|
July 9, 2006
It is difficult to come to grips with neo-classical economics because it keeps on changing or evolving. One way to pin it's formal models and number-crunching down is through its key axiomatic assumptions --that constitute its metaphysics or ontology. So argue Christian Arnsperger and Yanis Varoufakis in their paper What Is Neoclassical Economics? One influential strand of criticism is that neo-classical economics is an ideology, associated with the policies of neo-liberalism by which is meant the laissez faire endorsement of the "free market." It highlights the particular conceptions of reality with which economists conduct their work.
Arnsperger and Varoufakis say that the first such presupposition is methodological individualism. Neoclassical theory retains its roots firmly within liberal individualist social science. The method is still unbendingly of the analytic-synthetic type: in that the socio-economic phenomenon under scrutiny is to be analysed by focusing on the individuals whose actions brought it about; understanding fully their 'workings' at the individual level; and, finally, synthesising the knowledge derived at the individual level in order to understand the complex social phenomenon. What is downplayed is the economic agent being a creature of her social context, and that social structure and individual agency are messily intertwined.
The second presupposition is methodological instrumentalism: that all behaviour is preference-driven or, more precisely, it is to be understood as a means for maximising preference-satisfaction. Preference is given, current, fully determining, and strictly separate from both belief (which simply helps the agent predict uncertain future outcomes) and from the means employed. In effect, neoclassical theory is a narrow version of consequentialism in which the only consequence that matters is the extent to which an homogeneous index of preference-satisfaction is maximised.
The third presupposition is the axiomatic imposition of equilibrium. Even after methodological individualism turned into methodological instrumentalism, prediction at the macro (or social) level was seldom forthcoming. Determinacy required something more: it required that agents’ instrumental behaviour is coordinated in a manner that aggregate behaviour becomes sufficiently regular to give rise to solid predictions. Thus, neoclassical theoretical exercises begin by postulating the agents’ utility functions, specifying their constraints, and stating their ‘information’ or ‘belief’. Then, and here is the crux, they pose the standard question: “What behaviour should we expect in equilibrium?”
It is true that Arnsperger and Varoufakis talk in terms of metholodolgy, as opposed to metaphysics or ontolgy, but the use of axioms is appropriate because it is upon these core axioms of individualism, instrumentalism and equilibration that the theoretical structure of neo-classical economics is systematically constructed to explain the allocation of scarce resources among alternative ends. It becomes a perfectly enclosed and self-referential system like mathematics.
As Thomas Kuhn, and other historians and philosophers of science, attest, every paradigm is a selective device, making a particular kind of informational demand on the multi-layered nature of reality, and deliberately excluding other aspects of it.
|
Your one of those Acedemics that gets bursaries for free, and merely comments on existing knowledge. Attempts to make no progress of his own. Thusly I criticize you.