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On Planning for Development:  World Financial Crisis 2008
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sanity, humanity and science
real-world economics review
Formerly the post-autistic economics review
Issue no. 48, 6 December 2008
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Subscribers: 10,402 from over 150 countries

How should the collapse of the world financial system affect economics?

- After 1929 economics changed: Will economists wake up in 2009 - Geoffrey M. Hodgson
A remarkable feature of the unprecedented financial crisis that erupted in September 2008 is the doctrinal shift among world leaders. The market is no longer seen as the solution to every problem. The state has to step in to save capitalism. The US Republican Party had been the champion of free markets and minimal state intervention, yet President George W. Bush became the exponent of a huge state bale-out of the banks with a massive extension of state ownership within the financial system. Alan Greenspan, former chairman of the US Federal Reserve, belatedly declared that he had ‘made a mistake in presuming that the self-interest of organizations, specifically banks’ would protect ‘shareholders and equity in the firms’. He had ‘discovered a flaw in the model’ of liberalisation and self-regulation (Guardian, 24 October 2008).

- The economics of collapsing markets  -  Frank Ackerman
Big banks are failing, bailouts measured in hundreds of billions of dollars are not nearly enough, jobs are vanishing, mortgages and retirement savings are turning to dust. Didn’t economic theory promise us that markets would behave better than this? Even the most ardent defenders of private enterprise are embarrassed by recent events: in the words of arch-conservative columnist William Kristol, There’s nothing conservative about letting free markets degenerate into something close to Karl Marx’s vision of an atomizing, irresponsible and self-devouring capitalism.
So what does the current wreckage of the global financial system tell us about the theoretical virtues of the market economy?

- Economics needs a scientific revolution - JP Bouchaud
Compared to physics, it seems fair to say that the quantitative success of the economic sciences is disappointing. Rockets fly to the moon, energy is extracted from minute changes of atomic mass without major havoc, global positioning satellites help millions of people to find their way home. What is the flagship achievement of economics, apart from its recurrent inability to predict and avert crises, including the current worldwide credit crunch?

The financial crisis

- Reforming the world’s international money - Paul Davidson
The last two lines of the original manuscript of my book John Maynard Keynes (Palgrave, 2007) was written in July 2006. In those lines I noted that: “when, not if, the next Great Depression hits the global economy, then perhaps economists will rediscover Keynes’s . . . analytical system that contributed the golden age of the post World War II. For Keynes, however, it will be a pyrrhic victory”.
The winter of 2007-2008 will prove to be the winter of economic discontent and the beginning of the end of the classical theory of the efficiency of global financial markets. For more than three decades mainstream economists have preached, and politicians accepted, the myth of the efficiency of markets, while burying any thoughts of Keynes’s analysis of domestic financial markets and their connection via the international payments system.

- How to deal with the US financial crisis - Claude Hillinger
Some 80 years after the Great Depression the stream of analysis of causes and of actual or hypothetical alternative policies continues. The analysis of the present crisis, particularly the question of how to deal with it, are still in a very early stage. The most recent contributions are largely reactions to the 700 billion dollar bailout of the financial sector proposed by treasury secretary Paulson and after some modifications passed into law. While a scholarly article is not going to impact the current crisis management in the US or elsewhere, hopefully it can contribute to understanding and to better decisions in the future.

- The crisis and what to do about it  - George Soros
The salient feature of the current financial crisis is that it was not caused by some external shock like OPEC raising the price of oil or a particular country or financial institution defaulting. The crisis was generated by the financial system itself. This fact—that the defect was inherent in the system —contradicts the prevailing theory, which holds that financial markets tend toward equilibrium and that deviations from the equilibrium either occur in a random manner or are caused by some sudden external event to which markets have difficulty adjusting. The severity and amplitude of the crisis provides convincing evidence that there is something fundamentally wrong with this prevailing theory and with the approach to market regulation that has gone with it. To understand what has happened, and what should be done to avoid such a catastrophic crisis in the future, will require a new way of thinking about how markets work.

- On being "competitive": the evolution of a word - David George
The communications gap between mainstream economists and the general public reaches its extreme in the realm of mathematical theorizing. Agents in the everyday world may (or may not) act as theory predicts without being even remotely aware of theory. But these same agents, regardless of background, do often use much of the language of economists. My goal in this paper will be to offer a preliminary exploration into the changing importance of certain major economic words over the last century. “Competition” and its many derivatives will form the centerpiece of the paper. We clearly have an instance here of a word dear to mainstream economists that is at the same time a regular part of most adult vocabularies in the English speaking world. We also have a word that shows up in many different contexts. Firms and markets may be competitive, but so may be sports teams, determined personalities, and institutions usually outside the realm of “the economy.”

- The state of China’s economy 2009 - James Angresano
Over the past few decades there have been numerous forecasts predicting an "imminent collapse" of the Chinese economy. Some of these have a strong Anglo-Saxon ideological bias with little substantive theoretical or empirical support, while others offer standard economic principles in defense of a negative forecast. More recently, however, these pessimistic forecasts have been fewer in number and less dire. Meanwhile, some other analysts have offered quite favorable economic performance forecasts. Who appears to have been correct?
This paper will examine some past forecasts, and then evaluate the current performance of the Chinese economy. The first section will provide a brief summary of some previous forecasts. Analysis of the recent performance of China's economy will be presented in the following section, including trends over the past 5 of both standard macroeconomic and some socioeconomic indicators, using both Chinese and non-Chinese data sources. The third section will evaluate the overall state of the economy at present, weighting performance indicators both according to their relative importance to Chinese policy makers as well as to non-Chinese analysts. The following section will suggest the likelihood that the economy's performance during 2003-2008 is likely to continue for another five years. The final section will offer a summary and conclusions as to the likelihood that China's economy will inevitably collapse within the next 5 to 10 years

- Hedonic man: The new economics and the pursuit of happiness - Alan Wolfe
When I first began hearing about what Bruno S. Frey, professor of economics at the University of Zurich, calls the "revolution" in his discipline, my reaction was one of delight. As far as I was concerned, it could not happen fast enough. Neoclassical economists had insisted upon the primacy of self- interest only in order to model human behavior, but the way rational choice theory developed (at the University of Chicago in particular) suggested that self-interest was not just a fact for these thinkers, but also an ideal: not just how people do act but also how they should act. Their relentless advocacy of market-based public policies was finally ideological--and, by my lights, ideologically wrong. Also the jargon grew impenetrable, and the mathematics ostentatious and obnoxious. When Chicago-style economists started to apply their methods to other social science disciplines, and then to virtually all the perplexities of human life, the charge of academic imperialism could be added. Friedrich August von Hayek and Milton Friedman had always seemed to me to be marginal and somewhat bizarre thinkers, especially when compared to such intellectual titans as John Maynard Keynes and Joseph Schumpeter. The rapid spread of their ideas throughout so much of academia did not bode well for the future.

- Past contributors, etc.


Six winners of the Bank of Sweden Prize for Economics have written as follows.

". . . economics has become increasingly an arcane branch of mathematics rather than dealing with real economic problems"

Milton Friedman

“[Economics as taught] in America 's graduate schools... bears testimony to a triumph of ideology over science.” 
Joseph Stiglitz

"Existing economics is a theoretical [meaning mathematical] system which floats in the air and which bears little relation to what happens in the real world"

Ronald Coase

“We live in an uncertain and ever-changing world that is continually evolving in new and novel ways.  Standard theories are of little help in this context.  Attempting to understand economic, political and social change requires a fundamental recasting of the way we think” 

Douglass North

“Page after page of professional economic journals are filled with mathematical formulas […] Year after year economic theorists continue to produce scores of mathematical models and to explore in great detail their formal properties; and the econometricians fit algebraic functions of all possible shapes to essentially the same sets of data”

Wassily Leontief

“Today if you ask a mainstream economist a question about almost any aspect of economic life, the response will be: suppose we model that situation and see what happens…modern mainstream economics consists of little else but examples of this process”

Robert Solow

Post-Autistic Economics is about changing this state of affairs.


"Economics is supposed to be social science, i.e. an intellectual discipline resting upon empirically-observed facts, in which mathematics and conceptual frameworks are tools for understanding.  But in contemporary mainstream economics, the tools are often in the driver's seat, declaring evident facts impossible and reducing the subtleties of the real world to whatever clockwork economists best know how to build.  Post-Autistic economics is the attempt to escape the tyranny of these tools and build new ones that will work properly."

Ian Fletcher

“Modern economics is sick. Economics has increasingly become an intellectual game played for its own sake and not for its practical consequences for understanding the economic world. Economists have converted the subject into a sort of social mathematics in which analytical rigour is everything and practical relevance is nothing.”
Mark Blaug

A Guide to What’s Wrong with Economics

edited by Edward Fullbrook.
contributors: Emmanuelle Bénicourt, Michael A. Bernstein, Ana Maria Binachi, Ha-Joon
Chang, Robert Costanza, Herman E. Daly, James G. Devine, Peter Earl, Susan Feiner, Edward Fullbrook, Jean Gadrey, Donald Gillies, Bernard Guerrien, Ozgur Gun, Joseph Halevi, Geoffrey Hodgson, Grazia Ietto-Gillies, Steve Keen, Tony Lawson, Anne Mayhew, Paul Ormerod, Renato Di Ruzza, Sashi Sivramkrishna, Peter Söderbaum, Hugh Stretton, Charles L Wilber, Richard Wolff, Stephen T. Ziliak.
London: Anthem Press, November 2004, paperback, 323 pages.

Click here to buy from for $22.76
Click here to buy from for Ł13.29


The Crisis in Economics: The Post-Autistic Economics Movement:

The first 600 days

edited by Edward Fullbrook.
James K. Galbraith, Joseph Halevi, Hugh Stretton, Jacques Sapir, Gilles Raveaud, Geoff Harcourt, Steve Keen, Grazia Ietto-Gillies, Emmanuelle Benicourt, Le Movement Autisme Économie. Alan Shipman, Peter E. Earl, Peter Söderbaum, Susan Feiner, Geoff Harcourt, Bernard Guerrien, Frank Ackerman, André Orléan, Edward Fullbrook, Deirdre McCloskey, Tony Lawson, Sheila C Dow, Kurt Jacobsen, Paul Ormerod, Geoffrey Hodgson, Ben Fine, Michael A. Bernstein, Julie A. Nelson, Jeff Gates, Anne Mayhew, Bruce Edmonds, Jason Potts, John Nightingale, Marc Lavoie, Jean Gadrey, Warren J. Samuels, Katalin Martinás, George M. Frankfurter, Elton G., McGoun, James G. Devine
London: Routledge,an imprint of Taylor & Francis Books Ltd (27 Mar 2003, paperback , 200 pages)


Here are more things seriously wrong with traditional economics that Post-Autistic Economics addresses.

“. . . the close to monopoly position of neoclassical economics is not compatible with normal ideas about democracy.  Economics is science in some senses, but is at the same time ideology.  Limiting economics to the neoclassical paradigm means imposing a serious ideological limitation.  Departments of economics become political propaganda centers . . .”
Peter Söderbaum

“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 that hobbles both their critical understanding of economics and their ability to appreciate the latest advances in mathematics and other sciences.  A minority of these ill-informed students themselves go on to be academic economists, and they repeat the process.  Ignorance is perpetuated”
Steve Keen

"Undergraduate economics is a joke -- macro is okay, but micro is a joke because they teach this stuff that you know is not true. They know the general equilibrium model is not true. The model has no good stability properties, it doesn't predict anything interesting, but they teach it ... "
Herbert Gintis

“The human economy has passed from an “empty world” era in which human-made capital was the limiting factor in economic development to the current “full world” era in which remaining natural capital has become the limiting factor “

Robert Costanza

“Most courses deal with an ‘imaginary world,’ and have no link whatsoever with concrete problems.” 
Emmanuelle Benicort

“All of these textbooks fail to explain how prices are determined in ‘markets’’ and thus how markets work.  Where do prices come from?  Who determines them?  How do they fluctuate?  These questions are never addressed, even though it is through the price mechanism that the ‘invisible hand’ is supposed to operate.”
Le Mouvement Autisme-Économie

“. . . mainstream economists seek knowledge through numbers to stop the messy reality of people, processes and politics dirtying their invisible hands.” 
Alan Shipman

“Multinationals are everywhere except in economic theories and economics departments.”

Grazia Ietto-Gillies

 “. . . the economist must engage him or herself as a citizen with convictions regarding the public good and ways of treating it, rather than as the holder of universal truth that he or she substitutes for discussion in order to impose it on us all.”
André Orléan

 “The Taliban, and its variety of fundamentalist thinking, has been the most controlling and oppressive regime with regard to women in contemporary times.  Contemporary academic economics, and contemporary global economic policies, are gripped by other rigidities of thinking – what George Soros has dubbed ‘market fundamentalism.’  Fantasies of control are operative in both phenomena, and gender is far from irrelevant to understanding their power, and their solution.”
Julie A. Nelson

“There is an urgent need for a more realistic economics of the environment, with theories and analyses that can help to create environmentally sustainable economic activity.” 

Frank Ackerman

“Modern economics is not very successful as an explanatory endeavour. This much is accepted by most serious commentators on the discipline, including many of its most prominent exponents”

Tony Lawson

“Because mathematics has swamped the curricula in leading universities and graduate schools, student economists are neither encouraged nor equipped to analyze real world economies and institutions.”

Geoffrey M. Hodgson

“. . . the concepts of uneconomic growth, accumulating illth, and unsustainable scale have to be incorporated in economic theory if it is to be capable of expressing what is happening in the world. This is what ecological economists are trying to do.”

Herman E. Daly

“The application of mathematics to economics has proved largely unsuccessful because it is based on a misleading analogy between economics and physics. Economics would do much better to model itself on another very successful area, namely medicine, and, like much of medicine, to adopt a qualitative causal methodology.”

Donald Gillies

“Economic history courses have been disappearing from classrooms across the world. Once a compulsory part of economics education, they have been relegated to the remote corners of ‘options’ and even closed down.”

Ha-Joon Chang

“In Smith is a forgotten lesson that the foundation of success in creating a constructive classical liberal society lies in the individuals’ adherence to a common social ethics. According to Smith, virtue serves as ‘the fine polish to the wheels of society’ while vice is ‘like the vile rust, which makes them jar and grate upon one another.’ Indeed, Smith sought to distance his thesis from that of Mandeville and the implication that individual greed could be the basis for social good. Smith’s deistic universe might not sit well with those of post-enlightenment sensibilities, but his understanding that virtue is a prerequisite for a desirable market society remains an important lesson. For Smith ethics is the hero-not self-interest or greed-for it is ethics that defend social intercourse from the Hobbesian chaos.”

Charles K. Wilber

“. . . conventional economics . . . remains fixated on the view that economics is the physics of society.  In other words, most of the profession behaves as if there were a single universally valid view of the world that needs only to be applied.” 

Paul Ormerod


real-world economics review
Formerly the post-autistic economics review
An emailed economics journal with 10,412 subscribers from over 150 countries

subscribe for free here  and receive by email each issue, beginning with the current no. 48

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More Back Issues


     Ecological Economics    Ethics    Heterodox Economics    Pluralism    Development

The Post-Autistic Economics Movement   A brief history

The Strange History of Economics

Policy Implications of Post-Autistic Economics

New Petition  (May 2008)

Network Resources

Some articles on the PAE Movement
     “Teaching Economics: PAE and Pluralism”, (EAEPE, July 2005)
     “Post-Autistic Economics”  (Social Policy, summer 2005)
     “Post-Autistic Economics”  (Soundings, April 2005)
Signifying nothing?”   (The Economist, Jan 29, 2004)
     “Revolutionizing French Economics”  (Challenge, Nov/Dec. 2003) pdf

     “Fired up for battle”  The Guardian (UK) 9 September 2003
     Taking On 'Rational Man'”
The Chronicle of Higher Education (US) 24 Jan. 2003
”The 2002 Nobel Prize in Economics” The Journal of Investing (US) Spring 2003
“The Storming of the Accountants” The New Statesman  (UK)  21 Jan. 2002
     “Post-autisten' vallen economische heilige huisjes aan De Morgen  (Bruxelles) 2 Mar. 2002
          English Translation
     “movimiento económico postautista IBLNEWS, 14 March 2002
     “Distorted economic relations: A new movement – the post-autistic economists
          want to renew economics”
Sueddeutsche Zeitung  (Munich) 3 April 2002

Some important PAE texts

     The Student Petition of Autisme-Economie  (June 2000)
French Petition for a Debate on the Teaching of Economics  (July 2000)
     Issue No. 1 of the post-autistic economics newsletter  ( September 2000)
A Contribution on the State of Economics in France and the World

          James K. Galbraith 

     Autistic Economics vs. the Environment
           Frank Ackerman 

     Humility in Economics

          André Orléan  )

     Real Science is Pluralist

          Edward Fullbrook 

     Teaching Economics Through Controversies

          Gilles Raveaud 

     Back to Reality

           Tony Lawson 
The Relevance of Controversies for Practice as Well as Teaching

           Sheila C Dow 

     Opening Up Economics

          The Cambridge 27

     Economists Have No Ears

          Steve Keen 

     An International Open Letter

         "The Kansas City Proposal" 

     How Did Economics Get Into Such a State?

          Geoffrey Hodgson 

     Why the PAE Movement Needs Feminism

          Julie A. Nelson 

     Kicking Away the Ladder: How the Economic and Intellectual Histories of Capitalism Have Been Re-Written

     to Justify Neo-Liberal Capitalism

           Ha-Joon Chang

     Economic History and the Rebirth of Respectable Characters
Stephen T. Ziliak

     Some Old But Good Ideas

          Anne Mayhew 

     An Alternative Framework for Economics

          Jason Potts and John Nightingale 

     Is the Concept of Economic Growth Autistic?
          Jean Gadrey 
     Toward a Post-Autistic Economics Education

          Susan Feiner 
     Is There Anything Worth Keeping in Standard Microeconomics?

          Bernard Guerrien 
     Doctrine-centered Versus Problem-centered Economics
          Peter Dorman 

     Social Being as a Problem for an Ethical Economics
          Jamie Morgan 

The Petitions

Student Essays on PAE

Two World Views: Ecological Economics vs. Environmental Economics

German Section

French Section

Portuguese Section

Spanish Section

Chinese, Flemish, Italian and Turkish Sections

The Perestroika Movement-a sister movement to PAE in political science


Some more articles concerning the PAE Movement

New Post-Autistic Economics Books

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 19th 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, ..............

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-- Technical Cooperation
-- Discussion papers
-- G-24 Discussion papers
-- Prebisch Lectures
-- Transnational Corporations
----- Journal

-- Publications Survey 2006-

World indicators on the environment

World Energy Statistics - Time Series

Economic inequality

Other related themes:
- Aid
- Bureaucracy
- Debt
- Decentralization
- Dependency theory
- Development
- Development Economics
- Economic Policies
- Employment/Unemployment
- Foreign Direct Investment
- Gender
- Human Rights
- Human Development
- Hunger
- Inequality/social exclusion
- Informal sector
- Labour Market
- Microfinance
- Migration
- Poverty
- Privatization
- State/Civil Society/

- Sustainable Development
- Transnational Corporations
- Urbanization

- Complete list of development themes

Comercio internacional
UNCTAD: Trade and development report 2001
                    Overview:   English
          Aperçu Général:  Francais
    Panorama General:  Castellano
                     Part Two:  Reform of the international financial architecture
CNUCD: Conferencia de las Naciones Unidas sobre Comercio y Desarrollo

Commerce exterieure
UNCTAD: Trade and development report 2001
                    Overview:   English
          Aperçu Général:  Francais
    Panorama General:  Castellano
                     Part Two:  Reform of the international financial architecture
CNUCD: Conference des Nations Unies sur le Commerce et le Developpement