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Heterodox Economics Newsletter

Issue 213 May 08, 2017 web pdf Heterodox Economics Directory

In the past weeks I have been asked several times, how the thesis of a single paradigm dominating current economics comes to grips with the observation that the economic mainstream (still) produces a huge variety of models and policy proposals. And indeed, nearly a decade after the collapse of Lehman Brothers opinions still range from „I don’t know what a credit bubble means" (Eugene Fama in The New Yorker) to "[it is all about] booms and busts; bubbles and crashes‘” (Baldwin/Giavazzi 2015, The Eurozone Crisis - A consensus view).

The rough answer to this question is that the dominant neoclassical paradigm supplies the mainstream with a framework of metaphors and corresponding formal techniques along the traditional line of neoclassical thought (i.e., scarcity-optimization-equilibrium). Models in contemporary research are then grouped around these dominant metaphors by varying specific aspects of standard textbook models, which continue to dominate large parts of teaching and policy advice.

This constellation exhibits several problematic features: one is theoretical arbitrariness, which has been recently emphasized in the blogosphere, e.g. by Lars P. Syll or Noah Smith. Another problem with this practice is that it maps the inconsistencies on the level of political utterings (as those quoted above) unto contemporary research (an issue, that can be traced in greather depth, e.g. here).

Aside from "a decade of crisis", 2018 will also witness the bicentennial of Karl Marx's birthday. Hence, I expect a surge of Marx-related items in the Heterodox Economics Newsletter throughout the upcoming months, starting today with these two entries (here and here) motivated specifically by this anniversary.

All the best,

Jakob

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