Back from holidays, with orthodox neoclassicism
by Benjamin on September 6, 2010
This blog, like many others has been quiet over the summer months. But now school’s in, and so is Peter Radford’s (2010: 112) term “orthodox neoclassicism.” We used to speak of the economic orthodoxy and that was the neoclassical school of economics… But with a crisis and the amazing adaptability of neoclassicism, we now have orthodox neoclassicism. So there must be some heterodox neoclassicism out there as well? Of course there is. Behavioural economics, imperfect information analysis and feminist economics could all – I think – fall into the category of micro-based analysis from one or two utility maximizing agents representing the world. The danger with all this, is that any dissent towards this type of model will be lost in what is becoming a theoretical debate between one type of neoclassical economics and another, as Hugh Goodacre points out, in reference to Stiglitz’s 20 August FT article:
The attempt by Joseph Stiglitz to portray himself as an intellectual underdog is unconvincing. He represents the “mainstream” paradigm against which he claims to be rebelling in caricature terms as the crudest possible version of the “efficient markets hypothesis”… Prof. Stiglitz’s “new paradigm” is in fact just an updated version of the market fundamentalism it claims to replace: have faith in markets – if they break down, you can fix them. (Goodacre, 23 Aug. 2010, in the Financial Times)
There is a danger here: Just like the perfectly informed rational agent was replaced by a ‘revolutionary’ backward looking agent – changing little of substance in the theory. We may now be watching a change from one neoclassical doctrine to another. One that will be more informative and interesting I am sure, but one which will continue to propagate the same old myths, with the same old disdain for empirical investigation and fieldwork. I could be wrong. I hope so. Welcome back :)
