What is Neoclassical Economics?: Debating the origins, meaning and significance (Economics as Social Theory)

Despite some diversification modern economics still attracts a great deal of criticism. This is largely due to highly unrealistic assumptions underpinning economic theory, explanatory failure, poor policy framing, and a dubious focus on prediction. Many argue that flaws continue to owe much of their shortcomings to neoclassical economics. As a result, what we mean by neoclassical economics remains a significant issue. This collection addresses the issue from a new perspective, taking as its point of departure Tony Lawson's essay 'What is this 'school' called neoclassical economics?'. Few terms are as controversial for pluralist and heterodox economists as neoclassical economics. This controversy has many aspects because the term itself has different specifications and connotations. Within this multiplicity what we mean by neoclassical matters to pluralist and heterodox economists for two primary reasons. First, because it informs how we view and critique the mainstream; second, because the relationship between heterodox and mainstream economics influences how heterodox economists model, apply methods and construct theory. The chapters in this collection each have different things to say about these matters, with contributions ranging across the work of key thinkers, such as Thorstein Veblen and Kenneth Arrow, applied issues of non-linear modelling of dynamic systems, and key events in the history of economics. This book will be of use to those interested in methodology, political economy, heterodoxy, and the history of economic thought. -- Publisher What is Neoclassical Economics?- Front Cover 1 What is Neoclassical Economics? 2 Title Page 6 Copyright Page 7 Contents 8 Figures 10 Contributors 11 Introduction: The meaning and significance of neoclassical economics 16 Two ways to explore the neoclassical: diversity versus continuity in the mainstream 18 The social ontology critique, mainstream or neoclassical? 23 Lawson’s ‘What is this “school” called neoclassical economics?’ 25 Positions and provocations: the collected responses to ‘What is this “school” called neoclassical economics?’ 28 Conclusion: reversing the strategic provocation? Future issues for Lawson on the neoclassical and social ontology 39 Notes 42 References 43 Chapter 1: What is this ‘school’ called neoclassical economics? 45 Introductory observations 45 The real source of the discipline’s problems 50 Veblen’s project 55 The rise of mathematical modelling in economics 71 Implications for the contemporary situation 73 Taking stock and reassessment 78 Conclusion 81 Notes 82 References 92 Chapter 2: From neoclassical theory to mainstream modelling: Fifty years of moral hazard in perspective 96 Introduction 96 Ontology and method in the neoclassical school 97 A reading of Arrow (1963) 100 Early reception: the first seven years 104 Becoming a classic: the next 40 years 111 Conclusion 113 Notes 114 References 115 Chapter 3: Neoclassicism, critical realism and the Cambridge methodological tradition 117 Introduction 117 The nature and role of classifications of economics 119 Classification and rhetoric 123 Classicism and neoclassicism at Cambridge 126 Conclusion 129 Notes 131 References 131 Chapter 4: Lawson, Veblen and Marshall: How to read modern neoclassicism 134 Introduction 134 Lawson on Veblen and Veblen on economics 135 Why did so many economists get stuck? 137 Certainty, automaticity, and the persistence of the neoclassical trap 144 Notes 147 References 148 Chapter 5: Lawson on Veblen on social ontology 150 Lawson on Veblen 151 A further look at Veblen’s cumulative causation idea 152 Social reality as processual and highly transient 154 Emergence and the appearance of novelty 156 The internal relatedness of social reality 159 What is this “school” called neoclassical economics? 161 Acknowledgement 163 References 163 Chapter 6: Why is this ‘school’ called neoclassical economics?: Classicism and neoclassicism in historical context 164 Introduction 164 Neoclassical economics and closed systems 165 Classical political economy and vulgar economy 168 Deductive economics and critical economics 170 The normal position and the reproduction of economic activity 173 Should this school be called neoclassical economics? 177 Concluding remarks 179 Acknowledgement 181 References 181 Chapter 7: Ten propositions on ‘neoclassical economics’ 183 Proposition 1: Thorstein Veblen has no proprietary rights over the way in which ‘neoclassical’ is used in economics 183 Proposition 2: ‘neoclassical economics’ is an example of figurative language 183 Proposition 3: if a definition of ‘neoclassical economics’ excludes Milton Friedman, there’s something wrong with it 184 Proposition 4: the way in which ‘neoclassical’ is used to refer to economics is rather odd 184 Proposition 5: we need to distinguish the use of ‘neoclassical’ by historians of economic thought and by others, in the past and now 185 Proposition 6: the use of ‘neoclassical economics’ by others now is somewhat varied 187 Proposition 7: the distinction between ‘neoclassical’ and ‘non-neoclassical’ economics is a continuum, not a dual 188 Proposition 8: a good working definition of ‘neoclassical economics’ is not, after all, very hard to find 189 Proposition 9: Tony Lawson’s account of ‘neoclassical economics’ is questionable, for several reason 190 Proposition 10: a lot of work remains to be done 192 Acknowledgement 193 References 193 Chapter 8: Neoclassical economics: An elephant is not a chimera but is a chimera real? 195 Opening sallies 195 Hitting the target 200 How can two mathematicians come to opposite conclusions? 203 Heterovexology 206 Back to the frontline contest 209 Acknowledgement 211 Notes 211 References 213 Chapter 9: The state of nature and natural states: Ideology and formalism in the critique of neoclassical economics 215 Introduction 215 Lawson’s selective use of the realist tool-kit 217 The Newtonian roots of classical political economy 221 The Hobbesian roots of Neoclassical Economics 223 Neoclassical economics in historical context 227 Conclusion 231 Acknowledgement 233 Notes 233 References 234 Chapter 10: Heterodox economics, social ontology and the use of mathematics 236 Introduction 236 What is this “school” called neoclassical economics? 236 An OSCP approach to mathematical modeling 240 Conclusions 247 Notes 249 References 250 Chapter 11: Is neoclassical economics mathematical?: Is there a non-neoclassical mathematical economics? 253 Introduction 253 Lawson’s position 253 Mathematics, atomism, and nonlinearity 256 What is this “school” called neoclassical economics? 259 Is neoclassical economics mathematical? 261 Is neoclassical an accurate descriptive term? 264 Is heterodox economics completely free of mathematical error? 265 Conclusion 266 Note 267 References 267 Chapter 12: Neoclassicism forever 270 Introduction 270 Ontology 271 Mathematical modelling in economics 275 Econometrics 281 The ineliminable neoclassical tension 284 Notes 285 References 286 Chapter 13: Reflections upon neoclassical labour economics 288 Introduction 288 Augmenting Lawson’s key ideas 289 Attempts to define neoclassical labour economics 292 Mathematical modelling 297 The searching and matching approach to labour markets 299 Reflecting upon the searching and matching approach 304 Conclusion 320 Notes 321 References 322 Index 326 1. What is this 'school' called neoclassical economics? / Tony Lawson -- 2. From neoclassical theory to mainstream modelling : fifty years of moral hazard in perspective / John Latsis and Constantinos Repapis -- 3. Neoclassicism, critical realism and the Cambridge methodological tradition / Sheila Dow -- 4. Lawson, Veblen and Marshall: how to read modern neoclassicism / Anne Mayhew -- 5. Lawson on Veblen on social ontology / John B. Davis -- 6. Why is this 'school' called neoclassical economics? Classicism and neoclassicism in historical context / Nuno Ornelas Martins -- 7. Ten propositions on 'neoclassical economics' / John King -- 8. Neoclassical economics : an elephant is not a chimera but is a chimera real? / Ben Fine -- 9. The state of nature and natural states : ideology and formalism in the critique of neoclassical economics / Brian O'Boyle and Terrence McDonough -- 10. Heterodox economics, social ontology and the use of mathematics / Mark Setterfield -- 11. Is neoclassical economics mathematical? Is there a non-neoclassical mathematical economics? / Steve Keen -- 12. Neoclassicism forever / Don Ross -- 13. Reflections upon neoclassical labour economics / Steve Fleetwood