Heterodox Economics

from the

post-autistic economics review
Issue no. 18, 5 February 2003
article 3



      issue 18 contents                            PAE Review index                               home page




Common Ground Critiques of Neoclassical Principles Texts


Steve Cohn   (Knox College, USA)

© Copyright 2003 Steve Cohn



Like many heterodox economists I am pleased and excited by the growth of the PAE network.  I'd like to share some thoughts about a project I  have been working on that overlaps many initiatives and ideas that have been discussed in the PAE Review.


The project is a "critical commentary" on standard neoclassical principles texts.  It provides a "chapter by chapter" critique of introductory texts that could be assigned alongside a standard text by instructors or read independently by interested students in an orthodox course.   The design of the project is similar to Marc Linder's efforts in Anti-Samuelson (1977), but adds other heterodox voices to Linder's primarily Marxist perspective.   In these comments I will concentrate on the macroeconomic side of principles courses.


The “critical commentary” project is based on four major assumptions.



Assumption 1: Need for Critique

In the mid 1990s about 1.4 million students took principles classes in the United States.  All 20 best selling introductory macroeconomics textbooks in the U.S. are basically neoclassical texts.1 It is unlikely that even 1% of the students use a non-neoclassical  principles text.


To make matters worse, for several decades the neoclassicists have been increasing their control over economic education at the pre-college level.  There has been a major effort to craft and then impose on high school (and even pre-high school) economics courses "voluntary content standards" that reflect neoclassical ideas.  This has been accompanied by the creation of review mechanisms, such as the Test of Economic Literacy (TEL), that assess economic knowledge in terms of students' acceptance of neoclassical theory.  


When economists objected to the narrowness of the "voluntary" content standards, two important members of the drafting committee were quite explicit about their attempt to censor other viewpoints.  They indicated,

"The final standards reflect the view of a large majority of economists today in favor of a 'neoclassical model' of economic behavior….The task was to produce a single coherent set of standards to guide the teaching of economics in America's schools.  Including strongly held minority views of economic processes risks undermining the entire venture."2



Assumption 2: Generic Target  

There is a template, a standard neoclassical treatment of most topics covered in principles courses, which can serve as the target for a heterodox or pluralist commentary.  Space limitations preclude defending this claim here, but it is hardly controversial.  Colander's observation that principles texts can not diverge more than 15% from standard fare characterizes the market's homogenization fairly well. 



Assumption 3: Common Ground Critique

While the neoclassicists have been very good at homogenizing instruction within their ranks so as to speak with one voice when it counts, those of us with non-neoclassical positions have been less inclined to follow this strategy.  And for good reason.  Part of our success is based on the hard won development of specialized languages (such as Marxist theory) that are able to resist being co-opted by neoclassical discourse.  I think many advances for heterodox theory will come by preserving these separate languages and integrating their insights.  Nevertheless, while I think it is important for the individual paradigms to continue to flourish as separate schools of thought, I am convinced it is possible to find broad common ground across a wide range of critiques of neoclassical principles texts, including work by many Marxist, radical, institutionalist, feminist, Post Keynesian, socio-economic, humanistic, and ecological economists.  To use a biological metaphor, the issue is whether heterodox paradigms can be thought of as members of one species or separate species.  I believe there are enough shared ideas among paradigms to inter-breed and support shared assaults on neoclassical texts.



Assumption 4: Appropriate Pedagogy

An effective critique of standard texts requires a sustained voice. One of the rhetorical strengths of principles books is the repetition of the same kind of analysis across many different topics.  Our critiques must offer a competing "habit of mind."   Besides challenging the formal arguments of neoclassical economics,  heterodox critiques must also challenge the "stories" in neoclassical principles texts and offer alternative stories, metaphors, and patterns of analogies to convey heterodox ideas.3



The Significance of Common Ground


Since establishing our common ground may be key to expanding the influence of pluralist economics, I will concentrate on elaborating Assumption 3 in this article.  Besides offering opportunities for intellectual cross pollination, securing common ground might increase the clout of pluralism within the economics profession. Why not, for example, band together to demand that the College Board's Advanced Placement exam include at least one question that requires some knowledge of alternative economic paradigms?  The growth of ICAPE4 and recent efforts to create umbrella projects, such as the recent and/or upcoming conferences on the history and future of heterodox economics in the U.S. are promising steps in this direction.


A key challenge for "heterodoxy" is to define itself in ways that move beyond the rubric of "non-neoclassical" economics.  In defining a common ground in the "critical commentary" I have tried to do three things: (1) identify shared ideas that generate a pattern of heterodox critique across topics and chapters of introductory macro texts; (2) give special attention to ideas that link methodological differences to policy differences; and (3) characterize the common ground in ways that permit distinct paradigms to develop common differences with textbook economics in different ways. 


Let me offer two examples of the latter point. I think holist alternatives to methodological individualism are one of the most fundamental differences between heterodox and neoclassical economics.5  Holist alternatives are expressed differently, however, in different heterodox paradigms.  For example, Marxist holism finds expression in "dialectics;" institutionalist holism highlights patterns of institutional reproduction; holism in radical economics often illuminates social structures of accumulation;  feminist holism can involve systems of patriarchy; Post Keynesian holism highlights socially constructed conventions for responding to uncertainty; and so on.  While the approaches are very different they all assert that there is a "coherence" to economic life that reproduces itself over time at a higher level of integration than the individual.


A second example involves epistemological issues.  In contrast to neoclassical theory's assertion of a positivist-modernist epistemology, heterodoxy acknowledges the paradigmatic and multi-dimensional nature of knowledge.  While different economists have taken this challenge in different directions (including the adoption of pluralist or Babylonian methodologies, the rejection of micro foundation requirements, the acceptance of empathy and aggregate analysis as viable research techniques, the adoption of critical realism, etc.), there is a common ground that expands economics discourse from the narrow terrain of textbook methodology.


Any attempt to create a common ground is inevitably going to exclude some "terra firma" for many perspectives.  The commonalities and rubrics I have chosen work well along many dimensions, but not so well along others.  With these qualifiers in mind, I offer the concepts below as a heuristic for promoting discussion of common ground in heterodox critiques of textbook economics. Because of space limitations I have simply listed and not discussed most of the categories.  I will offer a few comments on the two asterisked categories whose meaning may not be self-evident from their title.



Heterodox paradigms share a common rejection of the following aspects of textbook economics:


           -its positivist-modernist epistemology

         *-its subtexts

         *-its treatment of issues of well-being

          - its inappropriate use of abstraction

          - its universalization of homo economicus

          -its allegiance to methodological individualism


In areas of particular relevance to macro theory, heterodoxy also rejects:  


-its assumption of perfect information

-its assumption of perfect competition

-its use of comparative static rather than dynamic models 

             -its appeal to partial equilibrium intuitions to explore system-wide

              issues of macro coordination

-its abstraction from the monetary character of the economy

            -its abstraction from the labor market's "subjective" dimension and

              the institutionally contingent determination of wage/profit shares



Some Comments on Subtexts


Heterodox critiques of neoclassical economics (at least the way I am using the term heterodox) involve two different kinds of inter-connected objections.  Within neoclassical economics, the first might be seen as "normative" and the second as "positive" objections.  One of the claims of heterodoxy, however, is that the sharp distinction between positive and normative statements claimed by neoclassical economics oversimplifies the complex relationship between the two.  Thus I will call the two objections textual and subtextual.  To some extent, the first deals with the techniques of analysis and the second with the goals of analysis (although the goals obviously influence and infuse the choice of techniques). 


Many heterodox economists feel that neoclassical economics often acts as an apology for capitalism and laissez-faire oriented policy regimes. The neoclassicists ridicule the claim, analogizing it to finding ideology in geometry.  I have found the concept of subtexts very helpful in explaining heterodox thinking.


By  subtexts, I mean (1) the tacit  and unprovable assumptions about the nature of society and the (2) normative ideas about the goals of economic knowledge that underlie all economic paradigms.   Most intellectual work is motivated by a belief that the ideas pursued are worth knowing.  Subtexts provide the context for knowing, i.e., they provide a backdrop that situates the knowledge in relationship to the projects it is intended to facilitate (i.e., it shows how the knowledge might be used).    

Neoclassical and heterodox economics tend to have very different subtexts and, partially as a result of this, tend to offer radically different contexts for thinking about economics and public policy. 


Illustrative of a larger list of textbook subtexts are the implicit assertions that:

1.       Neoclassical economics is a scientific theory and as such demands belief in ways similar to modern physics.

2.       Market outcomes reflect free choice.

3.       People are naturally greedy, with insatiable consumer appetites.  Capitalism is successful, in part, because it offers an incentive system that builds on this “human nature.”

4.       The major purpose of economic theory is to promote economic efficiency and economic growth, as both provide a basis for human happiness.

5.       There is no alternative to capitalism.  The failure of the former Soviet Union proves that socialism can’t work.  The message of the 20th century is "let (capitalist) markets work."  The onus is on the government to justify "intervention" in the market.


In contrast, among the key subtexts in heterodox economic writings are claims that:

1.       Economic analysis contains much more subjective and ideological content than acknowledged in neoclassical texts.

2.       Markets offer both "free" and "coerced" "choice."  Market exchange can not meet the full range of human needs.

3.       The link between economic growth and human well-being is much more complicated than implied in neoclassical textbooks and has weakened considerably in the advanced economies.

4.       Equity, environmental concerns, and the nature of the non-market economy (for example, the household economy) need increased attention in economic analysis.

5.       Capitalist economies need to be embedded in a system of social governance to meet human needs (and for a subset of heterodox theorists:  alternatives to capitalism need to be explored). 


Some Comments on Well-Being

I think that issues of well-being, implicit in many heterodox paradigms, like Marxist and Post Keynesian economics, need to be made more explicit, as in socio-economics, ecological economics, and feminist economics. Most neoclassical textbooks devote little attention to analyzing the nature and causes of human well-being.  They strongly imply, however, that there is a close positive correlation between national output and national well-being.   While most texts briefly acknowledge that several factors might complicate the link between output and well-being, they generally ignore these complexities and imply that this is quite appropriate.  


Heterodox economics (implicitly or explicitly) challenges the relatively mindless correlation between economic growth and human well-being animating neoclassical textbooks.  Heterodox economists tend to give greater attention to empirical findings about well-being (like those of Richard Easterlin) and theoretical concepts that explore well-being, such as ideas about positional competition and "meta-externalities" (the effect of economic outcomes on non-economic societal variables like the viability of democracy).  As a result heterodox analyses challenge the mantra of "let the market work" that echoes in principles texts



Contrasting Metaphors


I'd like to conclude with an abbreviated list of contrasting images that respond to Assumption 4's recommendation that heterodox critiques challenge the metaphors as well as the formal analytics  of textbook economics. 


Neoclassical Texts                                 Heterodox Alternatives


Economist as Scientist/engineer             Economist as Social Theorist


Key complementary disciplines:              Key complementary disciplines:

 mathematics & computer science          anthropology and sociology


Homo Economicus                                 Homo-Sociales

(Rational Isolated Economic Man)           (Human Beings in Social Contexts)


the Invisible Hand                                   the Prisoner's Dilemma


the Auctioneer                                       the Casino


Perfect competition                                Strategic Competition

and Passive Firms                                 and Active Firms


Crafting a common ground for heterodox critiques of textbook economics is inherently a collective project.  I have had enormous help from many people who cannot be acknowledged here.  I would welcome more feedback, as so too would the editor of this journal.




1. One can debate the status of Colander's thoughtful, but by his own admission, compromised text and hope that future editions of Stiglitz's book will move further in a heterodox direction.  Despite their contributions to a more thoughtful economics, I find both books clearly on the neoclassical side of the ledger.


2. John J. Siegfried, (Secretary-Treasurer of the American Economics Association) and Bonnie T. Meszaros of the Center for Economics Education and Entrepreneurship:  "What Should High-School Graduates Know in Economics?  National Voluntary Content Standards for Pre-College Economics Education." American Economic Review 87(2) May 1997, p. 249.


3. While I am not sure that deployment of active learning teaching techniques inherently favors heterodox economics, many feminist economists and PAE contributors, such as Peter Dorman and Susan Feiner, have made interesting arguments that they do. 


4. ICAPE = The International Confederation of Associations for Pluralism in Economics


5. Admittedly there are well known methodologically individualistic Marxists, though the concept seems an oxymoron to me.  Nevertheless I think this perspective should be included in heterodox economics because of the broad overlap with heterodoxy in other areas.  



Please e-mail (scohn@knox.edu) if you have any suggestions for the commentary or wish to see sample chapters.


Steve Cohn, “Common Ground Critiques of Neoclassical Principles Texts”, post-autistic economics review, issue no. 18, Februaryr 4, 2003, article 3. http://www.paecon.net/PAEReview/issue18/Cohn18.htm