A Teacher Writes to Students Series (58): Orthodoxy and Heterodoxy
Annavajhula J C Bose, PhD
Department of Economics (Retd.), SRCC, DU
“Neoclassical economics should already belong to the history of economic thought, as a failed paradigm every bit as wrong about the economy as Ptolemaic Astronomy was about the universe. It is… not merely an inappropriate paradigm for the analysis of capitalism, but an existential threat to capitalism itself, if not human society in general. It could well cause an existential crisis for our species, as our species itself has caused for so many others. It has to go.”
Keen (2024), to quote as above, is absolutely right again in intellectually refuting neoclassical economics, like he had already bulldozed it earlier even as conventional economists upholding it are deaf to him. And against his wishing like the above, neoclassical economics as orthodoxy in economics remains like strains of pathogens that have developed resistance to multiple drugs, which are the hardest to get rid of. It persists as “Economics students … graduate from Masters and PhD programs with an effectively vacuous understanding of economics, no appreciation of the intellectual history of their discipline, and an approach to mathematics which hobbles both their critical understanding of economics, and their ability to appreciate the latest advances in mathematics and other sciences.”
Hodgson (2019; 2021) is a scholarly beacon of light I have found to understand why neoclassical economics continues to have dominant presence and, more importantly, why non-neoclassical economics as heterodoxy in economics, has not made inroads into the economics classrooms. I mention here some of his irresistible points lest students, like me, be dejected to give up on economics itself as a dead end.
First, there are two impossible utopias—markets for everything versus state planning of everything. Much of orthodoxy is about promoting markets with insufficient attention to the moral, cultural and institutional prerequisites of commercial exchange. By contrast, much of heterodoxy is about promoting socialism without addressing the key debates concerning its feasibility, and without adequate consideration of how their proposed socialism could work in practical detail. Economics should not be dominated by this dichotomy. Instead it must rely much more on historical and geographical comparative analyses of real-world institutions and policies. At the policy level it should engage in cautious experimentation. Economics, thus, must emerge as a pragmatic and empirically-oriented science.
Second, heterodoxy dislikes orthodoxy for its capitalist support. But it is a flawed view that orthodoxy is largely and necessarily an apologia for a market economy. The core assumptions of orthodoxy do not lead logically to the promotion of markets. Assumptions such as scarcity and rationality do not imply a pro-market stance. While the welfare assumption of Pareto optimality disallows strong redistributive measures, it too does not logically imply a market system. Markets entail other assumptions, including the institutional preconditions of contracts and private property. The point is that just as orthodoxy does not logically lead to support for capitalism or markets, heterodoxy does not automatically lead to their rejection. Yet much of heterodoxy has aligned itself with leftist or anti-market politics, taking for granted the practicality and superiority of a socialist alternative. Orthodoxy has been used to support socialism as well as capitalism. By contrast, heterodoxy has no consensus on its theoretical core. Only leftist ideology unifies the majority of the adherents of heterodoxy even as heterodox economists cannot agree what heterodox economics means.
Third, orthodoxy perpetuates itself through its monopoly access to power and resources, and with its chosen metrics of evaluation. By contrast heterodoxy has received insufficient attention and constructive development, largely because there are inadequate incentives to engage with them. Orthodoxy excels in selecting the issues that it deems worthwhile and creates opportunities for those who participate in its community. Despite growth in numbers, the heterodox community has lost access to many of the levers of academic power. It has been caught in vicious circles of cumulative decline. Exclusion from high-ranking journals reduces the chances of promotion, lowers influence, confines academics to lesser-ranking universities, awards less time for research, reduces research grant possibilities, and leads to further exclusion from power. Moreover, despite major achievements in some areas, inadequate quality control has created severe reputational problems for heterodox scholarship.
Finally, orthodoxy is unbalanced with too much of consensus and authority and too little pluralism. By contrast, heterodoxy has rightly emphasized pluralism at least in terms of theories but has failed to see the importance of consensus which requires organization and power within the academy. A viable and healthy science requires both consensus and pluralism.
Economics students must think deeply about the above points reproduced from Hodgson’s writings.
They must also, following Keen (2024), must recognize that orthodoxy has not yet and probably never will realise that its research programme for the last 50 years of deriving macroeconomic analysis directly from microeconomic theory is a theoretical as well as a practical failure.
This is not all. Orthodoxy continues to trivialize the dangers of global warming for our civilization by being oblivious to the Laws of Thermodynamics.
Keen concludes that the only way forward is for real scientists to realise how unscientific orthodoxy is and develop an alternative themselves, building on the foundations laid predominantly by heterodox economists from the realism-oriented Post Keynesian heterodoxy.
According to him, the advocacy of pluralism from heterodoxy is really a concession to the fact that orthodoxy dominates the academic teaching of economics, is hostile to any other approach, holds the purse-strings for research funding, and acts as a gatekeeper against alternative paradigms at all but the most lowly ranked of universities. The only way for heterodox teaching and research to survive at universities is therefore to plead for pluralism, which translates as asking orthodox departments to not persecute their heterodox staff, and to tolerate some courses being not strictly orthodox in nature. This kind of academic begging should not be happening.
Econ students must also reflect on the viewpoint that land as a third factor of production (apart from labour and capital) is absent in orthodoxy due to deliberate corruption in economic theorizing to sideline what Henry George was advocating. But putting it back into economic theory can help us better understand how unearned incomes materialize via rent-seeking along with many of today’s most pressing social and economic problems, including excessive property prices, rising wealth inequality and stagnant productivity.
Homework: Explore Georgist Political Economy, and read Earth4All Deep Dive Papers as integral to Heterodoxy.
References
Geoffrey M Hodgson. 2019. Is There a Future for Heterodox Economics? Edward Elgar.
Geoffrey M Hodgson. 2021. Debating the Future of Heterodox Economics. Journal of Economic Issues. 55 (3).
https://ecotalker.wordpress.com/2021/02/20/steve-keens-anti-economics/
https://www.paecon.net/PAEtexts/Keen1.htm
https://evonomics.com/josh-ryan-collins-land-economic-theory/
https://www.amazon.com/Corruption-Economics-Georgist-Paradigm/dp/0856832448
Steve Keen. 2024. Rebuilding Economics from the Top Down. Budapest Centre for Long-term Sustainability.
