Wednesday, March 24, 2021

(Neoclassical) Economics and Economists

 

It is fair to say that what passes for economics at almost all levels could be called neoclassical economics.

Economics is a field. Neoclassical is an approach to that field. Probably every economist you've met is neoclassical (although Dave Berri has his doubts about this approach). Probably every economist you've ever heard speak is a neoclassical economist.

While the neoclassical approach was cemented into place more recently, this is the tradition that goes back to Adam Smith, and comes down to us through most of Ricardo's work, Bentham, the Mills, Marshall, Jevons, Menger, Clark, Walras, Pigou, Keynes, most of the Nobel Prize winners, and so on.

It has a number of characteristics. At the individual level, people try to do the best they can. They optimize. They are also rational, in that there is some internal consistency in how they combine doing the best they can along different dimensions of their lives. Firms behave the same way. Firms and individuals make jointly voluntary exchanges which make them both better off. Market failures do happen, and there is a role for government to correct them; although the self-interest of government officials might get in the way.

Neoclassical economics definitely qualifies as WEIRD (look that up in the Handbook). It is an intellectual tradition that started out English, but is now thoroughly American too. It is dominant in all the English speaking countries, Japan, Hong Kong, the Scandinavian countries, the Netherlands, Estonia, and it's becoming dominant in Spanish speaking countries both in Europe and Latin America. Its dominance is less total in other parts of the world, but it's often still there.

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