The incredible inertness of paradigms in economics
I gave this talk to the “Shifting Paradigms” conference run by the Aberdeen Political Economy Group in November 2019. It was a good opportunity to not only comment on the theme of the conference itself—how one might displace Neoclassical Economics, the long-dominant paradigm in economics—but also to sketch out what I believe that alternative paradigm could be.
In a sentence, I believe that the main reason for the persistence of the Neoclassical paradigm, despite its many failures and internal contradictions, is that no cohesive alternative has been constructed. There are alternative “Schools of Thought” in economics—particularly the Austrian, Post Keynesian and Marxian schools—but in my opinion, each lacks an essential part of what it takes to be a paradigm.
I’ll elaborate more in a book (that I am, unfortunately, years from commencing), which I have tentatively (and somewhat impishly) titled “Principles of Political Economy”. That title, or one like it, has often been used by books that have indeed supplanted, or defined, the dominant paradigm—Ricardo’s “Principles” (Ricardo 1817), Marshall’s “Principles” (Marshall 1890 [1920]), Samuelson’s “Foundations” (Samuelson 1947). But for now, I’ll simply state that the basic components of a paradigm are:
• A core set of beliefs (Lakatos, who extended Kuhn by considering the existence of multiple “Scientific Research Programs” in a discipline, called this the “Hard Core”) that are shared by all adherents to a paradigm. Marxian and Austrian economics both have this, but Post Keynesian economics does not;
• A methodology that enables the paradigm to extend its remit from an initial area of analysis to a larger, relevant sphere. Neither Austrian nor Marxian have this: they have methodologies which are persuasive to their adherents (“praxeology” and the “labor theory of value” respectively), but which don’t enable a significant expansion of their paradigm beyond a narrow set of issues that satisfy existing adherents. Post Keynesian economics has these in abundance: the stock-flow consistent methodology of Godley and Lavoie; and
• A set of unsolved “puzzles”, effectively selected by the paradigm itself, that give new recruits something creative to do. These are topics that new recruits to the paradigm can apply its methodology to extend the paradigm’s explanatory scope, and preferably also, its depth. These are to be contrasted with what Kuhn calls “anomalies”, which are puzzles that the paradigm has been unable to resolve. Post Keynesian economics has these creative puzzles in abundance, and few anomalies, while Austrian and especially Marxian economics are, like Neoclassical economics itself, replete with anomalies.
In this talk, I set out how a paradigm could be formed by combining a thermodynamic interpretation of production in which energy plays an essential role, an interpretation of Marx’s dialectical philosophy that contradicts the “Labour Theory of Value”, complex systems analysis, and the monetary analysis of both MMT and the Circuitist School (Graziani 1989).
Graziani, A. (1989). “The Theory of the Monetary Circuit.” Thames Papers in Political Economy Spring: 1-26.
Marshall, A. (1890 [1920]). Principles of Economics, Library of Economics and Liberty.
Ricardo, D. (1817). On the Principles of Political Economy and Taxation. Indianapolis, Library of Economics and Liberty.
Samuelson, P. A. (1947). Foundations of Economic Analysis. Cambridge, MA, Harvard University Press. |
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