Teaching heterodox microeconomics
from Lars Syll
Clearly, neoclassical economists believe that neoclassical microeconomic theory is theoretically coherent and provides the best explanation of economic activity; therefore there is no good reason to not teach it, if not exclusively. Many heterodox economists also broadly agree with this position, although not with all the particulars. However, sufficient evidence exists showing that as a whole neoclassical microeconomic theory is theoretically incoherent and without empirical support (see Lee and Keen, 2004; and Keen, 2001). Moreover, the methodological underpinning of neoclassical microeconomics is open to criticisms. The methodological approach of neoclassical economics is based on a pre-vision of supply and demand and/or a Walrasian general equilibrium all combined with scarcity and constrained maximization. Accepting this vision as a matter of faith, neoclassical economists construct axiomatic-based arguments via a deductivist methodology (with or without the use of mathematics) to articulate this pre-vision. There is no attempt to establish that the pre-vision has any connection to or is grounded in the actual capitalist economy it purports to explain. Hence the method of constructing theory is not tied to or informed by the real world, which means that the axioms qua assumptions used are not chosen because of their realism or some other way grounded in reality but solely because they contribute to articulating the pre-vision. Therefore with a methodology unconcerned with the real world, the theories derived therefrom are theoretically vacuous and hence not really explanations. They are in fact non-knowledge. Consequently, the methodology of neoclassical economics is not just wrong, it is also misleading in that it cannot inherently provide any understanding of how the real works or even predict outcomes in the real world.
Fred was together with Nai Pew Ong, Bob Pollin and Axel Leijonhufvud one of those who made a visit to University of California such a great experience for a young economics scholarship holder back at the beginning of the 1980s. I especially remember our long and intense discussions on Sraffa and Neo-Ricardianism. It is now more than five years since Fred passed away. I truly miss this open-minded and good-hearted heterodox economist.
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“a conceivably seminal contribution to this debate on economic systems and their place in human and natural systems.” – Steve Keen
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————- Edward Fullbrook ————-
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Edward Fullbrook and Jamie Morgan
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Thank You, 100% agreed…, I just wrote a Paper on such stuff…
World-Ecology vs. Economics (:>) Facing the Spectre of A New World: A Tentative Obituary on the Terminal Crisis of Global Capitalism (https://oeaw.academia.edu/ekkeweis)
The book that Fred Lee wanted to complete but could not during his life is now published:
Frederic S. Lee Microeconomics theory: A heterodox approach Abingdon, Oxfordshire and New York, NY: Routledge, 2018.
We must say thanks to Tae-hee Joo, the editor of the book, for his enormous efforts to make Fred’s manuscripts publishable.
Fred Lee presented a clear idea for an alternative economics. I do not claim that his book shows the final solution, but he presented much more concretely a picture of an alternative economics. It would be time to discuss the strategy to build a new alternative economics more affirmatively than eternally criticizing neoclassical or mainstream economics.
At around the same time that Fred Lee and Lars Syll visited the University of California and talked long on Sraffa with Axel Leijonhufvud, a paper by Avi J Cohen appeared in Eastern Economic Journal: “The Laws of Returns under Competitive Conditions”: Progress in Microeconomics since Sraffa (1926)? (Vol. 9, No. 3, 1983, pp. 213-220).
It was a short paper that counts only eight pages, but a decisive criticism of economics of perfect competition that was understandable for new economics students. After two sections of persuasive arguments, Cohen concluded that
However, this was not a real conclusion, but a premise of his true inquiry:
How are we to account for this extraordinary state of affairs?
After a few words on John Hicks’s position, Cohen noted this state of affairs could be understood as a normal state of scientific research:
The conclusive observation Cohen made is this:
This observation was made after a little less than 60 years after Sraffa’s paper, but it was also predictive because there was no big difference after the paper, for about 40 years.
What Cohen observed is not new. In fact, he only reconfirms the old dictum, i.e. it takes a theory to beat a theory. To beat mainstream economics, repeating criticism is not enough. We should build and present a theory that can surpass it.