Simon Wren-Lewis — Why the microfoundations hegemony holds back macroeconomic progress

When David Vines asked me to contribute to a OXREP (Oxford Review of Economic Policy) issueon “Rebuilding Macroeconomic Theory”, I think what he hoped I would write on how the core macro model needed to change to reflect macro developments since the crisis with a particular eye to modelling the impact of fiscal policy. That would be an interesting paper to write, but I decided fairly quickly that I wanted to say something that I thought was much more important.

In my view the biggest obstacle to the advance of macroeconomics is the hegemony of microfoundations. I wanted at least one of the papers in the collection to question this hegemony. It turned out that I was not alone, and a few papers did the same. I was particularly encouraged when Olivier Blanchard, in blog posts reflecting his thoughts before writing his contribution, was thinking along the same lines.… 

Mainly Macro

Why the microfoundations hegemony holds back macroeconomic progress
Simon Wren-Lewis | Professor of Economics, Oxford University

Peter Söderbaum — Redefining economics in terms of multidimensional analysis and democracy

A proposed new theoretical perspective starts with a partly different definition of economics:

“Economics is multidimensional management of (limited) resources in a democratic society”

Why “multidimensional” management? Multidimensional goes against the one-dimensional analysis of neoclassical theory and method. “Monetary reductionism” is no longer accepted. The idea that we should put a monetary price on all impacts, ecosystem services included, to make them commensurable and tradeable, is abandoned. Instead impacts of different kinds are kept separate throughout analysis. And non-monetary impacts are viewed as being as “economic” as monetary ones. This may make analysis more complex but also more relevant.…

Bringing trans-disciplinarity, social value, and quality of life into economic thinking at the foundational level.

Why reference to a democratic society? When reading neoclassical introductory textbooks in economics it becomes clear that “democracy” is not a theme taken seriously. These texts rather reflect an emphasis on economists as experts, i.e. a kind of technocracy....

Real-World Economics Review Blog
Redefining economics in terms of multidimensional analysis and democracy

Peter Söderbaum | Professor Emeritus In Ecological Economics,
Mälardalen University, Sweden

Peter Radford — Why Mainstream Economic Models Make Little Sense

My criticism of the use of models in economics is then not one of a denial of the value of models. It is directed at the selection of them. More to the point it is directed at the severity of the exclusion of zones of our experience that fall outside of our theoretical study because those zones are less tractable to our modeling technique. We have become monotheistic in our beliefs. Polytheism is frowned upon.

This is despite one of the great lessons of evolution: that diversity of approach gives the greatest chance of the location of solution. Economists have limited their options by reducing their subject to that set of issues most easily modeled according to the discipline’s self-referential code of modeling. And, further, they describe the problems they set out to solve in such a way as to produce results from their tests that conform to a prior code of acceptability.

So the code of modeling limits the usable technique, and the code of acceptability limits the range of problem. This duality then combines to define the discipline. Economics thus becomes defined as the subject that theorizes about problems tractable to the preferred technique.…

Evonomics
Why Mainstream Economic Models Make Little Sense
Peter Radford

Jason Smith — Utility maximization and crystal spheres

 Clever and important. Smackdown with a smile.

Information Transfer Economics
Utility maximization and crystal spheres
Jason Smith