Home > The Economics Profession > Why “Heterodox Economics”?

Why “Heterodox Economics”?

from Edward Fullbrook

Consider the following table.  The left-hand column lists the terms placed between quotation marks that I searched on Google, 20 June, 2010.  The right-hand column lists the number of hits that came up for each term.

heterodox physics                       9
heterodox physicists                   3
heterodox chemistry                   0
heterodox chemists                    0
heterodox biology                       9
heterodox biologists                   1
heterodox anthropology             5
heterodox anthropologists         5
heterodox sociology                   3
heterodox sociologists               2
heterodox political science         4
heterodox political scientists      1
heterodox economics                 29,600
heterodox economists               31,800

“Heterodox”, remember, is a relative word: if no orthodoxy, then no heterodoxy.  These figures point to a radical difference between economics and other “sciences”, ranging from the “hardest” to the “softest”.  What is it about economics – the discipline, the profession and its practitioners – that makes it uniquely obsessed with orthodoxy?  How did it come about?  What effect does this obsession have on the teaching of economics?  How does it shape economics research?  How does it affect economic policies and, in consequence, human lives?  How can this intolerance for innovation and different angles of inquiry be diminished?  How can we begin to make the mindset of economists more like those of physicists, chemists, biologists, anthropologists, sociologists and political scientists?

  1. June 21, 2010 at 10:42 am

    As a relatively new Economics student I can only assume as Molly Scott Cato said in her July 2009 blog posting ‘Face it – orthodox economics messed up’, is is because
    “Economics is a bizarre field-filled with equally bizarre animals. It is surely the only academic discipline that has an orthodoxy so strongly maintained that it is necessary to sign up to the catechism of the superiority of markets and the perfection of competition before you are allowed to advance very far within it.

    Promotion is determined through publication in a range of journals all of which are strongly neoclassical in orientation.”

    In my short time as a student it seems like all those teaching it who make any sense all agree with this statement. So I guess my question is how the hell did it get to be so orthodox??

  2. MMonides
    June 21, 2010 at 3:06 pm

    I call sampling error: economists use similar terms to poli sci, and yet also have theory based in math.

    BTW, physics isn’t slugging it out over string theory?

    • June 21, 2010 at 3:44 pm

      I couldn’t possibly think of a better example to reinforce my point. Indeed, physicists are openly “slugging it out” over their fundamental differences concerning string theory. This is both the opposite of what happens in economics and the essential behaviour it lacks. Only once in a blue moon do neoclassical mainstream economists, the defenders of the traditional orthodoxy, engage in open debate with those who are outside their faith. In most cases the former do not even acknowledge the latter’s existence.

  3. Anthony
    June 21, 2010 at 6:06 pm

    The question that should be put is: Do revolutions in economic theory ever occur? If we accept Thomas Kuhn, Karl Popper and a legion of followers, revolutionary (or paradigmatic) change is a defining characteristic of scientific disciplines. Understanding of the world is advanced during these periods of tumultuous change, and a scientific discipline can never go back: Newtonian mechanics did not return to Aristotle for answers, and Einsteinian relativity similarly discarded with Newton. Within a new paradigm, of course, work is done, but it is always piecemeal and merely serves to forward the new theory’s explanatory power, or persuasiveness.

    This is another way of saying that all scientific disciplines are obsessed, to some degree, with orthodoxy. It’s just that fields like physics, chemistry and biology allow themselves, occasionally, to dispense with current orthodoxy and replace it with a new one. So the Ptolemaic earth-centred universe begat the Copernican sun-centred universe, the latter a one-time heterodoxical notion.

    If the field of economics is indeed a science, then it would seem natural for it to experience periods of revolutionary tumult. What’s interesting is that as a field gets closer to overthrowing some earlier, orthodox theory (the key phrase here), the defenders of that theory get very vocal. After all, their worldview is suddenly in question. It’s possible that that is occurring now–that the many references to “heterodox economics” are another of way of saying that change is imminent.

    Of course, it is also possible that current orthodox and heterodox economic theories are both equally capable of explaining current phenomena. If this is the case—if no one theory is preferred by economists, if no one theory better explains the behaviour of economies—then economics is not behaving like a science at all.

    A science needs competing—and mutually exclusive—theories to advance, and this state of affairs does not seem to exist in the field of economics.

    • Sara
      June 30, 2010 at 1:37 am

      But as Kuhn pointed out, paradigmatic shifts where one paradigm ends and the next begins only happen in the ‘hard’ science. Neos think of economics as hard. The rest of the world protests. Kuhn noted that social sciences and critical theory does not follow the same pattern. Those ideas never fully die – they are continually quarrelled over. Part of the problem is that Neos do not see themselves as having any need to engage with anyone else (as you mention).

  4. Tomboktu
    June 21, 2010 at 10:31 pm

    I’d have thought the silence over non-Copenhagen interpretations of that quantumy stuff would be more like a heterodox physics than the debate within mainstream physics about which strings pull the universe.

  5. ben
    June 22, 2010 at 1:02 am

    I think the issues is that there is a lot more at stake –that is, a lot more immediate vested interest by a wider variety of parties– in economic theory than in physics or sociology. When you have a “science” that tells everyone with any money what they can or cannot do with it, you are bound to have forces and effects at work that aren’t present in sciences that only academics care about. (which is of course an exaggeration but you see my point)

    The other thing is that economics is a social science, which means that any theory can be right as long as you believe in it strongly enough. (logic=being wrong with confidence, etc…)

    Also, the “heterodox” google search seems kind of meaningless. I would argue that political science is perhaps more orthodox than economics. You don’t see a lot of tenured profs arguing for Stalinism or anarchism. Just because they don’t use the heterodox/orthodox terminology doesn’t mean there aren’t acceptable and unacceptable theories.

  6. Peter Radford
    June 22, 2010 at 4:53 pm

    Could it just be that economists are an irascible and argumentative bunch?

    Or is it that sciences like physics have more scope for experimental ‘proof’ that enables it to coalesce around core ideas?

    While we may bridle, as I certainly do, against the notion that neoclassical economics is somehow so scientifically well established that it deserves to be ‘orthodoxy’, we must also recognize that ‘heterodoxy’ is replete with a wide array of, sometimes, contradictory alternatives. In the absence of a strong and widely supported alternative we should expect the ‘orthodox’ to continue under the delusion that they represent the pinnacle of economic thought.

    Heterodox economics is, by definition, a diverse set of alternatives. It is a gaggle of pretenders and not a single challenger to the title. That makes it idiosyncratic, often obscure, and always difficult to meld into a single teachable program. I can almost hear many readers here bristle at the very notion that there should be a ‘single teachable program’. After all that’s not a very heterodox notion. Yet without such a program I fear it will always be difficult to have an impact on ‘orthodoxy.’

    If the big problem is that orthodoxy drowns out alternative voices and excludes diversity from lucrative positions then we must face our own deficiencies before we are able to alter that circumstance.

    Lastly: I think a major reason for the ‘obsession’ with orthodoxy is that our particular orthodoxy seems so unorthodox in its rejection of reality. It’s as if orthodox economists are proud of the utopian world they seek to explain and their seemingly complete indifference to the world around them. It is that feature of orthodoxy that drives us heterodox types nuts and motivates us to keep up the critique even in the face of obstacles we all complain about so much.

    As I said: economists are an irascible and argumentative bunch.

  7. June 23, 2010 at 3:30 am

    I appreciated your answer, Peter. I don’t have enough experience to know if the other sciences have ‘a single teachable program’. Do they, and, if so, why? And are those programmes ones that sizeable numbers of their fellow scientists consider to be rejections of reality. As a new student it is disconcerting to keep hearing from the leading economic thinkers that what you are being taught has no basis whatsoever in reality but by the teaching institutions that you must study it anyway because it is
    orthodox.

  8. Zagros Sadjadi
    June 24, 2010 at 6:47 am

    One of the key differences between economics and its social science breathren is that economics has always obsessed over finding universal laws (similar to the natural sciences) while the social sciences have worked on understanding things in a particular context. Heterodox economists, for the most part, are closer to being social scientists, whereas orthodox economists are more like natural scientists. The problem for both is that there are some seemingly universal laws (law of supply, law of demand, etc.) that operate at the individual level and even the market level but they break down at the systemic level. That is why heterodox economists tends to be macroeconomists rather than microeconomists.

  9. Jon-Mark Schneider
    June 25, 2010 at 3:34 am

    One of the primary failures of economists is to acknowledge that their field of study IS a social science, and not “related” to social sciences. Related to this is the fact that in social sciences there are few, if any absolutes; therefore, “laws” of supply and demand are clung to as the roots of orthodoxy (supply and demand are strong tendencies, but certainly not absolutes), keep their hold in economics and make “orthodoxy” harder to dispense with.

  10. Merijn Knibbe
    June 27, 2010 at 5:54 pm

    In fact, the revolution in consumer theory has already happened. Just read a textbook on ‘consumer behaviour’. This field of science is open to new insights, ideas and theories, is based in fact, observation, experiment and measurement and progressess from old ideas to new insights. It uses statistiscs, sociology, neurology, cultural antropology, history and related sciences to explain ‘consumer behaviour’. Only one idea is explicitely rejected (as it does not sell nylons): rational man! Forget about Samuelson, Varian and their disciples – and start to read some science. Of course, ‘consumer behaviour’ is heavily oriented towards ‘Big Business’, which is of course one sided and surely quite a lot of countervailing power (and countervailing science) is needed (to mention only one thing: ‘Big Pharma spends more on marketing (especially salesmen/women visiting docters) than on research – which is the reason why pills have to be so expensive. Beware, I do not say that these salesmen/women are not needed – I’m just pointing out that they are more costly than the research which is always mentioned as a reason for patents and high prices of medicines). But they also need scientific knowledge, instead of ideology. Again, just forget about ‘mainstream’ (f)utility analysis – just like ‘Big business’ has done. In fact, neoclassical consumer theory already seems to be on the fringe of science – if not beyond.

    Merijn Knibbe

  11. Raul Gadea
    June 28, 2010 at 3:47 pm

    (Please try to translate from spanish this thing).- La actual heterodoxia económica solo trata de ajustar la antigua, razonable exactitud de la ortodoxia neoclásica de Occidente, donde la escasez en la que vivían las grandes masas ha cambiado por el consumismo dispendioso de una masiva clase media. Eso ha hecho posible que los precios ya no obedezcan a la ley del valor-trabajo. Según “No Logo” de Naomi Klein el precio promedio de un zapato de correr Nike es de tres dólares con cuarenta centavos. Pero su precio de venta al público es de ciento cincuenta o doscientos dólares: un marketing hábil y obsesivo ha convencido a ese público de que gastar tanto dinero en sus zapatos de correr compra alta “calidad de vida”, aunque la gran mayoría solo use sus “Nike” para sacar el tacho de basura a la calle. La “globalización” ha producido así una explosión de las ganancias para las grandes multinacionales (que fabrican en zonas apartadas del Tercer Mundo, de trabajo semiesclavo, los productos que después venden en el mundo desarrollado apenas una pizca más baratos que los fabricados allí, con altos salarios y altos impuestos). Tantas ganancias no pueden usarse solo en invertir para mejorar el producto y ni siquiera se logran agotar en lujos extravagantes para los empresarios. Se inyectan en el circuito financiero donde tarde o temprano generan el aventurerismo irresponsable y cínico que provocó la actual crisis, bajo el lema de que “la codicia es buena”. Las formulaciones del neoliberalismo y del “consenso de Washington” no son inocentes y no hubieran hecho carrera si no hubieran favorecido la explosión de las ganancias de las grandes multinacionales. La heterodoxia económica actual busca dejar al desnudo esas malintencionadas falsedades, sin caer en simplismos que impliquen falsedades opuestas. Así, por ejemplo, una cosa es el keynesianismo y otra cosa es su reducción al absurdo impulsada por políticos demagogos, esa especie de “keynesianismo como lámpara maravillosa” donde se frota la lámpara y cuando aparece Aladino se le pide cualquier intervención para solucionar cualquier problema económico, presumiendo que el “keynesianismo” (en su versión política demagógica) lo autoriza. Para evitar estos extremos se fanatizó la “globalización”, que desindustrializó a Estados Unidos y lo hundió en un inmenso déficit comercial del cual no podrá salir sin bajar seriamente su nivel de vida y sin volver a un proteccionismo severamente controlado que le permita reindustrializarse avanzando, al mismo tiempo, hacia el pleno empleo. También Europa deberá adoptar este esquema, como lo han estado sosteniendo por años sus economistas “heterodoxos” como Emmanuel Todd y Jacques Sapir. ¿Podrá la democracia imponer este tipo de cambios?

  12. June 28, 2010 at 5:24 pm

    I am laughing (but should rather be crying…)
    How about the heterodoxy of the “Transformation Problem” and the related Bohm-Bawerk blunder?… How about the heterodoxy of “the falling tendency of the rate of profit” (which explains how systemic crisis come about) and the error in Okishio’s theorem?…
    Ah, but the best (in ortodoxy) is yet to come: watch out for the spread of “Econophysics”. That will be the icing on the cake!

  13. A.J. Sutter
    June 30, 2010 at 2:59 am

    Two big differences between economics and the natural sciences are (1) their respective roles in policy-making and (2) the degree of their respective usurpation of politics.

    Economists have a much bigger role in policy-making than do physicists or chemists. Moreover, those who are heterodox economists might have very different policy recommendations than orthodox ones, whereas a physicist who believes in the Bohm model of quantum mechanics and a Copenhagen adherent probably wouldn’t (at least, by virtue of that difference in interpretation) have very different views about policy issues such as climate change.

    The second point goes to the substantive content of the respective fields. The subject matter of economics impinges on politics, including on whether there are collective interests distinct from individual ones. The orthodox view, Benthamite utility and its revealed preference homologue, says not. Moreover, economic values, such as efficiency, are prized over political ones, such as fairness, justice and distributional equity. (BTW it’s ironic to note that physics is full of collective phenomena that can’t exist at the one-particle level (the Pauli exclusion principle, phase transformations, etc.).)

    Because economics is used much more than natural sciences in deciding how society will be shaped, and because orthodox economics incorporates a particular vision of society, it makes sense that “heterodox economics” and “heterodox economist” are more salient categories than in the natural sciences.

    Another important difference between economics and natural sciences is that economics isn’t a science, but that per se doesn’t explain the “heterodoxy” phenomenon.

  14. J
    June 30, 2010 at 4:14 pm

    Codswallop to all those who reckon economics isn’t a science. It damn well is – it just doesn’t have a very good laboratory.

    Any field of intellectual endeavour can be called a science if its remit lies in both explanation and prediction. In chemistry, physics, and biology it is easy to reproduce lab conditions, ensuring that (for 99% of subject matter knowledge that these clever people have produced over the centuries) the results are consistently predictable.

    In economics, there are certain startling findings from the laboratory. We can explain, for example, why most goods have diminishing marginal utility. Supermarket analysts can predict the cross-price elasticity of demand for substitutes and complements with astonishing accuracy.

    At the macro level (where heterodoxy, as you refer to it, is widest) it is simply impossible to recreate the laboratory simply by declaring “ceteris paribus”. That doesn’t mean economics isn’t a science, just that there are too many variables finally to settle the debate, for example, whether demand-management is an effective tool to increase GDP in the long-run. Furthermore, economics falls victim to reflexivity – the outcomes of decisions that we take affect the circumstances in which we exist, which in turn affect the outcomes. Finally, moral social and psychological issues all affect the laboratory. But it’s still right and desirable that economists should attempt to model the world based on the best assumptions they can, with a view to explanation and prediction.

    Physicists disagree vehemently about what happens in a black hole. That doesn’t mean physics isn’t a science.

  15. Merijn Knibbe
    June 30, 2010 at 11:01 pm

    Most sciences are not so much based on ‘the best assumptions’, but on costly, time consuming efforts to assemble and analyse data. Just think of the Hubbel Telescope, the Large Hadron Collider, the Human Genome Project, gene seuqencing, paleo-archeologists who spend up to fiteen years to put a ‘bone puzzle’ together – the list is endless. In my field of science, economic history, increasing use is made of very large collections of data. In macro economics, I can mention the magnificent (although still incomplete) system of national accounts: millions of seemingly separate micro data are combined into a coherent system of income, production, and expenditure which, for instance in the USA, also contains data on the (amazingly stable) differences in household incomes between whites, afro americans, hispanics and asians. Or between wage earners and the self employed.

    That’s, indeed, science! Again and again, these national accounting data yield new and often surprising information. In my country, The Netherlands, GDP per capita increased 80% between 1969 and 2008. However, real disposable income per household (a much better indication of the development of the wealth and prosperity of the inhabitants of a country than GDP per capita) only increased with 20%…

    But alas. DSGE-models, for instance, do not use this wealth of information – as the concepts used in these models are ill defined and often do not lend themselves to measurement. I’ve not yet encountered a DSGE-article which clearly defines ‘households’ (which, in the National Accounts, are very clearly defined!). Also,outdated, unmeasurable or refuted concepts like utility, hyperrationality and perfect foresight are used, as well as social welfare functions. Utility an indifference curves are the economic equivalent of the flogiston of nineteenth century scientists: non-existent. MRI scans show that people make their choices in totally different way. The choices we make as individual are, on the level of the individual, not rational at all (read the work of the neurologist Victor Lamme, ‘De vrije wil bestaat niet’ (‘There is no such thing as a free choice’)on this! Let alone the choices which are made by households as a sector (by the way, as far as I’m aware, Arrow proofed back in 1951 that the idea of a consistent, stable, transitive welfare function is fundamentally flawed – for instance different groups in society have different values, different levels of income and make different political choices). Can you please, please, finally give me a definition of utility which makes measurement of this core concept of neo classical economics possible? I’ve been searching, but of all the ill defined concepts of neo classical economics, this seems to be the most sloppy one. nother question: how do textbooks in economics define markets? More often than not, they don’t!

    Tellingly, marketeers explicitely or implicitely dismiss the ideas of utility and rationality – as they need scientific information, instead of myths. They use all the experiments and methods and sciences they can find to sell their stuff – but neo classical economics is not among this plethora of tools. There is no pratical use of the neo classical theory of indifference and choice.

    So, I agree with you – economics is a science. But astrology is not. And Numerology is not. And neither is the neo-classical theory of choice, micro or macro. At best, you might call it science fiction.

    Merijn Knibbe

    • Anthony
      July 2, 2010 at 5:18 pm

      The laws of physics apply equally–and consistently–in Amsterdam, Toronto, Pretoria, etc. Similarly, Lavoisier’s theory of oxygen, which defeated the prevailing theory of phlogiston, holds true in every corner of the world. But I can’t think of an equivalent law of economics that, absent human behaviour and intervention, applies equally and consistently, no matter the economic system. Economists may use the tools of science–they may theorize, collect data, and test their conjectures–but where are the prevailing laws that one would expect from a wholly scientific pursuit?

      Take away human beings, and the so-called laws of economics are meaningless–but the laws of the hard sciences still prevail.

  16. Merijn Knibbe
    July 3, 2010 at 12:42 pm

    Without human society no economy… that’s a real surprise! I do agree that there are no constant laws of economic motion. On the other hand, there do seem to be some basic tools of economics which do apply to a very wide array of economic institutions (at least in a monetary economy). Balance sheets and cash flow statements can be used to analyse countries, large companies, small companies – and even the financial situation and financial flows of the poorest 2,5 billion on this planet (Collins, D. e.a., ‘Portfolios of the poor. How the world’s poor live on $ 2,– a day’ (Princeton, 2009) p. 5). That’s not the roblem with economics. If you want to know the real prolem, just investigate how many university economists have had a thorough training in analysing balance sheets and cash flow statements. Somehow, quite some economists seem to have a severe degree of chiffrophobia.

    Merijn Knibbe

    Merijn Knibbe

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