How Heterogenous is Economics, Really?

9 June 2006 at 3:58 am 2 comments

| Nicolai Foss |

At seminars and conferences, I have often heard management scholars make the following kind of remark: "The economists think that management is fragmented, but look at economics itself. Economists disagree about virtually everything."

It easy to argue that this argument is entirely shallow, and is reflective of reading in the newspaper that this chief economist disagrees with that chief economist and generalizing this to the whole econ profession, while not understanding that economists hold a strong disciplinary core in common, and that disagreements tend to be over application and interpretation rather than about the most fundamental principles.  Seen in that light, economics is not fragmented, while management is, even absurdly so. (In fact, some of the management critics of  economics that we routinely blast here at O&M (i.e., Ghoshal, Pfeffer et al.) have a correct understanding of the unity of economics, even though their view of economics is entirely outdated).

However, increasingly the argument is being made by economists themselves, albeit mainly so-called "heterodox" economists that economics is changing from a situation in which a single paradigm held uncontested sway to a much more differentiated picture with multiple fundamentally different approaches.

Thus, evolutionary approaches exist and thrive, as does experimental economics, neuronomics, etc. These all in various ways make fundamental breaks with the reigning neoclassical orthodoxy.  A sophisticated statement of this is John B. Davis' just published paper, "The Turn in Economics: Neoclassical Dominance to Mainstream Pluralism."

Davis discusses "whether since the 1980s neoclassical economics has been in the process of being supplanted as the dominant research programme in economics by a collection of competing research approaches which share relatively little in common with each other or with neoclassical economics" (p.1.).

Davis' shortlist of such approaches includes neuronomics, evolutionary economics, behavioral economics, non-linear complexity theory, experimental economics, and game theory. The emergence of these approaches signal that "neoclassical economics … is not so much a failed programme as a finished one" (p. 16), in the sense that it simply has extinguished its potential for theoretical innovation.

Now, the inclusion of game theory in Davis' shortlist of approaches that are somehow "rival" to "neoclassical economics" makes one suspect that something may be wrong with the whole story. Many would argue that there is no variance what so ever between "ordinary" game theory and neoclassical economics.  Most of experimental economics also seems fairly close to mainstream neoclassical economics. The other approaches that Davis mentions certainly either builds off of neoclassical economics or includes it as somehow a special case (I would argue that this even holds for evolutionary economics).

If we turn the attention to graduate education in economics, variety seems to have decreased, rather than increased. Surely, there were huge differences between Chicago and MIT in the 1960s. These differences seem pretty non-existent. 

A possible conclusion is that the increasingly prevalent "increasing heterogeneity in economics" talk is really the wishful thinking of heterodox economists.

Entry filed under: - Foss -, Recommended Reading.

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2 Comments Add your own

  • 1. Peter Klein  |  9 June 2006 at 9:17 am

    Nicolai, I recently argued this very same point at a "heterodox" economics conference. One of the participants described the existence of a "heterodox mainstream," suggesting that heterodoxy is more widespread than previously acknowledged. He pointed out (correctly) that "mainstream" (a sociological category) and "orthodox" (a doctrinal category) are distinct. I responded that while I accept the distinction in principle, I don't see the relevance in practice. Who, I asked, is in this heterodox mainstream? The faculty who dominate the top journals, run the NBER, and staff the top economics departments are virtually all orthodox (and, by definition, mainstream). His examples were David Collander (at Middlebury College), Robert Frank (Cornell), Barkley Rosser (James Madison University), Vernon Smith (GMU), and a few others. I responded that those individuals are best described not as mainstream economists, but rather as bright eccentrics who are tolerated by their mainstream brethren, almost as window dressing to demonstrate the mainstream's openness and fairness.

    Further evidence comes from the mid-level research universities where I've spent much of my time. The economics departments at those institutions are, if anything, even less tolerant of heterodoxy than their counterparts at Ivy League schools. If mainstream means not what is taught at Harvard, but rather across a broad spectrum of research universities, then the link between orthodoxy and the mainstream is even tighter. (The same may not hold for liberal arts colleges, however.)

  • 2. Peter Boettke  |  14 June 2006 at 9:58 pm

    I have argued in several papers now (staring in 1996 with What is Wrong wtih Neoclassical Economics, but perhaps most fully in “Man as Machine: The Plight of 20th Century Economics”) that the nature of economic argument has changed so that the substantive content which separated MIT and Chicago in 1960s is not what matters any more, but instead the style in which propositions are discussed. In short, a form of formalistic historicism has taken over economics.

    This has coincided with a demotion of pure theory and a rise of empirical economics — which is supposed to adjudicate between the theories.

    This is reflected not only in the content of journals, but in the rankings of journals. Obviously the AER, JPE and QJE are still there, but look at the others and their relative placement. JET at one time was very important, less so today. See the discussion over at Marginal Revolution on the ranking of journals.

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