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The book "Modern Political Economics" is quite critical about "neoclassical economics", the basic claim being, if I understand correctly, that the models which "neoclassical economics" (armed with mathematical insights starting from John F. Nash Jr, Gerard Debreu and Kenneth Arrow) investigate, are not simplifications of some realistic models, but that they (the models) are just wrong (because of what the authors call "Inherent Error").

Is there a serious criticism of the views such as the ones exposed in this book?

added after a comment asking for citations:

maybe not a successful choice, but nevertheless (the following two citations are short descriptions of chapter 3 and chapter 8 of the book):

  1. "Chapter 3 The odd couple: The struggle to square a theory of value with a theory of growth

The odd couple of the title are value and growth. From the very start, political economics found it difficult to square the two; to create models or accounts of how the exchange value of things was determined in a growing economy. The chapter begins at the beginning, with the French Physiocrats, before moving to Adam Smith and David Ricardo’s attempts to tackle this conundrum. The Inherent Error makes its first fonnal appearance in these works, before it returns again and again in the following chapters. The essence of the Inherent Error is the impossibility of telling a credible story about how values and prices are formed in complex (multi-sector) economies that grow through time."

  1. "Chapter 8 A fatal triumph: 2008’s ancestry in the stirrings of the Cold War

During the Second World War, economic policy was in the hands of the New Dealers, who ran the economy on a trial and error basis and in the light of the accumulated experience of trying, not with great success, to kick-start the ailing US economy during the traumatic 1930s. Meanwhile, a group of scientists (mostly of Central European origin) were manning the agencies, laboratories and divisions of the civilian and military authorities whose job it was to solve practical problems (e.g. logistics, planning of transportation systems, price setting) by means of advanced mathematical methods. However, after the war ended, and the Cold War began to take hold, both the New Dealers and the Scientists lost out in the struggle for the hearts and minds of academic economics. The winners of that ‘game’ were a small group of Formalists, with John F. Nash, Jr, Gerard Debreu and Kenneth Arrow at the helm. The chapter tells the story of that triumph, which gave neoclassical economics a whole new push, by focusing on the person that the book portrays as the era’s most tragic figure: John von Neumann. His ‘fate’, the chapter argues, was an omen for the type of economics that would prove instrumental in the run up to the Crash o f2008."

and yet another citation:

  1. "The rest, as they say, is history. Debreu and Arrow emerged from Nash’s seminar and in a few short months applied what they had heard to hammer out their own existence proof in the context of a multiple-sector model economy: one that effectively brought back from the dead Walras’ (fully neoclassical) idea of a General Equilibrium complete with determinate prices for everything, including labour input and capital goods (recall Chapter 6). This they accomplished by procuring General Equilibrium’s ultimate mathematical proof; an existence proof that showed under which conditions a set of relative prices exists such that all markets (including that for labour) are in equilibrium. This existence proof was to mark a new neoclassical turn in political economics; a turn that altered the discipline’s course and returned neoclassical obscurantism to the throne from which it had been removed by the combined forces of the fall of 1929, the analysis of John Maynard Keynes, the engineering brilliance of von Neumann and, last but not least, the experiences of economic policy during the New Deal and the Second World War."
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    $\begingroup$ Any chance you could provide us with a couple of quotes from the book that lay out the authors' position? There are many people who know enough about neoclassical economics to defend it but wouldn't have read this book to be able to answer your question as currently written. $\endgroup$ – BKay Jan 8 '16 at 14:41
  • $\begingroup$ @BKay Some quotes added. $\endgroup$ – John Donn Jan 10 '16 at 12:39
  • $\begingroup$ I don't get what the Inherent Flaw is supposed to be. Models with market clearing and economic growth are routine. $\endgroup$ – arsmath May 22 '18 at 6:31
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Neoclassical economics or rational analysis should always be a starting point for an analysis of how a given system or model works.

However, that is all it is - a starting point. You cannot use a model that is solely rational to predict or infer much about how the real world works, because humans are not rational. That is why rational economics are critized, but do not match up with observed behavior.

Therefore, any real critique has to show how rational economics do match up with observed behavior.

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    $\begingroup$ Could you please support your first statement? $\endgroup$ – Giskard Dec 9 '15 at 9:15
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    $\begingroup$ I'd like to see some sources on the second paragraph, especially You cannot use a model that is solely rational to predict or infer much about how the real world works, because humans are not rational. That is why rational economics are critized, but do not match up with observed behavior. $\endgroup$ – FooBar Dec 9 '15 at 9:52
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    $\begingroup$ I used to think the same way that people are somewhat irrational, but it is a mathematical nightmare to work in such framework. It is much easier to think that people are rational, but some are, mildly spoken, different, and just have weird preferences. $\endgroup$ – Arthur Tarasov Dec 9 '15 at 10:52
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    $\begingroup$ i would have liked to upvote @denesp's comment twice here. but then milton friedman rose from his grave to slap my hand off the mouse $\endgroup$ – HRSE Jan 8 '16 at 9:57
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    $\begingroup$ @ArthurTarasov I am not sure how to model a model with irrational or erratic behaviour. Firstly, what is the percentage of irrational people in society ? another aspect is how to judge if a decision is really rational or not, every decision made by "supposed irrational man" is rational in a subjective way for this man. I am not sure if I was clear or not. $\endgroup$ – optimal control Jan 8 '16 at 16:14

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