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This paper investigates Pure Neoclassical economics from a logical standpoint. After discussing validity criteria, it focuses on theoretical individualism, a core foundation of Neoclassical theorizing in all its variants. Careful analysis of this doctrine reveals that, while mathematically valid, it generates many propositional contradictions in all economic and social science theories grounded upon it. [ABSTRACT FROM AUTHOR]

Economic theory has two inter-related, desiderata — valid argumentation, and scientific explanations of relevant realities. This paper explores whether these objectives can be achieved with a widely-deployed form of Neoclassical economics. Applying arguments drawn from logic to this type of theorizing produces far-reaching conclusions. [ABSTRACT FROM AUTHOR]

Keen's fundamental criticism is that Neoclassical economics has developed an abstract theory describing a utopian economy, and that it is unable to explain: "the complex, changing world in which we live" (Keen [6], p. 139). Steve Keen ([6]) has written a book full of passion, which highlights the macroscopic limits of Neoclassical economics and specifies the fundamental points of a Manifesto for a New Economics. Based on the results of the simulations of Minsky's Financial Instability Hypothesis, Keen concludes that the functioning of an economy making use of bank money is opposite to what is claimed by Neoclassical economics. Some Constructive Comments on Steve Keen's Manifesto for a New Economics: The New Economics: A Manifesto, Steve Keen, Cambridge, Polity, 2022, 140 pp., £12,99, ISBN-10: 1509545298, ISBN-13: 978-1509545292. [Extracted from the article]

Modigliani considered himself a Keynesian economist, convinced that 'a private enterprise economy using an intangible money needs to be stabilized, can be stabilized, and therefore should be stabilized' (Modigliani [5], p. 1). In the intervening years, Modigliani was confronted with diverse research experiences, which Rancan reconstructs by paying particular attention to Modigliani's scientific network. Antonella Rancan's new book retraces the intellectual path of Franco Modigliani, from his early writings, including the famous article on Keynesian and classical economics (Modigliani [4]), to his contributions of the 1950s and 1960s.[1] In this way, Rancan offers relevant insights into the origins and development of the neoclassical synthesis of Keynesian macroeconomic thinking. [...] I resorted to the help of one of the most brilliant of the Keynesians here, Franco Modigliani [...] When Modigliani had finished sketching the outline of the Keynesian edifice I raised my objections. [Extracted from the article]

This article implies that the time is ripe for a new paradigm in economic theory comprising classical (Ricardian) and Keynesian elements of analysis. The central Section Five presents the basic equations of classical-Keynesian political economy, the price and the quantity equation, based on three constitutive principles: the classical labour value and surplus principles and the Keynesian principle of effective demand. Subsequently, two employment mechanisms implied in the super-multiplier relation, the classical-Keynesian quantity equation, are mentioned, the internal and the external employment mechanism. Section Seven provides an analysis of the actual situation on the basis of the external employment mechanism, associated with cumulative processes of increasing disequilibria and inequalities. Given this, it ought to be replaced by the internal employment mechanism, allowing for Keynesian employment and distribution policies (Section Eight). However, the internal mechanism can only be implemented if a new world economic order is brought about, based upon a supranational currency, that is, Keynes's bancor, to ensure balance of current account equilibria worldwide. Section Ten sets forth Keynes's social liberalism, the social philosophy underlying classical-Keynesian political economy, the fundamental social ethical value of which is the Common Good. Social Liberalism thus emerges as the alternative to Capitalism and Socialism. [ABSTRACT FROM AUTHOR]

If this is correct, why did the classical economists spend so much time creating more physical capital for economic growth when they could substitute capital with natural resources? Victor approaches many of these topics in an interesting way by covering different "debates" that Daly had with mainstream economists. We might want to blame Adam Smith's I Wealth of Nations i (1776) for economists' preoccupation with economic growth. [Extracted from the article]

Hence, starting with the original Maastricht Treaty and the various binding treaties of the Economic and Monetary Union (EMU) that ensued, according to Alain, this constraining structure imposed on national governments a "market" discipline that would destroy the "real" economy. Like Marx, Alain saw the state in its predatory role in favouring the private wealth accumulation of the economically powerful, and like Keynes he also saw the state in its role as a potential source of stability in reducing social anxiety and predation by promoting genuine social progress. Alain, on the contrary, fully embraced a theory of endogenous money, and as Lavoie ([4], p. 13) suggests, Alain was close to the horizontalist view of money as defended by Basil Moore ([5]). We have lost a truly special friend, Alain Parguez, who passed away peacefully on 5 April 2022, in Paris, at the age of 81. [Extracted from the article]

An encyclopaedia of feminist economics was published in 1999 (Peterson and Lewis [5]), and a review of developments during the first ten years of feminist economics was published in 2003 (Ferber and Nelson [3]). Alessandro Roncaglia has given us fundamental reflections on the methodological and conceptual canons that should be the cornerstones of a realistic vision of how economic theories have developed through time. The introduction of a feminist perspective into economic theory during the last two or three decades can be regarded as part of a general project to rethink economics, either as a revised version of neoclassical economics, or as a deep heterodox critique to neoclassical economics. [Extracted from the article]

Indeed, Kalecki's long-lasting contributions to heterodox economics is now well cemented; today, Kalecki is recognized not only as a contributor to heterodox economics, but as a founder as well. Without doubt, Kalecki had a profound impact on the development of heterodox and post-Keynesian economics, through his own writings but also through his influence on John Robinson, and in most recent years, perhaps more so than Keynes himself. Much has also been written about Kalecki's independent discovery of the principle of effective demand and other key features of Keynes's work prompting many to ask if Kalecki was "Keynesian before Keynes"? In turn, this has led some to ask whether Kalecki's work should be considered more foundational to post-Keynesian/heterodox economics than Keynes's, in particular the I General Theory i (Sawyer [27]). [Extracted from the article]

This article revisits the controversy between Böhm-Bawerk and Edgeworth. The crux of this debate revolving around value and cost lay in their views on labour exchange. Böhm-Bawerk and Edgeworth did not disagree on the basic principles underlying the causality between labour exchange and value-cost. Böhm-Bawerk stressed a decisive influence of social power relationships on labour time and Edgeworth apparently agreed. Böhm-Bawerk’s and Edgeworth’s observations on actual industrial relations and their theoretical arguments informing the controversy had variances. Such observation-theory discrepancies also appeared in their other work and were shared by other early neoclassical economists. Their efforts, with this contradiction, contributed to the moulding of a principle that de-individuates labour exchange. At the root of this process lay the fact that, despite their subjectivist approach, they failed to comprehend the distinctiveness of capitalistic labour exchange arising from worker subjectivity towards labour performance and employer countermeasures. The Böhm-Bawerk-Edgeworth controversy typically illustrates this crucial moment for the establishment of the neoclassical paradigm. [ABSTRACT FROM AUTHOR]

This article traces the complex intellectual path of Olivier Blanchard, a personification of the controversial evolution of macroeconomic research over the last three decades. After contributing to consolidation of the core of mainstream macroeconomics, Blanchard recently suggested ‘rethinking’ some of its key aspects to take stock of the lessons of the 2008 Great Recession, which he witnessed as the International Monetary Fund’s Chief Economist. This welcome discussion, which according to Blanchard should open mainstream macroeconomics to heterodox thinking, has so far produced a certainly interesting albeit theoretically contradictory synthesis and limited policy consequences. The most paradigmatic aspect of this rethinking of macroeconomics is represented by the abandonment in teaching of aggregate supply and demand in favor of a revival of the IS–LM model complemented by the Phillips curve. While this change of perspective does allow for the instability of ‘natural’ equilibrium to be emphasized, a deeper reading may prove incompatible with the neoclassical foundations of the mainstream approach. [ABSTRACT FROM AUTHOR]

The extensive critical literature on Thomas Piketty’s Capital in the Twenty-First Century is surveyed under nine headings. The first deals with the conservative argument that inequality in the distribution of wealth does not matter, since a rising tide lifts all boats. Second, it is claimed that Piketty’s prediction of continuously increasing inequality and the return of ‘patrimonial capitalism’ is unjustified. Third, the quality of the empirical evidence that he cites is questioned, on a number of quite different grounds. Fourth, some critics object that Piketty’s explanation of long-run trends in the distribution of wealth is too general and too theoretical. Fifth is the argument that he has used the correct (neoclassical) theory incorrectly, exaggerating the elasticity of substitution of capital for labour. Against this, post-Keynesian critics claim, sixthly, that Piketty is using the wrong theory, and should have drawn on the Kaldor–Pasinetti model of distribution and growth, and not the discredited neoclassical analysis. Seventh, Piketty has been criticised for ignoring the distribution of wealth in developing countries. Eighth, there is a wide range of objections to his most striking policy proposal, for a progressive global wealth tax. Finally, several critics from outside economics complain that Piketty has neglected a number of non-economic dimensions of inequality. I conclude by welcoming both the book and the critical literature, and calling for the distribution of wealth to be placed back on the political agenda. [ABSTRACT FROM PUBLISHER]

This article takes a fresh look at reswitching. When two production techniques are compared, reswitching occurs when one technique is more viable than the other at a high interest rate, switches to being less viable at a lower rate, and reswitches to being more viable again at even lower rates. For some, reswitching undermines the foundations of neoclassical economics because it belies the idea of a monotonic relationship between relative capital values and factor price. The reswitching equation is an nth degree polynomial having n roots, implying the existence of n interest rates. Conventional analysis uses one interest rate but ignores the others. We argue that the others should not be ignored because all rates are determined simultaneously, and when one rate shifts, all rates shift. We demonstrate that the Samuelson reswitching model possesses a ‘dual’ expression containing every interest rate, the rates being compressed into a composite, interest-rate variable, thereby establishing a role for interest rates previously thought lacking in use and meaning. The relationship between this composite interest rate and capital value does not exhibit reswitching. The notion of a composite interest rate has implications for economics beyond reswitching. [ABSTRACT FROM PUBLISHER]

Recent mainstream macroeconomic models take Say's Law for granted. This paper argues that the justification for this assumption is not found in general equilibrium theory but in the ‘neoclassical-synthesis’ (and then monetarist) criticism of Keynes, which relies in a fundamental way on a treatment of investment that turns out to depend not only on neoclassical capital-labour substitution (called into questioned by the Cambridge controversies) but also on an assumption of full labour employment that on the contrary should be a result of the analysis. This paper first criticizes the attempt to justify a negative interest-elastic investment function through adjustment costs, that is, without relying on traditional neoclassical capital-labour substitution, with special attention on the treatment in Romer's advanced textbook. Then it proceeds to its new contribution, the demonstration that an endogenous determination of labour employment raises questions about the capacity of decreases in the real wage to raise employment even accepting neoclassical capital-labour substitution, because when the latter is correctly understood the rate of interest does not suffice to determine investment; hence, there is an inevitable role for the accelerator (and Say's Law is thereby undermined). This was perceived by Dornbusch and Fischer but they did not realize that then reductions of real wages will reduce investment instead of raising it. Thus, the ‘neoclassical synthesis’ reply to Keynes is undermined even apart from the inconsistencies of neoclassical capital theory. So the paper exposes a deficiency of the neoclassical arguments in support of a tendency toward full employment, additional to the inconsistencies revealed by the capital critique. [ABSTRACT FROM AUTHOR]

Non-orthodox economists generally share the Keynesian Hypothesis of the independence of investment from capacity savings, in the long run no less than in the short run. This hypothesis marks an essential point of difference from neoclassical theory. Keynes showed that within the limits of the existing capacity utilisation, investment determines savings rather than the other way around. How best to extend this conclusion to the long run is the object of the current paper. The paper assesses the controversy on demand-led growth that has taken place since the mid-1980s between neo-Kaleckian and Sraffian authors. The Sraffian front may be divided into a first and a second Sraffian position, the latter being the Sraffian supermultiplier approach. I shall argue that this second approach is the most promising framework for analysing economic growth. [ABSTRACT FROM PUBLISHER]

This paper examines the reasons for the difficulties Post Keynesian economics has had in supplanting mainstream neoclassical theory and for its resulting marginalization. Three explanations are given: intellectual, sociological and political, where the latter two are largely responsible for the current relationship of Post Keynesian economics to the mainstream. The paper also reviews various strategies for improving the future of Post Keynesian economics, including a focus on methodological issues by maintaining an ‘open systems’ approach; a strategy of ‘embattled survival’; the development of a positive alternative to mainstream economics; a strategy of ‘constructive engagement’ with the mainstream; and a dialogue with policymakers. While the global financial crisis has increased the potential for constructive engagement with the mainstream, significant barriers remain to the effectiveness of this approach. The crisis has, however, enhanced the possibility of engaging directly with policymakers and gaining a greater role in management education. [ABSTRACT FROM PUBLISHER]

The paper reviews and assesses the negative and positive advice which has been offered by various fellow economists to heterodox economists in general, and Post-Keynesian economists in particular, in light of changes that have occurred within neoclassical economics and in light of the rising hegemony of mainstream economics in economics departments. Various strategies are considered, among which is more engagement with orthodox dissenters, but it is concluded that the majority of heterodox economists ought instead to engage more with other heterodox economists and possibly other social sciences, developing and expanding their own agenda around real-world problems. [ABSTRACT FROM PUBLISHER]

This article argues that the neoclassical era in economics has ended and is being replaced by a new era. What best characterizes the new era is its acceptance that the economy is complex, and thus that it might be called the complexity era. The complexity era has not arrived through a revolution. Instead, it has evolved out of the many strains of neoclassical work, along with work done by less orthodox mainstream and heterodox economists. It is only in its beginning stages. The article discusses the work that is forming the foundation of the complexity era, and how that work will likely change the way in which we understand economic phenomena and the economics profession. [ABSTRACT FROM AUTHOR]

This paper explores the early discussion of external economies in the work of Alfred Marshall and Arthur Pigou. Marshall emphasized external economies as a positive aspect of the market process. Pigou's interpretation of externalities has become the standard public finance argument on the existence of market failure, and provides the rationale for proposed policy solutions. An examination of the differences between the two perspectives is subsequently used as the base for a discussion of the modern analysis of research and development, and of the difficulties inherent in the standard Pigovian view. A final substantive section of the paper reconsiders the Marshallian perspective, identifying recent contributions to economic theory that have begun a return to Marshall's original interpretation. The conclusion considers the significance of this Marshallian tradition for industrial policy. [ABSTRACT FROM AUTHOR]

This paper argues that economists would be well advised to do the work that Jacques Derrida calls 'choosing one's inheritance'. This fundamental task, which every heir must undertake, consists essentially of responding to a twofold and contradictory injunction: reasserting a past that the heir did not choose; and reinterpreting and transforming this past through a process of critical rewriting. We argue that this task, particularly the work of critical selection and rewriting, is too often neglected in economics. The fact that the property of path-independence is embedded in the great majority of economic models serves as an illustration of this negligence. Because of their desire to emulate the natural sciences, the neoclassical 'founding fathers' of modern economics bequeathed to their successors this essential property of the physics of their time. A consequence of this inheritance, coupled with the neglect of critical selection and rewriting by economists, is that the properties of path-independent systems - homeostasis and time-reversibility - continue to thrive in the great majority of economic models. [ABSTRACT FROM AUTHOR]

Policy implementation calls for efficiency. But because policy concerns range over broad social and political-economic areas, the efficient pursuit of one particular goal may conflict with the realization of some other, equally important social interest. Hence, efficiency for its own sake cannot be a policy goal. Giving special attention to the development process, the paper discusses the problems and contradictions that arise when policymakers working in a framework of neoclassical economic theory attempt to deal with issues of equity, stabilization, markets and trade. Starting with the limitations of market efficiency when conventional requirements of social welfare as well as social and environmental sustainability are taken into account, it is argued that a more meaningful concept of social efficiency can be obtained with the help of the human development indicators elaborated by the United Nations Development Program, augmented by the sustainability indicators developed by the European Union and others during the last decade. [ABSTRACT FROM AUTHOR]

The article presents the author's response to the comments made to his article "Value, distribution and capital: a review essay." He agrees with the commentators with the acceptance of neoclassical economic theory as the basis for scientific investigation of political economic questions despite the fundamental flaws in its theory of distribution and capital. However, he clarifies the issue of the core and its significance in classical theory and in the history of thought.

The article presents the author's response to the comments made by Professor Duncan Foley on his article on the theoretical world of the old classical economists. The author focuses on the issues raised, including the structure of classical theories and the existence of an analytical core, the quantity of capital in neoclassical theories, and the implications of the classical approach for policy analysis or economic policy.

This article points out the limits of Austrian economics as far as the passage from positive to normative economics is concerned. We propose a comparison with neoclassical economics and discuss the different theoretical solutions adopted by these two schools of thought in their legitimization of the normative discourse. The bridge from positive to normative economics is analyzed as resting upon two interdependent pillars, one of a technical nature, the other of an ethical one. In neoclassical theory, these two pillars are, respectively, the Pareto principle and the so-called minimal benevolence principle. In the case of Austrian economics, they are the coordination principle and a set of value judgments considered to be 'quasi-universal'. One problem for Austrian economics is that the coordination principle turns out to be incompatible with process analysis, the latter being a central tenet of the Austrian theory. A second problem, which creates serious difficulties for both schools, has to do with distribution. Our thesis is that whereas the neoclassical solution of the distributive problem is formally consistent (although deeply unrealistic), the Austrian solution is theoretically untenable and based on strong, although implicit, value judgments. [ABSTRACT FROM AUTHOR]

This paper argues that the naïve adoption of an Anglo-American approach to the management of credit risk as the prescription for Japan's prolonged financial slump would amount to a very risky strategy. The neoclassical arguments for the adoption of Basle-type pragmatism and the adoption of Anglo-American financial norms neglect the important question of how to manage Japanese lenders' uncertainty, which affects their assessment of credit risk. We point out that an ill-planned transition without mechanisms for diversifying risk and uncertainty has encouraged herd behavior in lending. We also argue that Japan's traditional rent-based mode of financial intermediation and monitoring performed important functions, including the incubation of new enterprises, and should have been retained in alternative form rather than abandoned. [ABSTRACT FROM AUTHOR]

New Zealand has gained considerable international attention for the neo-liberal economic reform programme it enacted from the mid-1980s; this programme has served as a model for similar reform elsewhere. Within the neoclassical framework of the reformers, the programme has produced many improvements to the economy. Such fundamental indicators as lower inflation, lower budget deficits and higher economic growth are cited as evidence of the improved economic conditions. Yet unemployment remains high, real interest rates are among the highest in the world, nominal interest rates and business confidence fluctuate considerably, and the balance of payments is deteriorating. Using a classical framework, this paper examines the neo-liberal reform of the New Zealand economy to see if there are alternative explanations for the persistence of these problems. The methodology developed by Shaikh & Tonak (1994) is used to map official national accounts data to classical economic categories for the 1972 to 1995 period. This approach is compared with earlier attempts at estimating classical economic categories for New Zealand. This classical view of the economic reforms is compared with the conventional view. The paper's main results are that there was a large increase in unproductive economic activity associated with the economic reforms in New Zealand; that the improvement in economic fundamentals emphasised by the reformers reflects this growth of unproductive activity; and that the persistence of other economic indicators is related to the ongoing weakness of productive activity. [ABSTRACT FROM AUTHOR]

Discusses the implication of reverse capital deepening for neoclassical economic theory, placing special emphasis on the role of the numeraire. Surplus approach of the classical economists; Analogy between capital or land and labor; Meaning of taking the quantity of capital as given in value terms.

Asserts that the Neoclassical Model in economics does not provide the basis for rejecting on a priori theoretical ground, the possibility that technological change can reduce equilibrium employment. Demonstration of this argument at the various levels of the economy; Supporters of this view; Factors which affect employment.

Examines the opening passage on the present position of economics as presented in P. Straffa's 1926 work `The Laws of Returns Under Competitive Conditions.' Focus of the paper; Evaluation of the Marshallian supply curve; Examination of Marshall's supporting work; Straffa's main criticism of Marshall; How Straffa's 1926 work should be viewed.

The behaviours of economic operators may be directed by goals and rationality criteria other than those postulated by neoclassical theory. Under certain conditions, the existence of deviant goals and rationality criteria, far from being eliminated by the process of 'natural selection', has a profound effect on market functioning. It alters the 'natural selection' criterion and thereby influences the market trajectory. It can also favour the development of specific mechanisms of co-ordination. Our hypothesis is illustrated by an analysis of the cultural markets. [ABSTRACT FROM AUTHOR]

So far the main successes of the surplus approach have been in providing a critique of certain variants of neoclassical theory (and to a lesser extent, of Marxian value theory). There has been much discussion of the parameters defining the framework of the new theory, but, apart from the analysis of long-period prices, not much constructive work has been done. For example, there has been little analysis of the determinants of accumulation, investment or employment within that framework. It is our contention that Kalecki's analysis can fill this gap; this paper attempts to locate Kalecki's analysis within the surplus approach, and suggests that his analysis solves many of the difficulties within that framework. [ABSTRACT FROM AUTHOR]

The mainstream neoclassical theory of the state is based on the assertion that the state in market economies is neutral, in the sense of being a mere reflector of the collective will and a mechanism of conflict resolution/consensus building. Rival theories such as the 'Marxist', 'Austrian', 'Chicago school' and 'public choice school' reject this idea, without however providing an analysis of the very notion of the possibility of state neutrality. Rather than choosing between two assertions, this paper attempts to attack the notion of state neutrality per se, Based on the defences of the neutrality concept by pluralist political theorists and by economists, we identify three different types of state neutrality - weak neutrality, consensual neutrality and structurally induced neutrality. We argue that in the presence of distributional inequities none of these concepts is realistic or satisfactory. [ABSTRACT FROM AUTHOR]

Work of institutionalists, both old and new, is usually compared to that of other economists. Here it is compared to developments in other social sciences. Old institutionalism is based on a strategy of seeing mankind as product of culture; old institutionalism is part of culture-based twentieth-century social science. New institutionalism has developed in a period when the trend is to favour a view of mankind as 'rational chooser'. In part this trend reflects an adoption of the models of neoclassical economics by other social scientists. Parallels in the development of the new institutionalism and the development of choice-focussed approaches in other social sciences are too many and too close to be coincidental, but there are no simple explanations of why the two developments are so similar. Comparison of the two contexts does, however, allow clarification of debates over rationality and endogeneity of institutions. It also leads to the conclusion that the questions asked in the two institutionalisms are so different that there is no common measure of the effectiveness of the old and new institutionalisms. [ABSTRACT FROM AUTHOR]

This paper's central concern is to assess the cogency of the public-choice perspective on politics. The paper is in three main parts. In the first part, I sketch out the market failure-benevolent government tradition within public sector economics; a tradition which came to give the state a major role in economic affairs. In the second part, I set down the essential principles of public choice theory. This section of the paper is sharply critical of the market failure-benevolent government tradition and is concerned to apply the model of individual behaviour, and the method of science integral to neoclassical economics to the material of politics, pointing to the importance of political failure by essentially selfish governments. In the third part, I identify four aspects of the public-choice perspective that I see as problematic in enabling us to advance a good understanding of politics. First, I deal with the testing of public-choice predictions; secondly, i explore the conception of explanation caught up in public-choice work; thirdly, t question the utility of public-choice assumptions; and fourthly, I attend to the implications of the values that seem to be central to the perspective of public-choice theorists. In a concluding section I point to the need for concrete research and open debate, I suggest that students of politics need to focus on the state and argue that we can best advance understanding of particular states by attending to the significance of constitutions and looking to the insights provided by constitutional theory. [ABSTRACT FROM AUTHOR]

The article offers a response to a commentary made by Bertram Schefold on the authors' paper. It states that the neoclassical theory of perfect competition may be impressive from the viewpoint of mathematical rigor and formal results, but it is empty from an empirical viewpoint. According to the authors, their framework is compatible with Schumpeterian and Marxian ideas of technological evolution in contrast to the Sraffian approach.