So, what is neoclassical economics (and what is not)?

In recent days, an unwholesome spat has erupted between progressive economists (e.g. Mark Thoma and Steve Keen, with some prior involvement by Paul Krugman) which, curiously, ended up revolving  around the question of what is neoclassical economics, who can be classified as a neoclassical economist etc. I must state it for the record that such a debate, especially when it escapes the confines of our silly academic games (and infects a public eager for serious policy debates and buffeted by the trials and tribulations of actual barbaric policies), is counter-productive. We should be debating ideas and desisting name-calling, label-wielding and boyish games whose objective is mutual belittlement. But since this one has escaped into the public domain, here is my bob’s worth on what constitutes neoclassical economics. Be warned: this is an academic article. But it is the best I can do to throw light on what neoclassical economics is.  The first section provides a definition of neoclassical economics. Later sections offer an account of how this most peculiar scientific failure has managed to draw enormous power out of its… failure.

Click here for the paper:  Neoclassical Economics (as a most peculiar failure)

PS. This paper will soon appear as the introductory chapter to my new book (to be published by Routledge) entitled ECONOMIC INDETERMINACY: A personal encounter with the economists’ most peculiar nemesis

11 Comments

  • I do find this topic interesting but the way this is written it’s quite a bit over my head. Perhaps you are targeting grads of economics as I find it extremely difficult to follow and I don’t think I’m out of order to suggest that the average person will have difficulty comprehending your arguments.

    Please don’t misconstrue as criticism. Perhaps this is the only way this can be expressed.
    However, if there exists a more layman version I would be interested in reading it.

  • Gd morning! I guess that your new book to b published will appear with this different title? Is it the same as “the dance of the meta-axioms” that we expect to come around June?

  • Having read Yannis Var.’s paper a question comes on my mind. Do we really need Samuelson’s contribution, or we should abolish his tradition? Neoclassial Economics seems to me as the nuclear energy…it can be used as a useful tool for humanity…or as a deadly weapon…it depents on human’s ability to balance the power of that tool-weapon…

    Thanks,

    Christos Papadopoulos

  • Thanks for this piece.

    Maybe homo economicus should become more of a free spirit and not worry too much about expectations and rather adopt higher principles to lead life ,without assuming about the nature of interactions in every social structure ,accepting the “variety” of connections and adjusting when needed ,without losing oneself.

    Equilibrium Joke
    —————————–

    Ever notice that when you drop a buttered piece of bread, it drops butter side down? And what about cats? Cats always land on their feet, right? So, the question is, what would happen if you took a piece of buttered bread, strapped it on the back of a cat (butter side up) and dropped the cat from any local precipice? The results are obvious! The laws of butterology demand that the butter must hit the ground, and the equally strict laws of feline aerodynamics demand that the cat can not smash it’s furry back. If the combined construct were to land, nature would have no way to resolve this paradox. Therefore it simply does not fall. That’s right you clever mortal (well, as clever as a mortal can get), you have discovered the secret of antigravity! A buttered cat will, when released, quickly move to a height where the forces of cat-twisting and butter repulsion are in equilibrium. This equilibrium point can be modified by scraping off some of the butter, providing lift, or removing some more…

  • This fine, succinct essay mentions the word “greed” once – “greed was never a foundational assumption of neoclassicism” – but its unspoken conclusion is: neoclassicism serves the “Greed is Good” ethic, period. Even the ‘rent seeking’ in the academy falls into the ‘greed is good’ paradigm.

    I’m reminded in reading this of Daniel Quinn’s book, “Ishmael” for which he won the first (and last) Turner Prize, in which a talking great ape explains the world entirely in terms of humans falling into one of two categories – “takers” or “leavers”. Takers are greedy, leavers share; leavers see themselves as being part of an ongoing human project in which ‘leavings’ for subsequent generations seems like the right approach to Earth’s bounty. Quinn was attacked first for his ideas, then Ted Turner was attacked, voluminously on TV and in the press, for allowing the taker/leaver heresy to find its way to print. Under the withering criticism Turner discontinued the Prize.

    When we speak of “regulatory capture”, as some politicians and pundits will, it is not sufficiently addressing the problem. Regulatory capture is focusing on a small part of the problem in order to obfuscate the larger problem which Yanis outlines perfectly here. The whole of economics is ‘captured’ and woe to us who would change it.

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