What do neoclassical economists even believe?

[E B]

Had an email exchange with Dr. Nitzan. Adding my question+his response here at his request.

“Hello Dr. Nitzan,

I just watched your video “Neoclassical Political Economy – Skating on Thin Ice.” and I had a question, especially as a student who has taken various economics courses, and is more than skeptical about the teachings of neoclassical economics myself.

[A program with my university facilitated meetings between students and 2 current key economists in the U.S. on the state and federal level. Both essentially came to admit to us students “a lot of what we thought we knew about economics has been thrown out the window in recent years, so when we’re deciding on economic policy, we are virtually holding up a flashlight to the dark.”]

At the end of your video, you point to an example where Samuelson and Nordhaus include information in their textbook that is controversial/unquantifiable. I’m reminded of David Graeber’s Debt, where he points out that even after anthropologists debunked the notion of economies based on barter, economists kept teaching their dogma but simply changed their textbooks to teach about barter economies as a thought experiment.

I think, of course, there are political reasons that economists would not be willing to admit in public that neoclassical economics is failing them, so what exactly do economists even believe? I’m curious if you’ve come across economists who have similarly been willing to be honest with you about neoclassical economics failing the field, and how the field is adapting as a result. Are economists publicly pretending neoclassical economics still works, and using other research methods behind closed doors or something? Is this a game of smoke and mirrors?

 

Dr. Nitzan’s response:

Hi,

You ask: “so what exactly do economists even believe?”

I’m not sure ‘belief’ is the right term to use.

Neoclassicists tend to follow abstract rituals. The theoretical bases of these rituals — demand, supply, equilibrium, perfect competition, profit/utility maximization, productivity theory of distribution, etc. — remain beyond doubt. The problem is that there is a mismatch between the sacrosanct theory and the everyday ‘reality’. This mismatch creates problems for those calling themselves ‘policymakers’, who find themselves having to shed light on the dark void. But it is not a problem for neoclassical theorists. As far as they are concerned, the theory is perfectly valid. The problem is reality, which is full of ‘shocks’, ‘exceptions’, ‘externalities’ and other diseases that serve to ‘distort’ the correct theory.

For more:

Capital as Power, Ch. 5 (https://bnarchives.yorku.ca/259/)
Capital Accumulation: Fiction and Reality (https://bnarchives.yorku.ca/456/)
The 1-2-3 Toolbox of Mainstream Economics: Promising Everything, Delivering Nothing (https://bnarchives.yorku.ca/722/)

Best,
Jonathan

Topic