Heterodox Economic Theory




 

Introduction to Heterodox Economic Theory
 

June 4, 2003

The title of this paper is actually misleading. There is no single heterodox theory in economics.  Instead, there are many heterodox theories.  What they all share, however, is a rejection of neoclassical orthodoxy as the appropriate tool for understanding the workings of economic and social life. The reasons for this rejection vary.  Some heterodox theorists would argue that neoclassical theory is appropriate as a tool under certain specialized conditions, such as when there is perfect or near-perfect competition.  Other heterodox theorists would reject neoclassical economic theory altogether, arguing that it is useless as a tool for understanding economic and social life.  A small number of theorists argue that all theories are valid so long as they are internally consistent.  Still others, less liberal in their conception of theoretical validity, argue that neoclassical theory is a form of ideology or religion, grounded in unscientific concepts. 

Neoclassical economic theory is grounded in a particular conception of human psychology, agency or decision-making.  It is assumed that all human beings make economic decisions so as to maximize pleasure or utility.  Some heterodox theories reject this basic assumption of neoclassical theory, arguing for alternative understandings of how economic decisions are made and/or how human psychology works.  It is possible to accept the notion that humans are pleasure seeking machines, yet reject the idea that economic decisions are governed by such pleasure seeking.  Human beings may, for example, be unable to make choices consistent with pleasure maximization due to social constraints and/or coercion.  Humans may also be unable to correctly assess the choice points that are most likely to lead to maximum pleasure, even if they are unconstrained (except in budgetary terms) in making such choices.  And it is also possible that the notion of pleasure seeking is itself a meaningless assumption because it is either impossible to test or too general to refute.  Economic theories that reject the basic assumption of economic decisions as the outcome of pleasure maximization are heterodox.

This web essay is in progress.  Stay tuned.  Send comments or criticisms to Satya Gabriel

Other Sites to Check Out:

Hetecon.com

World Conference on the Future of Heterodox Economics

URPE Newsletter

Rethinking Marxism

An Alternative Framework for Economics

Post-structuralist Marxian Theory and the Study of Economic History

 

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Copyright © 2003, Satya J. Gabriel, Mount Holyoke College