Neoclassical economic theory in its pretensions to scientific status is founded on one of the variants of a now discredited positivism. Neoclassical economic theory claims that there are two distinct areas of economic research: positive economics and normative economics. The former is assumed to deal with the cognitive as scientific content of economics while the later focuses on welfare or equity issues. I argue that the reliance of the whole theoretical structure of economics on (...) the normative postulate of rationality renders neoclassical economics a normative discipline. I also argue that neoclassical economics should thus be viewed as an instance of applied ethics rather than as applied mathematics, say. Finally, it is suggested that neoclassical economics, if its scientific pretensions are to be taken seriously, should be absorbed theoretically into general anthropology. (shrink)

The term neoclassical economics delineates a distinct and relatively homogenous school of thought in economic theory that became prominent in the late nineteenth century and that now dominates mainstream economics. The term was originally introduced by Thorstein Veblen to describe developments in the discipline (of which Veblen did not entirely approve) associated with the work of such figures as William Jevons, Carl Menger, and Leon Walras. The ambition of these figures, the first neoclassicists, was to formalize and (...) mathematize the subject in the aftermath of the so-called marginalist revolution. Economics is, according to one definition, the science that studies human behavior as a relationship between ends and scarce means that have alternative uses. Neoclassical economics pursues this study by means of supply and demand models that determine prices based on the subjective preferences of producers and consumers. Neoclassical economics relies on subjective preferences for determining prices in order to escape from the so-called objective value theory of classical economics, according to which the value of goods could be established by reference to some basic commodity (usually corn) or the labor input required to produce a good. Neoclassicists hoped that by jettisoning objective value, economics could be placed on a more scientific basis as an essentially descriptive and predictive theory of human behavior. Political theory, by contrast, involves both positive and normative elements. It is a positive science to the extent to which it aims to describe and predict political behavior. It is a normative science to the extent to which it prescribes how agents should behave in the political arena and what the best political institutions are. Neoclassical economics is relevant to both of these elements. (shrink)

Abstract: Don Ross’ Economic Theory and Cognitive Science (2005) provides an elaborate philosophical defense of neoclassical economics. He argues that the central features of neoclassical theory are associated with what he calls the Robbins-Samuelson argument pattern and that it can be reconciled with recent developments in experimental and behavioral economics, as well as contemporary cognitive science. This paper argues that Ross’ Robbins-Samuelson argument pattern is not in the work of either Robbins or Samuelson and in many (...) ways is in conflict with their own versions, and defenses, of neoclassical theory. (shrink)

Thirty years after its publication, Thomas Kuhn's The Structure of Scientific Revolutions is still the source of much discussion in economics. Its rel-ativistic tone has often been used to fuel the claims of dissident traditions against the prevailing orthodoxy, or at least to plead the case for intellectual pluralism. Through his arguments regarding the incommensurability of different theoretical approaches to a particular subject, Kuhn's work has allowed many to argue that dissident traditions are just as legitimate as orthodoxy for (...) analyzing a subject, since there is no objective or independent means of arbitrating between them. This has caused an opposing response by those more supportive of the prevailing theoretical approach to economics. The latter have tried to find a defense to relativist challenges in more “rational” philosophies of science, such as that of Lakatos. (shrink)

Economics is currently experiencing a climate of uncertainty regarding the soundness of its theoretical framework and even its status as a science. Much of the criticism is within the discipline, and emphasises the alleged failure of the neoclassical viewpoint. This article proposes the deployment of partial modelling, utilising Boolean networks (BNs), as an inductive discovery procedure for the development of economic theory. The method is presented in detail and then linked to the Semantic View of Theories (SVT), closely (...) identified with Bas van Fraassen and Patrick Suppes, in which models are construed as mediators creatively negotiating between theory and reality. It is suggested that this approach may be appropriate for economics and, by implication, for any science in which there is no consensus theory, and a wide range of viewpoints compete for acceptance. (shrink)

Classical economics was oriented towards the advancement of the common interest as defined by the political institutions of the state, whereas neoclassicism is defined in a social and political vacuum. Furthermore, the former related realistically to an excess supply of labour, while the latter assumes full employment. These differences have significant implications for income distribution, accumulation, growth and development. Classical economists advocated free trade to increase domestic productivity and employment at stable or growing real wages. Contemporary globalization recreates the (...) classical surplus labour economy to reduce domestic wage levels through moving domestic production from high to low wage areas around the globe. Free trade becomes necessary so that the goods produced abroad can be imported into capital exporting countries. However, without a corresponding growth of exportables, the trade balance must be adversely affected. Furthermore, adverse changes in income distribution diminish domestic demand for goods. The policy of globalization must become self-defeating. (shrink)

Les partisans de l’épistémologie historique ont souligné la manière dont les concepts nommés font partie des caractéristiques les plus fondamentales d’une science réussie. Les progrès de la compréhension, notamment par le développement de projets dont l’orientation est critique, peuvent être considérablement stimulés par la transformation d’aspects clés en concepts nommés, étant donné l’attention que ces derniers ont tendance à recevoir. Je me concentre ici sur un phénomène analytique qui, à mon sens, mérite de faire l’objet d’un concept nommé dans les (...) sciences sociales modernes. Je pense qu’une telle évolution serait bénéfique pour la discipline de l’économie moderne prise en particulier. En réalité, le phénomène en question a déjà fait l’objet d’un concept nommé en économie, et ce il y a plus de 100 ans. Il était associé à l’étiquette « économie néoclassique ». L’étiquette a survécu, tout comme le phénomène pour lequel elle a été, à juste titre, introduite. Mais l’étiquette et l’étiqueté se sont tous deux séparés, la première étant utilisée par la suite de manière essentiellement incohérente et le second persistant sans être articulé et de ce fait essentiellement non reconnu. Ainsi, il s’agit également d’explorer la manière dont tout cela s’est passé et de se demander s’il y a quelque chose à tirer de cette histoire. (shrink)

The critique of philosophical foundations of neoclassical economics is significant, because of its hegemony on economic education and research programs in Iran and worldwide academies. Due to an epistemological fallacy, methodological individualism plays a prominent role in the philosophy of economic; since the ontological aspects of economy are reduced to methodological considerations. Accordingly, critique of methodological individualism is regarded as the main entry for philosophical analysis of neoclassical economics. This article aims to analyze and appraise the (...) methodological individualism from critical realism’s point of view. Critical realism is taken as a stand for criticizing methodological individualism, because critical realism and neoclassical economics as a positive approach to economics, both share a realistic worldview. The critical realism’ critique of methodological individualism is bases on analyzing the concepts of formalism, syllogism, social atomism, isolation and reduction. From critical realism’ point of view because of unrealistic postulations of methodological individualism, neoclassical economics is turned to an abstract and deductive science such as mathematics with a low potentiality of explanation. (shrink)

This article examines and assesses Bernard Hodgson’s critique of the Neoclassical concept of rationality and its place in the literature. It is argued that Hodgson’s Trojan horse critique is superior to the others because it addresses the role of empiricist epistemology in reducing reason to instrumental rationality and consequent disappearance of the human subject of political economy. The second phase of the empiricist level of analysis reintroduces the capacities for ethical deliberation, self-determination, and the socio-historical conditions and institutional setting (...) of the economic agent. Because Hodgson’s solutions presuppose empiricist terrain, they are arbitrary. This occurs because the fundamental problem of Neoclassical rationality is its ontology. Yet by introducing the human subject into economic theory, Hodgson’s solutions move onto an ontological terrain adequate for economic analysis of human subjects. (shrink)

Methodological changes within the study of man are inspired not only through new scientific insights and discoveries, but also through crises, wars, and the appearance of new political masters. Within the study of economics, the edifice of neoclassical economics is now standing on the scaffold seeking pardon among the spectators and hoping the executioner has been called away and the verdict redrawn. The critique is not new, but has been continuous and gaining in strength especially over the (...) past three decades, particularly after the recent financial crisis. In the wake of this devastating event, more people are questioning the usefulness…. (shrink)

Is rhetoric just a new and trendy way toépater les bourgeois?Unfortunately, I think that the newfound interest of some economists in rhetoric, and particularly Donald McCloskey in his new book and subsequent responses to critics, gives that impression. After economists have worked so hard for the past five decades to learn their sums, differential calculus, real analysis, and topology, it is a fair bet that one could easily hector them about their woeful ignorance of the conjugation of Latin verbs or (...) Aristotle's Six Elements of Tragedy. Moreover, it has certainly become an academic cliché that economists write as gracefully and felicitously as a hundred monkeys chained to broken typewriters. The fact that economists still trot out Keynes's prose in their defense is itself an index of the inarticulate desperation of an inarticulate profession. (shrink)

The concept of equilibrium has long been a focus for dissent between orthodox and heterodox schools of thought in economics. The paper explores the meanings of ‘equilibrium’ and attempts to tease apart salient appropriate and inappropriate modes of deployment of the concept. Under far-from-equilibrium conditions, equilibrium is not even an approximate description of the condition of the system, but an abstraction – a state of affairs which might obtain should a process under consideration run to its conclusion. The order (...) of the system is viewed from this standpoint, not as an equilibrium, but as a temporary and ephemeral balance of forces, destined to be disturbed by the passage of time. A specific instance of the deployment of the concept of equilibrium by a neoclassical writer – Robert Lucas – is examined and the conclusion drawn that the concept has been hypostatised: an aspect of a process has been one-sidedly emphasised and substituted for the whole. The temporary is made permanent, and process subordinated to stasis, with clear apologetic results. The paper concludes by suggesting that this hypostatisation exemplifies the contrast between formal and dialectical modes of thought, and that it is in the application of a dialectical notion of equilibrium that the heterodoxy can make its most telling contribution. (shrink)

The neglect of issues related to the economic status of minorities and women in introductory economics textbooks widely used in the United States is a problem rooted in the most fundamental theoretical propositions of mainstream economics. Despite the fact that the claims of both mainstream methodology and general equilibrium theory have been seriously questioned in recent years, introductory economics textbooks fail to incorporate into the principles curriculum those critical findings which would allow analysis of the economic problems (...) of women and minorities in the United States. This article compares mainstream and radical textbooks' treatments of race and gender issues to show how the radical approach to these economic questions overcomes many of the deficiencies of the mainstream approach. (shrink)

The article by Ron Wallace 'proposes the deployment of partial modelling, utilising Boolean networks (BNs), as an inductive discovery procedure for the development of economic theory'. The central argument in favour of partial models is well-made, and while I agree with this aspect of the paper, and the conclusion that models should serve as 'cognitive instruments in a regime of exploration,' I have a number of comments about the proposed strategy and the example of BNs......

Many epistemic anomalies of the neoclassical research programme originate from its ontologically reductionist meta-axioms, which predicate how economic macro-systems are constituted from their micr...

We examine the merits of neoclassical environmental economics and discuss alternative approaches to it. We argue that the basic assumptions of the neoclassical approach, embodied in the indifference curve, make that model inappropriate for environmental analysis. We begin by assuming that the basic postulates of the neoclassical model hold and then argue that even this ideal state is incompatible with environmental sustainability. We discuss the role of the discount rate, the exclusive emphasis on marginal choices, and (...) the assumption of perfect information. (shrink)

We examine the merits of neoclassical environmental economics and discuss alternative approaches to it. We argue that the basic assumptions of the neoclassical approach, embodied in the indifference curve, make that model inappropriate for environmental analysis. We begin by assuming that the basic postulates of the neoclassical model hold and then argue that even this ideal state is incompatible with environmental sustainability. We discuss the role of the discount rate, the exclusive emphasis on marginal choices, and (...) the assumption of perfect information. (shrink)

We examine the merits of neoclassical environmental economics and discuss alternative approaches to it. We argue that the basic assumptions of the neoclassical approach, embodied in the indifference curve, make that model inappropriate for environmental analysis. We begin by assuming that the basic postulates of the neoclassical model hold and then argue that even this ideal state is incompatible with environmental sustainability. We discuss the role of the discount rate, the exclusive emphasis on marginal choices, and (...) the assumption of perfect information. (shrink)

The most important fact about 21st century economics is that it is the post-neoclassical era in terms of the frontiers of economic research. One can still find orthodox, neoclassical theory in most textbooks, especially those at the upper undergraduate level. However, this no longer reflects the reality of how economists at the cutting edge of economics are thinking, including those who are in the mainstream of the profession. The intellectual orthodoxy of neoclassicism has died (Colander, 2000) (...) and the current thrust of research at the cutting edge of the frontier is the search for the appropriate alternative to replace it. (shrink)

Neoclassical economics remains the leading theoretical alternative to Marxian economics. In this article I shall contrast the accounts of technical change in capitalism proposed by both theories. I shall introduce five criteria relevant to a comparison of competing social theories, and argue that the Marxian perspective on technical change in capitalism is superior on all five counts.

Neoclassical economics remains the leading theoretical alternative to Marxian economics. In this article I shall contrast the accounts of technical change in capitalism proposed by both theories. I shall introduce five criteria relevant to a comparison of competing social theories, and argue that the Marxian perspective on technical change in capitalism is superior on all five counts.

In this paper I argue that the criterion of valuation in neoclassical economics is flawed because it is not an invariant measure of value. It is invariant only when unrealistically restrictive conditions are imposed on the class of admissible utility functions, which in fact makes it a special case. The only sensible alternative is to turn to classical value theory based on real sacrifices or opportunity costs.

For most observers of economics from both inside and outside the science, the term ‘economics’ is synonymous with neoclassical economics. It is the methodology of neoclassical economics that defines the discipline of economics. ‘Mainstream economics’ is neoclassical economics and anyone entering the discipline today who wishes to obtain an appointment at one of the leading universities of the world is well advised to master its techniques. The fact that virtually every (...) winner of a Nobel prize from Paul Samuelson up to his student Joseph Stiglitz has been a practitioner of neoclassical economics is ample proof of the methodology’s triumph. Despite the dominance of this methodology, however, neoclassical economics has been subject to a steady stream of criticisms and proposals for alternative methodological approaches throughout its life. This article focuses on two relatively recent challenges to the neoclassical orthodoxy that seem to have taken hold of a non-negligible minority of the profession, some of whom can be found at leading universities. These two challenges come from behavioural economics and evolutionary economics. The article describes the strengths and weaknesses of both of these methodological approaches and contrasts them with that of neoclassical economics. It concludes that all three methodologies have something positive to contribute to the study of human behaviour. Key Words: neoclassical economics • behavioural economics • evolutionary economics. (shrink)

This paper achieves two general objectives. It first analyses Bernard Hodgson's "Economic As Moral Science" as a path-breaking internal critique of neo-classical economic theory, and it then demonstrates that the underlying neo-classical paradigm he presupposes suffers from a deeper-structural myopia than his standpoint recognizes. EMS mainly exposes the a priori moral prescriptions underlying orthodox consumer choice theory - namely, its classical utilitarian ground and four or, as argued here, five hidden universal categorical-ought prescriptions which the theory presupposes as instrumental imperatives: (...) comparability evaluations by all consumer judgements; non-satiety of consumer desire; consistency and transitivity of consumer preferences; diminishing rate of marginal substitution by consumer choice; and an unlimited aggregate growth of commodity production, or "the liberal growth ethic". The article argues that Hodgson's refutation of the neo-classical claims of "value neutral scientific method" is sound, that his bridging of the Humean reason-desire divide by the "rational review" of wants is resonantly demonstrated, and that his argument for conversion of an "a priori-cum-normative-cum-idealized" neoclassical theory into scientific status is logically plausible but morally abhorrent. The principal objection to Hodgson's magisterial exposé of neo-classical doctrine's moral a priorism is that the latter's normative presuppositions are profoundly deranged at a level that he himself assumes as given. In consequence, there is theoretical closure at three levels: to the underlying "life economy" of non-priced and non-profit production and distribution of goods otherwise in short supply; to the "civil commons" infrastructure sustaining these non-commodity systems of social and ecological production and distribution; and to the systemic despoiling of both by monetized market mechanisms which are falsely assumed as the defining limits of "the economy". (shrink)

The goal of “Inclusive Economics” is to tie together various authoritative strands of contemporary economic theory into an easily comprehensible whole that illuminates the need for a broader approach to contemporary economic policymaking undistorted by obsolete 18th century rationalist assumptions about utility, ethics, worthiness and traditional culture. This is accomplished by elaborating the rationalist competitive ideal along the optimizing lines pioneered by Paul Samuelson (neoclassical economics); plumbing modifications necessitated by Herbert Simon's realist concepts of “bounded rationality” and (...) “satisficing”; refined further by applying a pragmatist outlook to probe the consequences of relaxing Enlightenment teleological, ethical, spiritual and cultural taboos. The exercise will explain why competitive market economies guided by rational utility-seeking invariably are less productive, efficient, just and beneficent than most theorists concede, and will illuminate the full range of interventions needed to achieve better outcomes. We call this program in its entirety “Inclusive Economics”, including the integration of micro and macroeconomics. (shrink)

Economic Imperialism is the claim of some economists that the methodology of neoclassical economics has superior scientific qualities and should be adopted by most or all social sciences. The paper first shows why such a dominant claim could develop among economists but in no other science and then goes on to point out the shortcomings of this claim of methodological superiority. These critical remarks are also relevant for methodological controversies within economics between a mainstream and heterodox economists.