we can determine whether it is performing well or not. A cornerstone of this approach is the observation that economics is NOT about the allocation of scarce resources. It is about sharing plentiful resources!