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Paradigm Lost?

from Peter Radford

The story so far:

Robert Locke asserts that neoclassical economics never attained paradigm status and thus cannot be seen as about to be dethroned from its exalted perch. He also decries the failure of mainstream economics to discuss its failures. This only a few months after an interview conducted by Paul Rosenberg with Edward Fullbrook in the RWER issue #66 in which he discussed the contrast between new and old paradigms in economics, and I may have stirred things up when I used a Thomas Kuhn quote to begin one of my own articles earlier this month.

So is there? Or isn’t there?

Let me try to square the circle.

Clearly there exists in economics some center of gravity. Indeed this center is so large that it appears to engulf most else around it. Economists either acknowledge that the discipline is rife with many voices – these seem to be in the minority – or they simply behave as if the big questions have been settled and that what they do is “economics” without the need to give a more precise definition. These latter are what I suspect Locke would refer to as the “mainstream”.

Equally clearly, at least to those who occupy the center, mainstream economics is a coherent whole. It isn’t just the degree of mathematical formality with which it is expressed, it isn’t just a methodology, nor is it just a set of “laws”, insights” “tools” and what have you. It is all of these packaged together. If a person doesn’t conform to this package then he or she is outside the mainstream and will find it hard, often impossible, to advance professionally or participate in the major arguments of the day.

The boundaries of the center are malleable to a degree. There are factions within it so it is not thoroughly homogenous. But there are sufficient shared traits that, to someone on the outside looking in, the center is manifest. It is manifest enough to exert enormous power over what is or isn’t published. It is manifest enough to dominate what is taught in most schools and universities. It is manifest enough to dominate policy circles and other domains that require input from economists.

It is manifest enough to deserve to thought of as  a paradigm.

Whether this rises to the level Locke seems to need it to before he acknowledges its existence is obviously something he contests, but for most economists who sit outside it mainstream economics has paradigm-like qualities. And, as the saying goes: if it quacks like a duck …

Besides, Locke himself lashes at the “mainstream” for its lack of self-criticism. Were it not manifestly an entity of itself and recognizably coherent how could it possibly indulge in self-criticism? There would be no center of discussion. There would be no central principles to critique, bemoan, or otherwise bash away at. It would be like kicking rice pudding, it would stick to your shoe but not go anywhere. There would be no argument to advance because there would be nothing to argue about. Or, conversely, there would be everything to argue about and hence no direction to the debate.

Perhaps the paradigm is vague because the crowd outside is so diverse that the mainstream appears from a distance to be just one aspect of that diversity. Obviously I disagree with such a view. Were this true it would be much more easy for a Locke-like dialog to take place about the mainstream’s many and, to me, fatal flaws. The center of gravity would be insufficient to quell argument and any consequent criticism that had merit would be more easily taken up even within the mainstream.

But the mainstream in economics is distinguished by its enormous resistance to criticism and its almost pathological resistance to empirical contradiction. Whilst Kuhn may not have talked much about these qualities I think they are key attributes of a paradigm.


Precisely because the coherence of mainstream economics is both its key strength and its key weakness.

It is a strength because it allows a believer to avail themselves of an established, widespread, body of thought, tools, and support that is instantly recognizable and accepted by like minded analysts. Insiders can thus communicate amongst themselves without fear of misunderstanding; they can identify those who excel because of their mastery of the thought and tools; and they can approach common problems from similar positions and thus share issues, data, and other paraphernalia of intellectual discourse without resorting to the need for interpretation.

This is a paradigm by any other name.

Perhaps not “Kuhnian”, but a paradigm nonetheless.

The weakness is that this commonality is based upon the supreme fit between the parts. Subject any one part to destructive criticism and not just the part, but the whole, collapses. This results in that defiance I mentioned above. Mainstream economists can brook no critique of their failures, nor take on board the lessons of history, because to do so would undermine the entire enterprise. They would be left with nothing. Fearing this, they plod on regardless and invent ever more epicycles to keep their theory as close to reality as it can possibly be. That their theories are now separated from reality by vast tracts of magic and mystery is testimony to their dogged willingness to keep their ideas together rather than accept revision. They would prefer to look foolish rather than have to change their minds in order to be closer to the truth. They have so much invested in, and extract so much prestige from, their errors that they have to fight to preserve their mainstream despite what, presumably, Locke sees clearly as its error.

This too defines a paradigm.

And it is why I chose to quote Kuhn in my article. True believers need to believe. They cannot accept alternative dogma without it being equally strong as the belief they are being asked to disavow. It must have the same look and feel as their old faith. Hopefully it might answer one or two more questions, but the pivotal moment of desertion from one faith to another, from one paradigm to another, only comes when the new faith delivers the same sense of security, completeness, and structure as the old one.

Which brings me closer to the topic I take more seriously than worrying about precise definitions of paradigms. There is no such coherent alternative extant in modern economics. Keynesian thought is the closest, having a clear defining boundary in its treatment of uncertainty. But there too lurks the mirage of equilibrium to distort our ability to press its ideas against reality. Of course there are sundry others, but all seem to be niches and not complete schemes. At least at the moment. So the mainstream can rumble on. It gives us outsiders something to laugh at, but it leaves economics as a discipline horribly exposed to ridicule. Which is something I wish were  not true.

Economics is too important to be left to the high priests of orthodoxy, but they have their hands on it at the moment, paradigm or not.

Which is what I think needs reform.

  1. April 22, 2014 at 1:55 pm


  2. Steve
    April 22, 2014 at 3:49 pm

    Excellent post. If symmetry is the signature of nature I would suggest looking at the asymmetries currently existing as clues to where we can restore naturalness and so balance to economic theory. For instance, the private monopoly on credit creation is a glaring inconsistency in “free” market theory. Likewise that monopoly’s rigid enforcement of the loan only and work for pay only paradigms to qualify for issuance of credit to the individual consumer is onerous and utterly economically de-stabilizing in view of the fact that the logics of both profit and technological innovation are efficiency of cost and effort. The individual and his/her ability to earn/purchase are hence asymmetrically ignored/missed/dismissed due to a lack of thoroughgoing examination of flawed theory (specifically Quantity and velocity theory). Establishing a true symmetry and naturalness would entail creating truly equal countervailing ideas to those of debt/loan and work for pay as consumer financial paradigms, and that idea is the free gift of income in the policy form of a universal dividend. This new paradigm/idea in turn effectively breaks up the current private monopoly on credit creation and form of credit issuance without abolishing their business model. It simply puts it in its proper, non-dominating place in a truly free, symmetrical and natural economy.

  3. robert r locke
    April 22, 2014 at 4:21 pm

    Perhaps the problem of economics lies in the belief that it is a fixed body of knowledge. Most people tend to believe academic disciplines are. But in the nineteenth century German universities developed a critical apparatus that looked on a discipline not as a fixed body of knowledge but as knowledge constantly in a process of becoming. The driver was the scholarly-scientific community formally organized: professors holding chairs, graduate students working on research PhDs, scientific publishing house and publishers of scholarly journals – all engaged in a great on-going debate defining the content of their discipline. Talk about paradigms shuts down this debate and shackles the knowledge creating process. Historians like myself point out that the scholarly world has never accepted the neoclassical paradigm. But people who do not look at thought historically cannot know that. Their ignorance helps mainline economists defend their paradigm status; it is useful to learn some history just to keep the learning enterprise going.

  4. davetaylor1
    April 22, 2014 at 7:18 pm

    In my dictionary a paradigm is defined as an example or examplar. Edward Fullbrook, in the discussion Peter linked in above, shows extremely clearly how the metaphorical example of equilibrium derives from the exemplar of Newtonian mechanics. He tells us the project of Jevons and Walras was

    “to fashion a determinate and micro-reductive model of the economic universe in the image of Newtonian mechanics, one in which economic agents could be treated as if they were particles obeying mechanical laws, and all of whose behaviour could, in principle, be described simultaneously by a solvable system of equations. This narrative required the treatment of human desires as fundamental data, which, like the masses of physical bodies in classical mechanics, are not affected by the relations being modelled. This became the grand narrative of economic theory and accounts for all the mechanical analogies and metaphors that have come to dominate Economics 101”.

    Thus in a sense Robert Locke was right that “neoclassical economics never attained paradigm status”. Like equilibrium it is an example whose examplar was Newtonian mechanics (or rather a causeless – hence God and Gravity-denying – Humean interpretation of it restricted to quantitative measurements), posited on isolated particles moving between distinct points in infinite time and three-dimensional space. The new paradigm which economists need to learn from is how science became able (via instrumentation) to reverse engineer the universe right back to the Big Bang, reconstructing its theories to take account of language and differences of logical and linguistic type as well as of genus and species.

    Edward has, in the RWER and WEA, done as much as anyone to promote the development of a new paradigm for economics. What I am saying here, about the science of language and a pluralism of types already evident in Newton’s equations of motion, is however quite different from what he went on to say:

    “This pluralist revolution in the natural sciences did not mean the abandonment of the Newtonian approach. Instead it meant that it was no longer held to be the only legitimate approach. This conversion to pluralism in the natural sciences meant that the work of Darwin, Maxwell, Boltzmann, Hertz, Einstein, Born, Bohr, Heisenberg, Fermi, Feynman and all the others came to be recognized as science, incorporated into educational curricula and thereby subsequently utilized by society”.

    Re the existence and paradigmatic significance of information science, let me quote back to him his Einstein quote:

    “Whether you can observe a thing or not depends on the theory which you use. It is theory which decides what can be observed.”

  5. Geoff Davies
    April 23, 2014 at 2:46 am

    Clearly there is a mainstream body of belief, a world view if you like. You can call it a paradigm if you want, but it is not science, nor any kind of rigorous scholarship, so I doubt if Kuhn would think it qualified.

    Neither is it coherent, though its followers might be a tight gentlemen’s club, as James Galbraith puts it.

    The neoclassical theory is based on such absurd assumptions with no obvious relevance to real economies, and its central prediction of equilibrium is so obviously contradicted in the real world, that the persist use of it can only be called pseudo-science.

    Mainstream economics is more than the neoclassical theory. It is a belief that banks do not create money, but only loan existing savings. It is the use of GDP (a measure of activity involving money) as a measure of our wellbeing. It is the exclusion of debt and money from macro models. It is the neglect of community wealth arising from proximity, that belongs to no individual. It is a focus on only a few forms of ownership. It is an apparently reflexive defence of anything that supports the plutocracy, and dismissal of anything that threatens it – such as removing subsidies of polluters, predatory financiers, corporations, etc etc. I would call it an ideology.

    This is not a coherent body of knowledge. It is, to quote my recent book* “an incoherent grab bag of mathematical abstraction, assertion, failure to heed observations, misrepresentation of history and sources, rationalisation of archaic money-lending practices, and wishful thinking. It missed the computational boat that liberated other fields from old analytical mathematics and overly-restrictive assumptions. It is ignorant of major fields of modern knowledge in biology, ecology, psychology, anthropology, physics and systems science.”

    As to there being no alternative, well I keep pointing one out, but apparently I speak a language not much understood in this community.
    See https://rwer.wordpress.com/2012/11/28/finding-a-framework-for-a-new-economics/, and https://rwer.wordpress.com/2014/03/10/a-science-of-economies/.

    It seems straightforward to me that a system obviously full of positive and negative feedbacks and fairly obviously far from equilibrium all the time can be seen as a self-organising system. A lot is known about such systems. There are immediate fundamental conclusions and there are obvious ways of proceeding to understand more about it. And there are already many detailed studies of parts of such a system that offer a lot of insight: Beinhocker, E.D., The Origin of Wealth. 2006, Boston: Harvard Business School Press. The alternative is growing around you, take a look.

    If I speak a bit bluntly, my perception of this community is that many people see themselves as belonging to one “school” or another. When I come along with another suggestion, you perceive me just as pushing another “school”, but you’ve already got one so you don’t need a new one. Well if that’s what’s happening, it’s just as inflexible as the neoclassical “school”.

    So the opportunity/invitation is there to move on from old “schools”, and to move on from agonising about philosophies and definitions, and to just get out and explore new fields, fields that are likely to be highly productive. You may have to learn some new and exciting ideas.

    *My book: Sack the Economists (not you folk, the mainstreamers): http://sacktheeconomists.com .
    You can get ebook or hardcopy, it’s not very long, it pulls the mainstream “paradigm” apart and points the way to a really coherent approach.

    • BFWR
      April 23, 2014 at 4:45 am


      I would heartily agree with all of your critiques of economics as an ideology. However, I still think that economic theory’s real problem is its incomplete deconstruction of its various orthodoxies (specifically the Quantity and Velocity theories of money which abstract out costs that in actual fact still exist and have economic effects) as well as perhaps man’s peculiar tendency to latch onto one way of looking at problems when looking at them as complementary instead. For instance, Why not take the above theories which tend to (falsely IMO) validate Say’s law, which was formulated in 1801 when enterprises had neither the capital costs nor the large nominal financial outlays that they do today thus instead of production creating an equity of demand it now results in an inherent scarcity of individual incomes in ratio to total costs instead. This makes the canon of free market theory actually a fallacy as well as the market worshiping belief that left alone the economy will tend toward equilibrium. It also means we have to act in order to create an equilibrium, or a virtual one at least. It also shows where and why current monetary policy is flawed. Where it is flawed is in its non recognition of the individual’s scarcity of income and why it is flawed is because currently money is only injected into the economy by Banks or the government…via an enterprise first…which only exacerbates the scarcity of individual incomes problem once again. If, in addition to any income they may (or may not) receive for work for pay, a dividend was universally paid directly to the individual…that would equate individual incomes with prices and accomplish the equilibrium so sought after but never yet accomplished by theory.

      • davetaylor1
        April 23, 2014 at 4:28 pm

        BFWR, like Geoff you’ve just beaten me to it! At the level of observables I largely agree with you, especially this bit: “This [Say’s Law?] makes the canon of free market theory actually a fallacy as well as the market worshipping belief that left alone the economy will tend toward equilibrium. It also means we have to act in order to create an equilibrium, or a virtual one at least”. And loosely your practical way of doing so: “equate individual incomes with prices”.

        I tend to think of payment in advance so one has the money to buy the goods already produced, effectively reversing the direction of trust as between workers, employers and banks.

        Agreed, anyway, the theory of economics isn’t now accomplishing social equilibrium, but it did more or less while Keynes was being listened to and could if its paradigm was not imaginary free market forces but the modern theory of control.

        The theory that an economy is a PID control system leads almost directly to the thought that Adam Smith’s invisible hand is (moment by moment, always now) steering the economy by correcting pricing Proportionately, and Keynes’s contribution was to add Integral correction for accumulated drift (always in the past) when businessmen don’t invest in Different courses in anticipation (always in the future) of the icebergs of saturated markets.

        Less obviously, considered as a power circuit with three information feedback circuits, the question arises as to which is which. What are you equilibrating: distribution of goods to everyone or [rate of] return to money-lenders? Get it wrong and the P and D feedbacks are reversed so one combines over-investment in production with austerity in maintaining the goods the society needs but already had.

      • April 23, 2014 at 10:19 pm

        davetaylor1 commented on Paradigm Lost?.

        in response to :
        BFWR, Geoff ..

        “I tend to think of payment in advance so one has the money to buy the goods already produced, effectively reversing the direction of trust as between workers, employers and banks. ”
        WHY NOT: As for TRUST, we have abandoned “In God We Trust” and now it is “In Private For Profit Banks We Trust”.

        WHY NOT a real 100% capitalistic Central Bank that works for the people, by the people
        and yes, of the people?
        Get the 99% of all that have an income to unite.
        Before they vote, they would ask one question.
        Would you support :
        “The new Federal Personal Income Tax :
        Income is to be taxed per individual at the rate of 15% with a
        standard deduction of the first $150,000.”

        YES or NO.?

        Even Obama knows this can be done, everyone knows it can be done.
        (As stated on ” 60 minutes” (12/11/11)”
        President Obama said,”You can’t raise revenues by lowering taxes unless you get the money from somewhere else.” ?


        AMEND THE FEDERAL RESERVE CHARTER; TURN THE FED RESERVE INTO THE FEDERAL RESERVE BANK OF AMERICA (FRBA),RESTORE MONETARY POWER BACK TO THE PEOPLE ,OPERATE THE FRBA WITH ABSOLUTE TRANSPARENCY, (“GLINDA,the Good Witch, owns a Great Book of Records that allows her to track everything that goes on in the world from the instant it happens.”_The Road to Oz)

        Form a more perfect “capitalistic monetary ” circle: $100 trillion issued as loans to come back as $200 trillion as payment while at the same time as it returns creates $100 trillion in new loans while spending $100 trillion as Congressional appropriations for the benefit of the people.
        With payments of $415 per month on each $100,000 for 20 years, the Central Bank would receive an annual revenue income of $10 trillion per year.
        $5 TRILLION to be turned over to the US Treasury as taxes raised while at the same time make new loans for $5 TRILLION so as to complete the the prosperity circle.
        No inflation or deflation for there is zero change in the capital value of the sovereignty. There is zero change on the balance sheet of the Central Bank; a true zero net change. Whatever the amount ‘entrusted’ to the Central Bank remains that exact amount. Comments by Justaluckyfool ( http://bit.ly/MlQWNs )
        ( “You are always welcome to share, copy, plagiarize, improve, etc..any comments.)
        ****Would $5 trillion spent “bottom up” help close the “inequality gaps”?
        ****Federal Personal Income Tax ? just a way to redistribute part of a excessive gap of inequality.

        What if …We had a Federal Reserve as a caretaker of the American sovereign currency with full transparency that worked for the people.
        Have the Federal Reserve raise revenue for Congressional appropriations to help establish… “a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”, while at the same time reduce taxes?
        The answer lies in not how the most powerful force in the universe is used ,rather how you redistribute what it creates !
        “The most powerful force in the universe is compound interest” – Albert Einstein.
        You had also asked for simplicity.
        THE CURE by Justaluckyfool:

        “Why is it so difficult to understand a simple truth: ‘ We the people’ have legislated the right to ‘print’ our money (via loans) and the right to tax that issuance (via interest) to the Private For Profit Banks (PFPB)?”
        How is that working for you?

      • davetaylor1
        April 24, 2014 at 6:56 am

        Justalucky, we too are singing from the same hymn sheet but with different tunes.

        You are looking for practical measures which will change outcomes. I would have to give the situation a lot of thought before I accepted even tentatively they were for the best. (In the case of Soddy I already had).

        I am looking for a simple change (“pay” before rather than for work) which would change attitudes and thus lead to the evolution of better ways of doing things. In that respect your talk of “our money” strikes the wrong note. Think “our acceptance of IOU’s”.

      • April 24, 2014 at 3:59 pm

        Davetaylor1, Thank you for your response.” …talk of “our money” strikes the wrong note. Think “our acceptance of IOU’s”.
        May I resubmit :
        “Why is it so difficult to understand a simple truth: ‘ We the people’ have legislated the right to issue (delete-‘print’) our currency (delete-money) via loans and the right to tax that issuance via interest as a right for the Private For Profit Banks (PFPB) to maximize profits for themselves.”
        Translation: PFPB have to right to issue ‘receipts’ of IOU’s that have the pledge of redemption upon demand for ‘goods and services ‘ already owned by the people of the
        sovereignty. PFPB also have the right to tax this issuance to gain more redeemable rights
        (even more than double at times) which may be used to form and fund their own agenda.
        Quote, ” To allow it to become a source of revenue to private issuers
        is to create, first, a secret and illicit arm of the government and, last, a rival power strong enough ultimately to overthrow all other forms of government.” Frederick Soddy,
        “The Role Of Money”
        (Entire book as a free download… http://archive.org/details/roleofmoney032861mbp

        As “Justaluckyfool” has no credentials other than being a fool, please, any profound response is welcomed.***** “Believe nothing merely because you have been told it…But whatsoever, after due examination and analysis,you find to be kind, conducive to the good, the benefit,the welfare of all beings – that doctrine believe and cling to,and take it as your guide.”- Buddha[Gautama Siddharta] (563 – 483 BC), Hindu Prince, founder of Buddhism As Dr. M. Yunus stated, “Challenge, improve or endorse.”
        ( “You are always welcome to share, copy, plagiarize, improve, etc..any comments.)

  6. davetaylor1
    April 23, 2014 at 2:52 pm

    Geoff, given your Australian timings I don’t know whether your attempted dismissal of this discussion of paradigms preceded my attempt to clarify it, but even though we are both singing from the same physics hymn sheet and looking back to the Big Bang, you are still singing a different tune and drowning mine out.

    Your tune is about garbage in, garbage out – which of course I entirely agree with. Mine is about paradigms being about programs: in the forms of both informative theories and their physical embodiment. Even good procedures (like ones for numerical addition) become garbage ones by being applied to corrupt or inappropriate data.

    The achievements of C E Shannon’s information science and Algol68’s scientific language, both using indexed logic, were in the one case to show how to form data so one can recognise and correct corrupt data, and on the other to define data in terms of the types of program demonstrably appropriate to them.

    On the evidence, Geoff, even physicists and complexity theorists – never mind everyone else from the literati to economists and politicians – have failed to understand Shannon’s “complex” of meaningful signal amid ergodic noise. Likewise the Americans missed half the point of Algol68, selling the world ‘C’ – with its addition of ‘pointer’ variables – as easier to understand: library classifications and indexes being already familiar as add-ons rather than as a different logical type of data.

    When you advocate the fashionable complexity theory as a way forward for economics, it seems to me you are falling into what Tony Lawson calls “the epistemic fallacy”. In broadcasting, forms are embedded in energy rather than matter, and even if the self-organisation of matter in the universe resulted from energetic turbulence, by now in our world it has already largely self-organised, and (except when deliberately brought together, hence the value of “Small is Beautiful”) the proportion of unstable (radioactive) material and thus of primary noise to meaningful signal is usually vanishingly small. The issue is rather the systematic spread of infection from toxic assets – proverbially “rotten apples” – so bundled in with the good so that the problem is seeing which is which.

    Let us agree Complexity as splendidly written up by Waldrop accounts for the unstable evolution of species and firms. What I ask you to reflect on are the stable relationships in Complex Number, the four forms or “phases” of water (solid, liquid, gas and unstable ion), the stable evolution of four types of life (reproducing cells, oxygenating plants, plant-recycling animals and humans unstably recycling ideas), four types of economy (household sharing, community barter, product selling and unstable monetary pricing). Can we agree that Complexity is stable at the Macro (logical type) level but not at the Micro (species population) level? Because I’m saying the problems in economics, when not engineered by humans trapped in the self-centred childish phase of growing up, are in the failure to understand logical types and their relation to our personalities and roles in the economy

  7. davetaylor1
    April 24, 2014 at 8:37 am

    Since this discussion began with Peter Radford, Robert Locke and Edward Fullbrook, all singing from the same hymn sheet, presenting very understandings of the word ‘paradigms’, I would like to return this discussion to them. Peter, I think, clearly misses Edward’s point that mainstream economics IS NOT itself a paradigm, rather it HAS a paradigm at a more fundamental level of science: itself virtually an example of the use of the most fundamental science of all: logic, which is, as Robert suggests, ahistorical as still normally understood (despite the revolutionary discoveries of evolution and dynamic logics),.

    Where I think Peter is right is that the effects of a shared paradigm are “manifest enough to exert enormous power over what is or isn’t published. It is manifest enough to dominate what is taught in most schools and universities. It is manifest enough to dominate policy circles and other domains that require input from economists”. But this doesn’t just apply to economics. Kuhn’s point is that it applies to the understanding of what science is (hence the neglect of information science and its dynamic logics).

    It applies also to the way people are taught to think (hence the emphasis on quantity of intelligence rather than types of logic); it applies to the understanding of what should be in an academic paper. A couple of book titles nicely capture the different tunes our editors and I are singing: “It must be true: I saw it in the papers”, and [Hadamard’s] “The Psychology of Invention in the Mathematical Field”.

    To a scholar the point of references is to confirm establishment of who said what. To a mathematically (visual pattern) minded scientist they point to ways of thinking which enable one to see what he has seen. Until editors realise this, they will continue to fail to recognise and understand new thinking.

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