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Common Ground Critiques of Neoclassical Principles
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Steve Cohn (Knox College, USA) © Copyright 2003 Steve
Cohn Like many heterodox economists I am pleased and excited by the growth of the PAE network. I'd like to share some thoughts about a project I have been working on that overlaps many initiatives and ideas that have been discussed in the PAE Review. The project is a "critical commentary" on standard neoclassical principles texts. It provides a "chapter by chapter" critique of introductory texts that could be assigned alongside a standard text by instructors or read independently by interested students in an orthodox course. The design of the project is similar to Marc Linder's efforts in Anti-Samuelson (1977), but adds other heterodox voices to Linder's primarily Marxist perspective. In these comments I will concentrate on the macroeconomic side of principles courses. The “critical commentary” project is based on four major assumptions. Assumption 1: Need for Critique
To make matters worse, for several decades the neoclassicists have been increasing their control over economic education at the pre-college level. There has been a major effort to craft and then impose on high school (and even pre-high school) economics courses "voluntary content standards" that reflect neoclassical ideas. This has been accompanied by the creation of review mechanisms, such as the Test of Economic Literacy (TEL), that assess economic knowledge in terms of students' acceptance of neoclassical theory. When economists objected to the narrowness of the "voluntary" content standards, two important members of the drafting committee were quite explicit about their attempt to censor other viewpoints. They indicated, "The final standards reflect the view of a large majority of economists today in favor of a 'neoclassical model' of economic behavior….The task was to produce a single coherent set of standards to guide the teaching of economics in America's schools. Including strongly held minority views of economic processes risks undermining the entire venture."2 Assumption 2: Generic Target There is a template, a standard neoclassical treatment of most topics covered in principles courses, which can serve as the target for a heterodox or pluralist commentary. Space limitations preclude defending this claim here, but it is hardly controversial. Colander's observation that principles texts can not diverge more than 15% from standard fare characterizes the market's homogenization fairly well. Assumption 3: Common Ground Critique
Assumption 4: Appropriate Pedagogy
The Significance of Common Ground Since establishing our common ground may be key to expanding the influence of pluralist economics, I will concentrate on elaborating Assumption 3 in this article. Besides offering opportunities for intellectual cross pollination, securing common ground might increase the clout of pluralism within the economics profession. Why not, for example, band together to demand that the College Board's Advanced Placement exam include at least one question that requires some knowledge of alternative economic paradigms? The growth of ICAPE4 and recent efforts to create umbrella projects, such as the recent and/or upcoming conferences on the history and future of heterodox economics in the U.S. are promising steps in this direction. A key challenge for "heterodoxy" is to define itself in ways that move beyond the rubric of "non-neoclassical" economics. In defining a common ground in the "critical commentary" I have tried to do three things: (1) identify shared ideas that generate a pattern of heterodox critique across topics and chapters of introductory macro texts; (2) give special attention to ideas that link methodological differences to policy differences; and (3) characterize the common ground in ways that permit distinct paradigms to develop common differences with textbook economics in different ways. Let me offer two examples of the latter point. I think holist alternatives to methodological individualism are one of the most fundamental differences between heterodox and neoclassical economics.5 Holist alternatives are expressed differently, however, in different heterodox paradigms. For example, Marxist holism finds expression in "dialectics;" institutionalist holism highlights patterns of institutional reproduction; holism in radical economics often illuminates social structures of accumulation; feminist holism can involve systems of patriarchy; Post Keynesian holism highlights socially constructed conventions for responding to uncertainty; and so on. While the approaches are very different they all assert that there is a "coherence" to economic life that reproduces itself over time at a higher level of integration than the individual. A second example involves epistemological issues. In contrast to neoclassical theory's assertion of a positivist-modernist epistemology, heterodoxy acknowledges the paradigmatic and multi-dimensional nature of knowledge. While different economists have taken this challenge in different directions (including the adoption of pluralist or Babylonian methodologies, the rejection of micro foundation requirements, the acceptance of empathy and aggregate analysis as viable research techniques, the adoption of critical realism, etc.), there is a common ground that expands economics discourse from the narrow terrain of textbook methodology. Any attempt to create a common ground is inevitably going to exclude some "terra firma" for many perspectives. The commonalities and rubrics I have chosen work well along many dimensions, but not so well along others. With these qualifiers in mind, I offer the concepts below as a heuristic for promoting discussion of common ground in heterodox critiques of textbook economics. Because of space limitations I have simply listed and not discussed most of the categories. I will offer a few comments on the two asterisked categories whose meaning may not be self-evident from their title. Heterodox paradigms share a common rejection of the following aspects of textbook economics: -its positivist-modernist epistemology *-its subtexts *-its treatment of issues of well-being - its inappropriate use of abstraction - its universalization of homo economicus -its allegiance to methodological individualism In areas of particular relevance to macro theory, heterodoxy also rejects: -its assumption of perfect information -its assumption of perfect competition -its use of comparative static rather than dynamic models -its appeal to partial equilibrium intuitions to explore system-wide issues of macro coordination -its abstraction from the monetary character of the economy -its abstraction from the labor market's "subjective" dimension and the institutionally contingent determination of wage/profit shares Some Comments on Subtexts Heterodox critiques of neoclassical economics (at least the way I am using the term heterodox) involve two different kinds of inter-connected objections. Within neoclassical economics, the first might be seen as "normative" and the second as "positive" objections. One of the claims of heterodoxy, however, is that the sharp distinction between positive and normative statements claimed by neoclassical economics oversimplifies the complex relationship between the two. Thus I will call the two objections textual and subtextual. To some extent, the first deals with the techniques of analysis and the second with the goals of analysis (although the goals obviously influence and infuse the choice of techniques). Many heterodox economists feel that neoclassical economics often acts as an apology for capitalism and laissez-faire oriented policy regimes. The neoclassicists ridicule the claim, analogizing it to finding ideology in geometry. I have found the concept of subtexts very helpful in explaining heterodox thinking. By subtexts, I mean (1) the tacit and unprovable assumptions about the nature of society and the (2) normative ideas about the goals of economic knowledge that underlie all economic paradigms. Most intellectual work is motivated by a belief that the ideas pursued are worth knowing. Subtexts provide the context for knowing, i.e., they provide a backdrop that situates the knowledge in relationship to the projects it is intended to facilitate (i.e., it shows how the knowledge might be used). Neoclassical and heterodox economics tend to have very different subtexts and, partially as a result of this, tend to offer radically different contexts for thinking about economics and public policy. Illustrative of a larger list of textbook subtexts are the implicit assertions that: 1. Neoclassical economics is a scientific theory and as such demands belief in ways similar to modern physics. 2. Market outcomes reflect free choice. 3. People are naturally greedy, with insatiable consumer appetites. Capitalism is successful, in part, because it offers an incentive system that builds on this “human nature.” 4. The major purpose of economic theory is to promote economic efficiency and economic growth, as both provide a basis for human happiness. 5. There is no alternative to capitalism. The failure of the former Soviet Union proves that socialism can’t work. The message of the 20th century is "let (capitalist) markets work." The onus is on the government to justify "intervention" in the market. Some Comments on Well-Being
I think that
issues of well-being, implicit in many heterodox paradigms, like Marxist and
Post Keynesian economics, need to be made more explicit, as in
socio-economics, ecological economics, and feminist economics. Most
neoclassical textbooks devote little attention to analyzing the nature and
causes of human well-being. They
strongly imply, however, that there is a close positive correlation between
national output and national well-being.
While most texts briefly acknowledge that several factors might
complicate the link between output and well-being, they generally ignore
these complexities and imply that this is quite appropriate.
Heterodox economics
(implicitly or explicitly) challenges the relatively mindless correlation
between economic growth and human well-being animating neoclassical
textbooks. Heterodox economists tend
to give greater attention to empirical findings about well-being (like those
of Richard Easterlin) and theoretical concepts that
explore well-being, such as ideas about positional competition and
"meta-externalities" (the effect of economic outcomes on
non-economic societal variables like the viability of democracy). As a result heterodox analyses challenge
the mantra of "let the market work" that echoes in principles texts
Contrasting Metaphors I'd like to conclude with an abbreviated list of contrasting images that respond to Assumption 4's recommendation that heterodox critiques challenge the metaphors as well as the formal analytics of textbook economics. Neoclassical Texts Heterodox Alternatives Economist as Scientist/engineer Economist as Social Theorist Key complementary disciplines: Key complementary disciplines: mathematics & computer science anthropology and sociology Homo Economicus Homo-Sociales (Rational Isolated Economic Man) (Human Beings in Social Contexts) the Invisible Hand the Prisoner's Dilemma the Auctioneer the Casino Perfect competition Strategic Competition and Passive Firms and Active Firms Crafting a common ground for heterodox critiques of textbook economics is inherently a collective project. I have had enormous help from many people who cannot be acknowledged here. I would welcome more feedback, as so too would the editor of this journal. Notes
2. John J. Siegfried, (Secretary-Treasurer of the
American Economics Association) and Bonnie T. Meszaros
of the Center for Economics Education and
Entrepreneurship: "What Should
High-School Graduates Know in Economics?
National Voluntary Content Standards for Pre-College Economics Education."
American Economic Review 87(2) May 1997, p. 249. 3. While I am not sure that deployment of active
learning teaching techniques inherently favors
heterodox economics, many feminist economists and PAE
contributors, such as Peter Dorman and Susan Feiner,
have made interesting arguments that they do.
4. ICAPE = The
International Confederation of Associations for Pluralism in Economics 5. Admittedly there are well known methodologically
individualistic Marxists, though the concept seems an oxymoron to me. Nevertheless I think this perspective
should be included in heterodox economics because of the broad overlap with
heterodoxy in other areas. Please e-mail (scohn@knox.edu)
if you have any suggestions for the commentary or wish to see sample
chapters. ______________________________ |