Economics as a science -or viewed from the perspective of scientists in other fields

Vergés-Jaime, Joaquim (2020): Economics as a science -or viewed from the perspective of scientists in other fields. Published in: CADMUS , Vol. 4, No. 2 (July 2020): pp. 247-257.

Abstract

The aim of this article is to underline that the core paradigm of mainstream economics, the economics’ standard model (ESM), rests upon an explanatory theory that draws on deductive assumptions which are not supported by what observations of the reality of market economies show us; either in the present day or historically. A theoretical setting, therefore, that fails to provide a proper explanation of how our economic system –a market economy based on private firms, or capitalist– operates in reality. Or that it does not explain it well for the vast majority of cases, goods, sectors or markets. Something which, moreover, I am far from being the first one to highlight. That ‘deficiency’ of the ESM has relevant implications. It is something more than a pure theoretical issue. The fact that this explanatory model (much dominated by microeconomics) postulates that the ‘free-play market’ leads spontaneously to an optimum of social utility (a general equilibrium of efficient markets), has nevertheless implications beyond the economic discipline. In the political arena, neoliberalism draws on this theoretical postulate to defend its principles of no (or minimum) intervention by governments in the economy, and of no (or minimum) regulation of markets. I. e., to defend what lies behind the well-known expression ‘the less State the better’: minimum public expenditure, minimum taxes. And, furthermore, this general equilibrium model that supports such a postulate dominates the way economics is customary taught, i.e., how the workings of a market economy is explained in textbooks and in university classrooms.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economics epistemology, Mainstream economics, Economics’ explanatory role, Scientific method, General Equilibrium model, Empirical testing of assumptions, Reality-based Economics
• Subjects: A - General Economics and Teaching > A1 - General Economics > A11 - Role of Economics ; Role of Economists ; Market for Economists; A - General Economics and Teaching > A1 - General Economics > A13 - Relation of Economics to Social Values; A - General Economics and Teaching > A2 - Economic Education and Teaching of Economics > A20 - General; B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B20 - General; B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology > B40 - General; D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles; D - Microeconomics > D2 - Production and Organizations > D20 - General; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D50 - General

References

Arrow, K. J. (2000) “Increasing returns: historiographic issues and path dependence”, The European Journal of the History of Economic Thought; 72:2, 171-180.

Beckenstein, A. R. (1975) “Scale Economies in the Multiplant Firm: Theory and Empirical Evidence”, The Bell Journal of Economics, Vol. 6, No. 2, pp. 644-657.

Blaug, Mark (1968), Economic Theory in Retrospect, (1st. ed., revised), and (1985, 4th ed.) Cambridge University Press.

Cohen, A. J. (1983) “The laws of returns under competitive conditions: progress in microeconomics since Sraffa (1926)?”, Eastern Economic Journal, 9(3): 213–20.

Cohen, A. J. (1996) ‘Why haven’t introductory textbooks resolved Sraffa’s 1926 complaints? , in N. Aslanbeigui and M. I. Naples (eds), Rethinking Economic Principles: Critical essays on introductory textbooks, Chicago, IL: Irwin, pp. 81–91

Fullbrook, Edward (2004), A Guide to What’s Wrong with Economics, Anthem Press.

Klein, Philip A. (2006), Economics Confronts the Economy, Edward Elgar

Lancaster, K., (1981), Economía Moderna 1, Alianza Editorial

Mansfield, Edward (1994), Microeconomics: theory & applications (8th. edition), W. W. Norton

Mas-Colell, A., Whinston, M. D. and Green, J. R. (1995), Microeconomic Theory, Oxford University Press.

Shepherd, W. G. and J. M. Shepherd (2004), The Economics of Industrial Organization, 5th edn, Long Grove, IL: Waveland Press.

Sraffa, P. (1926) ‘The laws of returns under competitive conditions’, Economic Journal, 36(4): 535–50.