Heterodox economics 2399697 226154098 2008-07-17T01:48:36Z 75.148.6.221 /* Reasons for the rejection of Neoclassical economics */ c/e {{peacock}} {{Cleanup-remainder|May 2007|date=September 2007}} '''Heterodox economics'''<ref name=LAWSON>[http://www.bresserpereira.org.br/Terceiros/05.5.Heterodox_Economics.pdf LAWSON, Tony. The nature of heterodox economics. Published by Oxford University Press on behalf of the Cambridge Political Economy Society, 2005, in: Cambridge Journal of Economics 2006 30(4):483-505; doi:10.1093/cje/bei093]</ref> is a category referring to the approaches, or [[Economic schools of thought|schools of economic thought]], that are considered outside of [[orthodox]] economics. Heterodox Economics is an umbrella term to cover the coming together of, sometimes long-standing, separate unorthodox projects or traditions. The latter include [[Post-Keynesian economics|post Keynesianism]], (old) institutionalism, [[Feminist economics|feminist]], social, [[Marxian economics|Marxian]] and [[Austrian School|Austrian economics]], among others.<ref name=LAWSON>[http://www.bresserpereira.org.br/Terceiros/05.5.Heterodox_Economics.pdf LAWSON, Tony. The nature of heterodox economics. Published by Oxford University Press on behalf of the Cambridge Political Economy Society, 2005, in: Cambridge Journal of Economics 2006 30(4):483-505; doi:10.1093/cje/bei093]</ref> Orthodox economics is also known as "[[mainstream economics]]," largely consists of the neoclassical synthesis, which combines a neoclassical approach on microeconomics and Keynsian approach to macroeconomics.<ref name="Barry">Barry, C. (1998). ''Political-economy: A comparative approach''. Westport, CT: Praeger.</ref><ref name="Case & Fair">Case, K. & Fair, R. (2008). ''The principles of economics''. New Saddle River, NJ: Pearson.</ref> While mainstream economics may be defined in terms of the "rationality-individualism-equilibrium" [[nexus]], heterodox economics may be defined in terms of a "institutions-history-social structure" nexus. Note that there is a different emphasis in distinguishing [[mainstream economics|mainstream]] and heterodox economics in this way than is involved in distinguishing them as closed-system and an open-system approaches respectively (Lawson,1997);<ref name=LAWSON>[http://www.bresserpereira.org.br/Terceiros/05.5.Heterodox_Economics.pdf LAWSON, Tony. The nature of heterodox economics. Published by Oxford University Press on behalf of the Cambridge Political Economy Society, 2005, in: Cambridge Journal of Economics 2006 30(4):483-505; doi:10.1093/cje/bei093]</ref> Dow, 2000) <ref name=DOW>DOW, S. C. ''Prospects for the Progress in Heterodox Economics.'' Journal of the History of Economic Thought 22 (2): 157-170., 2000.</ref> It is difficult to define heterodox economics. The International Confederation of Associations for Pluralism in Economics (ICAPE) has prudently avoided defining its umbrella too specifically, choosing instead to define its mission as "promoting pluralism in economics." All strands of [[socialism]] are heterodox, but not all heterodox schools are necessarily socialist. 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" some heterodox economists, such as Steve Cohn ([[Knox College (Illinois)|Knox College]], USA), 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. ==Rationality== One of the most broadly accepted principles of [[neoclassical economics]] is the assumption of the "rationality of economic agents". Indeed, for a number of economists, the notion of rational maximizing behavior is taken to be synonymous with economic behavior (Becker 1976, Hirshleifer 1984). When some economists' studies do not embrace the rationality assumption, they are seen as placing the analyses outside the boundaries of the [[Neoclassical economics]] discipline (Landsberg 1989, 596). [[Neoclassical economics]] begins with the [[a priori]] assumptions that agents are "[[rationality|rational]]" and that they seek to "maximize their [[Methodological individualism|individual]] [[utility]]" (or [[profit|profits]]) subject to environmental constraints. These assumptions provide the backbone for [[rational choice theory]], and from this basis neoclassical economists derive the familiar [[supply and demand|supply and demand functions]] which, under certain conditions, will lead to a determinate [[market clearing]] [[Economic equilibrium|equilibrium]]. Under even stricter conditions this [[Economic equilibrium|equilibrium]] will be [[Pareto efficiency|Pareto efficient]]. Heterodox economics reject these fundamental assumptions on which most of [[neoclassical economics]] theory has been built. Up to 1980 heterodox economics could be defined as: #rejection of the [[Methodological individualism|atomistic individual conception]] in favor of a socially embedded individual conception; #emphasis on time as an irreversible historical process; #reasoning in terms of mutual influences between individuals and social structures. On 1980 (or thereabouts) significant changes begin to occur in economics; a number of new research programs began, in various ways, to be recognized by the [[mainstream economics]]. These include [[behavioral economics]], [[complexity economics]], [[evolutionary economics]], [[experimental economics]], [[neuroeconomics]], and others. As a consequence, some heterodox economists, such as John B. Davis, proposed that the definition of heterodox economics has to be adapted to this new, more complex reality.<ref name=DAVIS>[http://www.paecon.net/PAEReview/issue40/Davis40.pdf DAVIS, John B. ''The Nature of Heterodox Economics''. post-autistic economics review, issue no. 40, 1 December 2006, article 3, pp.23-30.]</ref> ::The argument of the previous section is that heterodox economics post-1980 is a complex structure, being composed out of two broadly different kinds of heterodox work, each internally differentiated with a number of research programs having different historical origins and orientations: the traditional left heterodoxy familiar to most and the 'new heterodoxy' resulting from other science imports.<ref name=DAVIS>[http://www.paecon.net/PAEReview/issue40/Davis40.pdf DAVIS, John B. ''The Nature of Heterodox Economics''. post-autistic economics review, issue no. 40, 1 December 2006, article 3, pp.23-30.]</ref> ==Rejection of Neoclassical Economics== There is no single "heterodox economic theory"; there are many different "heterodox theories" in existence. "What they all share, however, is a rejection of the [[Neoclassical economics|neoclassical orthodoxy]] as representing the appropriate tool for understanding the workings of economic and social life. The reasons for this rejection may vary."<ref name=HETTHEORY>[http://www.mtholyoke.edu/courses/sgabriel/heterodox_defined.htm GABRIEL, Satya J. ''Introduction to Heterodox Economic Theory.'' , June 4, 2003] <small>Satya J. Gabriel is a Professor of [[Economics]] at [[Mount Holyoke College]]</small></ref> ===Reasons for the rejection of Neoclassical economics=== *That neoclassical theory is appropriate as a tool only under certain limited conditions, where there is "perfect" or "near-perfect" competition. **The Austrian School in particular considers neoclassical theory relevant for conditions of equilibrium{{fact}} *That it is useless as a tool for understanding economic and social life.<ref><small>GABRIEL, Satya J. ''Introduction to Heterodox Economic Theory.'' , June 4, 2003, Based on lecture's notes at the author's website. Copyright © 1996-2007, Satyananda J. Gabriel, [[Mount Holyoke College]].</small></ref> *That all theories are valid so long as they are internally consistent.<ref><small>GABRIEL, Satya J. ''Introduction to Heterodox Economic Theory.'' , June 4, 2003, Based on lecture's notes at the author's website. Copyright © 1996-2007, Satyananda J. Gabriel, [[Mount Holyoke College]].</small></ref> *That [[Neoclassical economics|neoclassical theory]] is a form of [[ideology]] or [[religion]], which is grounded in unscientific concepts.<ref><small>GABRIEL, Satya J. ''Introduction to Heterodox Economic Theory.'' , June 4, 2003, Based on lecture's notes at the author's website. Copyright © 1996-2007, Satyananda J. Gabriel, [[Mount Holyoke College]].</small></ref> According to Satya Gabriel: <blockquote>Neoclassical economic theory is grounded in a particular conception of human psychology, agency or decision-making. It is assumed that all human beings make economic decisions so as to maximize pleasure or utility. Some heterodox theories reject this basic assumption of neoclassical theory, arguing for alternative understandings of how economic decisions are made and/or how human psychology works. It is possible to accept the notion that humans are pleasure seeking machines, yet reject the idea that economic decisions are governed by such pleasure seeking. Human beings may, for example, be unable to make choices consistent with pleasure maximization due to social constraints and/or coercion. Humans may also be unable to correctly assess the choice points that are most likely to lead to maximum pleasure, even if they are unconstrained (except in budgetary terms) in making such choices. And it is also possible that the notion of pleasure seeking is itself a meaningless assumption because it is either impossible to test or too general to refute. Economic theories that reject the basic assumption of economic decisions as the outcome of pleasure maximization are heterodox.</blockquote> ==Most recent developments== Over the past two decades, the intellectual agendas of heterodox economists have taken a decidedly [[pluralist]] turn. Leading heterodox thinkers have moved beyond the established paradigms of Austrian, Feminist, Institutional-Evolutionary, Marxian, Post Keynesian, Radical, Social, and Sraffian economics—opening up new lines of analysis, criticism, and dialogue among dissenting schools of thought. This cross-fertilization of ideas is creating a new generation of scholarship in which novel combinations of heterodox ideas are being brought to bear on important contemporary and historical problems, such as socially-grounded reconstructions of the individual in economic theory; the goals and tools of economic measurement and professional ethics; the complexities of policymaking in today's global political economy; and innovative connections among formerly separate theoretical traditions (Marxian, Austrian, feminist, ecological, Sraffian, institutionalist, and post-Keynesian) (for a review of post-Keynesian economics, see Lavoie (1992); Rochon (1999)). ==Fields or schools of heterodox economics== <div class="references-small" style="-moz-column-count:2; column-count:2;"> *[[Institutionalist political economy|American Institutionalist School]] *[[Austrian economics]] ''#'' (partly within, and partly outside of mainstream economics)<ref>''A Companion to the History of Economic Thought'' (2003). Blackwell Publishing. ISBN 0631225730 p. 452</ref> *[[Feminist economics]] ''#'' *[[Binary Economics]] *[[Political economy]] (the term is used in various ways, also to describe certain kind of economics) *[[Post-Keynesian economics]] *[[Piero Sraffa#Sraffian economics|Sraffian economics]] ''#'' *[[Marxian economics]] ''#'' *[[Socialist economics]] ''#'' *[[Bioeconomics]] § *[[Complexity economics]] *[[Evolutionary economics]] ''#''§ (partly within [[mainstream economics]]) *[[Institutional economics]] ''#'' (partly within [[mainstream economics]]) *[[Ecological Economics]] *[[Neuroeconomics]] *[[Supply-side economics]] *[[Ecological economics]] </div> ''#'' Listed in [[Journal of Economic Literature]] codes scrolled to at [[JEL classification codes#Schools of economic thought and methodology JEL: B Subcategories|JEL: B5 - Current Heterodox Approaches]]. § Scrolled to at [[JEL classification codes#Mathematical and quantitative methods JEL: C Subcategories|JEL: C73 - Stochastic and Dynamic games; Evolutionary games]]. Research is also being done in the multidisciplinary field of [[cognitive science]] on [[individual decision making]], [[information]] as a general phenomena, [[distributed cognition]] and their implications on economic dynamicity. Some schools in the social sciences aim to promote certain perspectives: classical and modern [[political economy]]; [[economic history]]; [[economic sociology]] and [[economic anthropology|anthropology]]; gender and racial issues in economics; economic [[ethics]] and [[social justice]]; [[development studies]]; and so on. ==References== {{reflist}} ==See also== <div class="references-small" style="-moz-column-count:2; column-count:2;"> * Marc Linder, ''Anti-Samuelson''. * [[Austrian School|Austrian School of Economics]]" :"competition: Austrian conceptions" * [[Behavioural economics]]" * [[Bioeconomics]] * "biological applications of economics" * Francis Green & Petter Nore (eds.), ''Economics: An Anti-Text''. The following are entries for the above from ''The [[New Palgrave: A Dictionary of Economics]]'' (1987): * [[Institutional economics]] * [[Post-Keynesian economics]] * [[Marxian economics]] * [[Socialist economics]] * [[Piero Sraffa|Sraffian economics]] </div> ==External links== <div class="references-small" style="-moz-column-count:2; column-count:2;"> *[http://www.open.ac.uk/socialsciences/hetecon/ Association for Heterodox Economics] * [http://www.rep.org.br/default.asp ''Brazilian Journal of Political Economy'' (bilingual)] * [http://cje.oxfordjournals.org/ ''Cambridge Journal of Economics''. founded in the traditions of Marx, Keynes, Kalecki, Joan Robinson and Kaldor] * [http://www.cseweb.org.uk/ Conference of Socialist Economists] * [http://www.economics.laurentian.ca/lprochon/Links%20of%20interest.htm Departments of Economics With Heterodox Interests] * [http://www.dollarsandsense.org/ ''Dollars and Sense''] * [http://www.debunking-economics.com/ Debunking Economics] * [http://www.themeister.co.uk/economics/evolutionary_economics.htm Evolutionary Economics - John P. Birchall] * [http://www.greeneconomics.org.uk Green Economics Institute (links, aims, activities)] * [http://www.orgs.bucknell.edu/afee/hetecon.htm Heterodox Economics Web] * [http://cepa.newschool.edu/het/thought.htm#alternative ''The History of the Economic Thought Website''] * [http://www.msu.edu/user/schmid/instecon.htm Institutional & Behavioral Economics] * [http://www.econ.usyd.edu.au/content.php?pageid=2269 ''The International Journal of Development Issues'', Faculty of Economics and Business, University of Sydney, Australia] *[http://www.inderscience.com/ijge ''International Journal of Green Economics'' (publisher's description)] * [http://cepa.newschool.edu/het/schools/lse.htm The London School of Economics at the HET website] * [http://www.paecon.net/ Post-Autistic Economics Network - heterodox economics: sanity, humanity and science - pluralism in economics] * [http://aix1.uottawa.ca/~robinson/english/publications_subjects/history_economics_thought.htm''ROBINSON: Research On Banking International and National Systems Or Networks'', University of Ottawa, History of Economics Thought] * [http://cepa.newschool.edu/het/profiles/rousseau.htm ROUSSEAU, Jean-Jacques.Page at The History of Economic Thought Website] * [http://www-sul.stanford.edu/depts/hasrg/frnit/pdfs_gimon/stedman_jones.pdf STEDMAN-JONES, Gareth. Saint Simon and the liberal origins of the socialist critique of Political Economy. King's College, Cambridge University] * [http://www.economicsnetwork.ac.uk/handbook/heterodox/ "Teaching Heterodox Economics Concepts", Andrew Mearman (2007)] in "The Handbook for Economics Lecturers" *[http://www.urpe.org/ Union for Radical Political Economics] * [http://www.econ.utah.edu/hesa/links/links.htm#archives LINKS: University of Utah. Economics Dept. Heterodox Economics Student Association] </div> ==Publications on heterodox economics== ;Articles * LEE, Frederic S. "heterodox economics," ''[[The New Palgrave Dictionary of Economics]], 2008, 2nd Edition, [http://www.dictionaryofeconomics.com/search_results?q=heterodox+economics&button_search=Search Abstract.] ;Books * Blatt, John Markus: ''Dynamic Economic Systems: A Post-Keynesian Approach'', Armonk, 1983, ISBN 0710802730 * [http://www.mesharpe.com/mall/resultsa.asp?Title=Reintroducing+Macroeconomics%3A+A+Critical+Approach COHN, Steven Mark. ''Reintroducing Macroeconomics: A Critical Approach.'' M. E. Sharpe, Inc, December 2006] ISBN 978-0-7656-1450-6 ISBN 978-0-7656-1451-3 * [http://books.google.com/books?id=XnHERR2uQ1MC&dq=heterodox+economics+book DAVIS, John, editor. ''The Theory of the Individual in Economics: Identity and Value.'' Routledge, 2003] ISBN 0415202191 * [http://www.accessmylibrary.com/coms2/summary_0286-17616611_ITM FULLBROOK, Edward, editor. ''A Guide to What’s Wrong with Economics.'' London: Anthem Press, November 2004] ISBN 1843311488 * [http://www.press.umich.edu/titleDetailDesc.do?id=171896 HARVEY, John T. and GARNETT JR., Robert F. Garnett, Editors. ''Future Directions for Heterodox Economics'', Series Advances in Heterodox Economics, The University of Michigan Press, 2007.] ISBN 978-0-472-03247-1 * LAVOIE, M. (1992) Foundations of Post-Keynesian Economic Principles, Aldershot: Edward Elgar. * McDERMOTT, John. Economics in Real Time: A Theoretical Reconstruction, Series Advances in Heterodox Economics, The University of Michigan Press, 2003 ISBN 978-0-472-11357-6 * ROCHON, Louis-Philippe (1999) Credit, Money and Banking: An Alternative Post-Keynesian Approach, Cheltenham: Edward Elgar. * [http://www.economics.laurentian.ca/lprochon/ModernTheoriesofMoney.htm ROCHON, Louis-Philippe and ROSSI, Sergio, editors. '' Modern Theories of Money: The Nature and Role of Money in Capitalist Economies''. Edward Elgar Publishing, 2003 ISBN 1840647892] ;Articles, conferences, papers * [http://www.paecon.net/PAEReview/issue18/Cohn18.htm COHN, Steve. ''Common Ground Critiques of Neoclassical Principles Texts.'', 2003]. [[Knox College (Illinois)]]. * [http://www.middlebury.edu/services/econ/repec/mdl/ancoec/0237.pdf COLANDER, D. ''The Death Of Neoclassical Economics''. Journal of the History of Economic Thought, 2002, 22 (3), pp. 127-43. <small>Online readable, free link - Copyright JHET, All rights reserved</small>] * [http://www.journal-intervention.org/seiten/englisch/download/Lavoie_Intervention_Vol_3_No_1_2006.pdf LAVOIE, Marc. ''Do Heterodox Theories Have Anything in Common? A Post-Keynesian Point of View.''] * LAWSON, Catherine & LAWSON, Larry (1990). Financial system restructuring: lessons from Veblen, Keynes, and Kalecki. Journal of Economic Issues 24 (1): 115-31. * [http://www.bresserpereira.org.br/Terceiros/05.5.Heterodox_Economics.pdf LAWSON, Tony. The nature of heterodox economics. Published by Oxford University Press on behalf of the Cambridge Political Economy Society, 2005, in: Cambridge Journal of Economics 2006 30(4):483-505; doi:10.1093/cje/bei093] * MINSKY, Hyman (1996). Uncertainty and the institutional structure of capitalist economies. Journal of Economic Issues 30(2):357-68. * [http://www.accessmylibrary.com/coms2/summary_0286-29687573_ITM RANSON, Baldwin ''Heterodox theoretical convergence: possibility or pipe dream?'' (Notes and Communications)(Report). Journal of Economic Issues, 01-MAR-07] * SECCARECCIA, M. ''Early Twentieth-Century Heterodox Monetary Thought», Money, Financial Institutions, and Macroeconomics'', ed. by A.J. Cohen, H. Hagemann and J.N. Smithin, Boston: Kluwer Academic Publishers, 1997, pp. 125-39 [[Category:Heterodox economics|*]] [[Category:Political economy]] [[es:Economía heterodoxa]] [[fr:Orthodoxie et hétérodoxie en économie]] [[pt:Economia heterodoxa]]