Guy Routh's Heterodox Critique of Economic Methodology

Guy Routh was an outstandingly incisive and severe critic of mainstream economic theory's abstraction, class bias, and empirical irrelevance. Routh's The Origin of Economic Ideas (1975 1989), with such chapter titles as “The Preposterous Origins” and “From Propaganda to Dogma”, was described by Robert Heilbroner as “irreverent, original, controversial, and delightful” while J. K. Galbraith expressed his “utmost enjoyment” and “utmost approval” of the book. Routh's trenchant critique of mainstream theorizing and his vision of an empirically-grounded alternative have been largely forgotten since his death in 1993, but deserve the attention of heterodox and especially of institutionalist and social economists.     

Comment on “What is Heterodox Economics? Conversations with Historians of Economic Thought”

The Comment on Wrenn’s article “What is Heterodox Economics?” suggests that the inability of heterodox economists to define their field arises from an as yet unrecognized and different metaphysical foundation than that of orthodox economics.     

新自由主义思潮的经济哲学批判

新自由主义经济学重要代表人物哈耶克与弗里德曼等人都以其经济学认识论与方法论而著称。在哈耶克的自发秩序原理和弗里德曼的货币主义理论中,个体人的自由行动构成为最基本的概念范畴,进而在自由竞争的市场体制下促成了资本主义的繁荣发展。随着二十世纪七十年代新自由主义的兴起及其全球化资本主义的盛行,其反思与批判成为了现代政治经济学的核心议题,并对马克思主义的时代发展具有重要比较意义。     

A Proposed Methodological Synthesis of Post-Keynesian and Institutional Economics

Post-Keynesian and institutionalist writers have commented on the theoretical and conceptual commonalities between the two schools. Some have suggested a theoretical synthesis based on these commonalities. In spite of these theoretical and conceptual commonalities each tradition has developed significantly different methods of analysis. Instead of theoretical or conceptual synthesis we seek here to present a methodological synthesis.

Institutionalist methods have yielded "plausible" explanations, but these have been too "vague and suggestive" to be consistently used for economic policy. Post-Keynesian methods have policy necessary "rigor," but the similarity to neoclassical methods has exposed post-Keynesian theories to unwarranted synthesis with incompatible traditions.

This essay presents a synthesis of post-Keynesian and institutionalist methodology, one of "plausible rigor," combining elements of "institutional dynamics" with a heuristic framework based on John Dewey's "instrumental logic," and proposes that the resulting approach overcomes weaknesses in the methods of analysis of both schools.     

Economic Reforms in Socialist Economics: A Comment on Petr

Abstract:

The pre-WWII approaches to trade unions were mainly based on the theoretical and methodological viewpoints of early institutional economics. Trade unions were conceived of as politico-economic organizations whose members were motivated by relative comparisons, and also were concerned with issues of equity and justice. In the post-war period, there was a major theoretical and methodological shift toward the idea of unions as optimizing economic units with well-defined objective functions, which are optimized subject to purely economic constraints. This conceptual transformation took place mainly through the Dunlop -Ross debate, in which John Dunlop conceived of unions as analogous to business firms, as opposed to Arthur Ross’s institutional and political approach. However, after decades of analytical developments, the current state of trade union theory has not produced very impressive theoretical results. We trace the historical development of the economic analysis of trade unions from a methodological perspective. We also examine the methodological reasons for the dominance of Dunlop’s approach, and the current state of – and the contemporary criticism toward – the established theory. Furthermore, we discuss the contemporary efforts to build a more comprehensive approach to trade union theory and trade union objectives, also incorporating Ross’s institutional and political insights.     

Teaching Economics in the Schools: A Review of Survey Findings

The authors review and contrast the findings of a 1981 national survey of economic education at the precollege level and 15 state surveys conducted at about the same time. The picture that emerges is disturbing: instruction in economics tends to be minimal (or nonexistent) for many students, and teacher training in economics is limited. Curriculum structure, teacher training, and the development and use of materials are interrelated problems facing economic education.     

The Scholarship of Teaching Economics

The authors report on the results of a telephone survey of 1,001 employees of seven large corporations conducted for the Business Roundtable as part of its public policy program. A set of 20 questions keyed to the Voluntary National Content Standards in Economics was embedded in the survey. A measure of economic literacy was constructed from the survey results. Greater economic literacy was associated with more overall education, more college economics coursework, high incomes, and being male. An examination of individual test questions revealed that previous college economics had substantial effects on employees' current economic literacy.     

理论创新与中国理论经济学发展研究

近年来,由于理论创新不足,中国理论经济学走到了一个十字路口,发展方向不明.笔者认为,中国理论经济学的生命力在于不断创新,及时将理论研究重心从引进和吸收为主转向创新为主,奏响理论创新的主旋律,才是中国理论经济学进一步发展的出路.     

Economics of the crisis and the crisis of economics

Abstract

The macroeconomic instability revealed in the recent deep recession steams from the condition of balance sheets. Generally high leverage and strained maturity mismatches build up slowly but generate a financial structure so brittle that the impulse that eventually sends it crashing is hard to identify. The US financial system had been rendered more vulnerable by the financial reforms that swept away the Glass-Steagall regulations. The crisis made the inadquancies of the ruling macroeconomic paradigm painfully obvious. DSGE models generally did not include a financial sector and did not take the possibility of dramatic instability seriously. Unanticipated violations of budget constraints do not fit easily into general equilibrium models.     

The Fable of the Allegory: The Wizard of Oz in Economics

L. Frank Baum's The Wonderful Wizard of Oz has become popular as a teaching tool in economics. It has been argued that it was written as an allegory of Populist demands for a bimetallic monetary system in the late 19th century. The author argues that Baum was not sympathetic to Populist views and did not write the story as a monetary allegory.     

The Facts and the Values of the Lucas Critique

In his influential 1976 paper, ‘Econometric Policy Evaluation: A Critique,’ Robert E. Lucas, Jr. presented the policy non-invariance argument, also known as the Lucas critique (LC). Drawing on the work of Putnam and Walsh, this paper discusses how the LC, like all works of scientific inquiry, contains values entangled with scientific facts, and argues that the Lucas critique devalued and revalued the highest values in macroeconomic science, a process known as ‘transvaluation.’ Most importantly, the LC worked to operationalize a shift in values that undermined belief in economists’ ability and responsibility to make meaningful interventions in the economy. Employing the language and concepts of continental philosophy, this paper discusses the meaning and effect of the LC on the values embedded in contemporary macroeconomic science.     

The Williamsonian Ambiguity on Authority and Power in Transaction Cost Economics

Power has traditionally been rejected from economics and more particularly from the economics of the firm. Although he proposes building an interdisciplinary approach to the firm, Williamson rejects power from the economics of transaction costs. However, regarding the theoretical and behavioral hypotheses he makes, we can raise the following question: does the Williamsonian approach to the firm have intrinsic properties for developing a theory of power? After analyzing Williamson’s argument on power/authority, this paper aims to shed light on the fact that the 2009 Williamson, Oliver E. 2009. “Pragmatic Methodology: A Sketch, with Applications to Transaction Cost Economics,” Journal of Economic Methodology 16 (2): 145-157.[Taylor &; Francis Online] , [Google Scholar] Nobel Prize winner has built a theory based on power that he rejects due to a questionable methodological choice. Conversely, we defend the thesis according to which power cannot be removed from the economics of the firm and transaction cost economics–at the risk of providing a distorted picture of the reality of capitalism.     

Tyranny of kindness: Dismantling the welfare system to end poverty in America Theresa Funiciello

The Comment on Wrenn’s article “What is Heterodox Economics?” suggests that the inability of heterodox economists to define their field arises from an as yet unrecognized and different metaphysical foundation than that of orthodox economics.     

Beyond the Linearity Critique: The Knife-edge Assumption of Steady-state Growth

The “linearity critique” of endogenous growth models is presented in a general context of an arbitrary growth model and reassessed. It is argued that presence of linearities is not a valid criterion for rejecting growth models. Existence of exponential/geometrical steady-state growth (i.e. of a balanced growth path with strictly positive growth rates) necessarily requires some knife-edge condition which is not satisfied by typical parameter values. Hence, balanced growth paths are fragile and sensitive to smallest disturbances in parameter values. Adding higher order differential/difference equations to a model does not change the knife-edge character of steady-state growth.     

The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory

It is somewhat common for heterodox economists to come to the defense of neoclassical microeconomic theory. This is due to many reasons, but perhaps the commonest one is ignorance. It seems that most heterodox economists are not aware of the many critiques or that as a collective they completely undermine neoclassical theory. The objective of the article is to dispel ignorance by using the existing criticisms to delineate a systematic critique of the core components of neoclassical microeconomic theory: the supply and demand explanation of the price mechanism and its application to competitive markets. The critique starts by examining the choices, preferences, utility functions, and demand curves, followed by examining production, costs, factor input demand functions and partial equilibrium, and ending with perfect competition and the supply curve. In the conclusion, the implications of the results will be extended to the firm and imperfectly competitive markets, and then the question whether general equilibrium theory or game theory can save neoclassical microeconomic theory.     

Economics: Unfit for Purpose

This paper is a shortened and revised version of the Closing Plenary given to the World Congress of the Association of Social Economics, and Cairncross Lecture, University of Glasgow, June 2012. Mainstream economics is seen as unfit for purpose because of deficiencies that have long been criticised by a marginalised heterodoxy. These include the taking out of the historical and social even if bringing them back in on the basis of a technical apparatus and architecture that is sorely inappropriate. These observations are illustrated in passing reference to social capital but are particularly appropriate for understanding the weakness of ethics within mainstream economics. An alternative is offered through taking various “entanglements” (such as facts and values) as critical point of departure, leading to the suggestion that ethical systems are subject to the 10 Cs—Constructed, Construed, Conforming, Commodified, Contextual, Contradictory, Closed, Contested, Collective and Chaotic.     

The Fable of the Allegory: The Wizard of Oz in Economics: Comment

Although recent research strongly suggests that L. Frank Baum did not write The Wonderful Wizard of Oz as a monetary or political allegory, the Populist-parable interpretation of his book remains a tremendous teaching tool in economics classes. The author offers some background on the rise and fall of the Populist interpretation, in recognition of students' natural curiosity about Baum's intentions. He also offers a classroom-ready version of the parable that synthesizes several different versions of that interpretation.     

马克思《政治经济学批判大纲》、“经济学提纲”与中国经济发展模式

马克思《政治经济学批判大纲》(1857-1858)及其经济学提纲(8条)首次集中阐述了马克思政治经济学方法论尤其是逻辑体系构筑方法。提出了生产力(生产资料)的概念和生产关系的概念的辩证法、生产关系两分方法以及中介范畴等原创性思想,从而为探索中国经济学体系及其经济发展模式提供了方法论基础。中国经济发展模式应该跳出西方学者的模式中性论和价值中立论,努力挖掘《政治经济学批判大纲》及其经济学提纲(8条)中所蕴藏的当代价值,建构中国特色的经济发展模式。     

On the Anthropological Study of Economies: A Comment

This paper deals with the moral justification behind policy positions. Squeezed between the inevitability of having a welfare ideology and the mantra of value-neutrality (depoliticization), neoclassical policy economists tend to disguise their normative positions on policy matters as common sense. This attitude is particularly pronounced in what I will call "the rhetoric of worthiness," whereby the neoclassical approach justifies its advocacy that certain people should not be helped. This normative position is disguised by a vocabulary (e.g., moral hazard) claimed to be politically neutral. The present paper criticizes this neoclassical mode of policy evaluation in favor of a more socially conscious and innovative policy approach.     

经济改革与经济学转型

我国的经济改革是在传统计划体制背景下启动的,也是在一定的改革意识引领下发生的,但在传统政治经济学框架内形成的改革理论具有一定的局限性。改革开放以来,经济学者运用现代经济学方法对中国经济进行分析,获得了有价值的成果。但是,我国经济学理论的转型还没有完成。为了深化市场经济的改革,如何科学地认识市场经济,怎样在经济学理论研究中体现现代精神,都需要在范式转型的前提下继续进行探索。