Thought for the day: Neoclassical economics is specific not only in ‘scientific’ but also in ‘ideological’ terms.
from Peter Söderbaum
Mainstream neoclassical economics is a standardized language that claims to be helpful in understanding the world. Standardized or not; each language points in specific directions concerning relevant objects, relationships, processes etc. to focus upon. The language is socially constructed for specific purposes, for instance to deal with specific problems in specific ways. Neoclassical economics, as an example, is specific not only in ‘scientific’ but also in ‘ideological’ terms. ‘Ideology’ stands for a ‘means-ends philosophy’ and is not limited to more or less established political ideologies like socialism, social democracy, social liberalism or neo-liberalism. In this sense, neoclassical economics clearly qualifies as an ideology and as such is more specific and precise than the political ideologies mentioned.
Neoclassical economics tells us about the relevant actors in the economy (consumers, firms and government); about how to understand markets (supply and demand of commodities and of factors of production); about decision-making (optimization) and efficiency (usually a monetary concept or at best cost-efficiency). This way of understanding economics is clearly not neutral but specific in ideological terms. Gunnar Myrdal has argued that “values are always with us” (1978 p.778) in social science research and in my understanding “economics is always political economics”. This suggests that the neoclassical attempt to develop a ‘pure’ economics from about 1870 onwards as opposed to ‘political economics’ (which was the language used by classical economists) was a mistake. At issue is now whether neoclassical theory as a conceptual framework and ideological orientation is useful in dealing with the ecological crisis and/or the financial crisis.
The ideological features of neoclassical economics also suggest that it becomes relevant to inquire into the similarities between neoclassical economics as ideology and the established political ideologies referred to. Has neoclassical economics contributed, for example, to make neo-liberalism more legitimate? Alternatives to the neoclassical conceptual framework and paradigm, such as some version of institutional economics, feminist economics or ecological economics are equally specific in ideological terms but may perform better in relation to the ecological crisis and/or the financial crisis. This is – again – a matter of subjective judgment. The important thing now in economics is to open the door for pluralism and competing (or complementary) theoretical perspectives and approaches.
From: Peter Söderbaum “A financial crisis on top of the ecological crisis: Ending the monopoly of neoclassical economics”, real-world economics review, issue no. 49, 12 March 2009, pp. 8-19, http://www.paecon.net/PAEReview/issue49/Soderbaum49.pdf