A Brief History of the Post-Autistic Economics Movement

Theories, scientific and otherwise, do not represent the world as it is but rather by highlighting certain aspects of it while leaving others in the dark.  It may be the case that two theories highlight the same aspects of some corner of reality but offer different conclusions.  In the last century, this type of situation preoccupied the philosophy of science.  Post-Autistic Economics, however, addresses a different kind of situation: one where one theory, that illuminates a few facets of its domain rather well, wants to suppress other theories that would illuminate some of the many facets that it leaves in the dark.  This theory is neoclassical economics.  Because it has been so successful at sidelining other approaches, it also is called “mainstream economics”.

From the 1960s onward, neoclassical economists have increasingly managed to block the employment of non-neoclassical economists in university economics departments and to deny them opportunities to publish in professional journals.  They also have narrowed the economics curriculum that universities offer students.  At the same time they have increasingly formalized their theory, making it progressively irrelevant to understanding economic reality.  And now they are even banishing economic history and the history of economic thought from the curriculum, these being places where the student might be exposed to non-neoclassical ideas.  Why has this tragedy happened?

Many factors have contributed, but three especially.  First, neoclassical economists have as a group deluded themselves into believing that all you need for an exact science is mathematics, and never mind about whether the symbols used refer quantitatively to the real world.  What began as an indulgence became an addiction, leading to a collective fantasy of scientific achievement where in most cases none exists.  To preserve their illusions, neoclassical economists have found it increasingly necessary to isolate themselves from non-believers. 

Second, as Joseph Stiglitz has observed, economics has suffered “a triumph of ideology over science”.¹  Instead of regarding their theory as a tool in the pursuit of knowledge, neoclassical economists have made it the required viewpoint from which, at all times and in all places, to look at all economic phenomena.  This is the position of neoliberalism. 

Third, today’s economies, including the societies in which they are embedded, are very different from those of the 19^th century for which neoclassical economics was invented to describe.  These differences become more pronounced every decade as new aspects of economic reality emerge, for example, consumer societies, corporate globalization, economic induced environmental disasters and impending ecological ones, the accelerating gap between the rich and poor, and the movement for equal-opportunity economies.  Consequently neoclassical economics sheds light on an ever-smaller proportion of economic reality, leaving more and more of it in the dark for students permitted only the neoclassical viewpoint.  This makes the neoclassical monopoly more outrageous and costly every year, requiring of it ever more desperate measures of defense, like eliminating economic history and history of economics from the curriculum.

But eventually reality overtakes time-warp worlds like mainstream economics and the Soviet Union.  The moment and place of the tipping point, however, nearly always takes people by surprise.  In June 2000 .................... more   _______________________________________________

The Strange History of Economics

These days people like to call neoclassical economics “mainstream economics” because most universities offer nothing else.  The name also backhandedly stigmatizes as oddball, flaky, deviant, disreputable, perhaps un-American those economists who venture beyond the narrow confines of the neoclassical axioms.  To understand the powerful attraction of those axioms one must know a little about their origins.  They are not what an outsider might think.  Although today neoclassical economics cavorts with neoliberalism, it began as a honest intellectual and would-be scientific endeavour.  Its patron saint was neither an ideologue nor a political philosopher nor even an economist, but Sir Isaac Newton.  The founding fathers of neoclassical economics hoped to achieve, and their descendents living today believe they have, for the economic universe what Newton had achieved for the physical universe.

This brief article roughly traces the strange history of economics from the 1870s through to the beginning of Post-Autistic Economics movement in the summer of 2000.  .................... more _____________________________________________

Policy Implications of Post-Autistic Economics

The neoclassical monopoly in the classroom and its prohibition on critical thinking means that it brainwashes successive generations of students into viewing economic reality exclusively through its concepts, which more often than not misrepresent or veil the world, especially today’s world.  Nearly all of these neoclassical notions have a bearing on judgements about social, cultural and economic policy.  Consequently, if society were to learn to think about economic matters outside the neoclassical conceptual system, it would almost certainly choose different policies.  One of Post-Autistic Economics’ ( PAE ) projects has been to expose some of the many conceptual lunacies of today’s mainstream, both in terms of the concepts it uses and the concepts it lacks.  Drawing on recent essays by PAE economists in A Guide to What’s Wrong with Economics, especially the chapters by Michael A. Bernstein, Geoffrey Hodgson, Peter Söderbaum, Hugh Stretton, Richard Wolff, Robert Costanza, Herman E. Daly, Jean Gadrey and Edward Fullbrook,^* this brief article briefly considers ten such concepts.

Neoclassical economics regards competition as a state rather than as a process.  It defines perfect competition as a market with a large number of firms with identical products, costs structures, production techniques and market information.  But in real life competition is a process by which firms continually seek to re-establish the conditions of their own profitability.  To compete in a market requires firms to seek out and exploit differences between them in production, technology, distribution, access to information and awareness of trends in consumption.  These differences are the essential dimensions in which competition takes place.  Once the neoclassical conception of competition becomes imbedded in the student’s mind, appreciation of real-world competition, and hence the policies that might enhance it, becomes logically impossible.

Neoclassical economists love to talk about freedom of choice.  But this is pure rhetoric, because they define rationality in a way that eliminates free choice from their conceptual space.   By rationality they mean that an agent’s choices are in conformity with an ordering or scale of preferences.  The “rational” agent chooses among the alternatives available that one which is highest on his ranking.   Rational behaviour simply means behaviour in accordance with some ordering of alternatives in terms of relative desirability.  In order for this approach to have any predictive power, it must be assumed that the preferences do not change over some period of time.  So the basic condition of neoclassical rationality is that individuals must forego choice in favour of some past reckoning, thereafter acting as automata.  This conceptual elimination of freedom of choice, in both its everyday and philosophical meanings, gives neoclassical theory the hypothetical determinacy that its Newtonian inspired metaphysics require.  No indeterminacy; no choice.  No determinacy; no neoclassical model.  This is far from just an academic matter, because society needs an economics that is able to address questions regarding freedom of choice.

No terms in neoclassical economics are more sacrosanct than rational choice and rationality.  Everyone identities with these words, because everyone wants to think of themselves as rational.  But few people realize that economists give these words an ultra eccentric meaning.  Neoclassical economics begins with an a priori conception of markets and economies as determinate systems that by the action of individual agents alone tend toward an efficient and market-clearing equilibrium.  This requires that the individual agents, like the bodies in Newton’s system, behave in a prescribed manner.  Neoclassicalists have deduced the particular pattern of behaviour that would make their imagined world logically possible, then named it “rational choice” or “rationality” and then declared that that is the way real people behave.  But thankfully they don’t.  Everyday economic actors do many things that by the neoclassical meaning of “rational” are “irrational”.   Looking to the choices of other consumers as guides to what one might buy; buying a stock because you believe other people will be buying it and so increase its value, spending your money in a spirit of spontaneity rather than stopping to calculate the consequences and alternatives up to the limits of your cognitive powers; a taste for change, that is, buying something because you did not previously prefer it; these common consumer behaviours are all prohibited under the neoclassical notions of rational choice and rationality and so outside its scope of analysis. 

These failings connect with another.  Neoclassical economics is by its own axioms incapable of offering a coherent conceptualisation of the individual or economic agent.  From where do the preferences that supposedly dictate the individual’s choice come from?  Not from interpersonal relations, because if individual demands were interdependent, they would not be additive and thus the market demand function – neoclassicalism’s key analytical tool – would be undefined.  And not from society, because neoclassicalism’s Newtonian atomism translates as methodological individualism, meaning that society is to be explained in terms of individuals and never the other way around. 

This leaves an awful lot in the dark.  In the main, despite the neoclassical axioms, we all categorise and classify according to prevailing cultural norms.  Likewise our tastes and preferences for this and that reflect the social conventions and institutions with which we interact.  Consequently individual choice is unavoidably and inextricably bound up with historically and geographically given social worlds.   An economics that has nothing to say about the formation of economic tastes and preferences is silly and irresponsible, especially in an age of consumer societies and in a world now threatened with climate-change or worse.

For half a century neoclassical economics has hid its ideology behind the notion that it calls positive economics.  This is the idea that it contains no value judgements because it mentions none.  Of course such a notion belongs to an intellectually more naive age than today, but nonetheless it persists as an effective tool of indoctrination of undergraduates.  The fact that neoclassical economics requires a highly restricted focus in order to maintain its atomist and determinist metaphysics compels it to make many extreme judgements about what is and is not economically important.  There is not space even to list them.   But an example is its notion of  “economic man”, which is acutely ideological, as it emphasizes some roles and relationships and excludes others.  By allowing only decisions based on utility maximization, it excludes other forms of ethics.   As an economic agent, each individual acts in many roles, not just market ones, and is guided by his or her “ideological orientation”.  That orientation may be founded on utilitarianism or not.  It may for example be based on social and environmental ethics.  PAE economists do not believe that economists have the right to select one ethics as the “correct” one for framing economic analysis.   Furthermore the neoclassical insistence upon the utilitarian ideology legitimises a kind of “market ideology” and “consumerism” that increasingly appears dangerous to society and sidelines the debate about Sustainable Development.

Like rationality, nearly everyone thinks efficiency is a good idea.  Neoclassical economists adore using this word, especially when addressing the public.  But the meaning of “efficiency” always depends on what you choose to count.  For example, .............. more