[PEN-L:8368] Re: Re: Re: Thomas Friedman an economist?

[Peter Dorman <dormanp@xxxxxxxxxxxxxxxxxxx>]

At the risk of being really reductionist, I think I can sum up neoclassical
economics in one sentence: it is the approach to analyzing economic life which
uses the metaphor of exchange universally and exclusively.  I think everything
else follows from this.

Other characteristics that have been attributed to NCE are jettisoned when they
conflict with the exchange template.  For instance, treating "the firm" as an
atom is methodologically collectivist, but that is what is required to depict
many activities in the economy as pure exchanges.  (In other contexts NC
economists are free to look at "exchanges" within the firm, and subatomic
particles can re-emerge.)

Peter

Jim Devine wrote:

> Brad writes: >... Neither Bill Clinton nor Thomas Friedman is a
> neoclassical  economist. Each of them thinks in a very different manner
> than we neoclassical economists do...<
>
> it's important to separate "neoclassical economics" (from Samuelson to Sen)
> from the "liberal political world-view" (as seen in Clinton's and
> Friedman's work). The former is infused with the latter ideology, so that
> they are hard to separate in practice, but they are not the same.
>
> Since it evolves over time, neoclassical economics is hard to pin down. But
> I think that Phil Mirowski's general definition works. Modifying his
> definition a bit, neoclassical economics:
>
> 1.employs mathematical modeling rather than institutional analysis or
> historical evidence as its main tool for understanding the world (formalism);
>
> 2. claims to be "scientific" in a positivist or Cartesian way, in imitation
> of idealized natural science (positivism);
>
> 3. utilizes constrained maximization, equilibrium, and comparative statics
> as its main analytical pillars (equilibrium economics);
>
> 4. emphasizes individual utility-maximization (consistent goal-seeking) as
> the determinant of human behavior (utilitarianism);
>
> 5. always seeks out microfoundations, i.e., solely individual explanations
> of aggregate phenomena (reductionism, methodological individualism); and
> finally,
>
> 6. leaves many of the most important variables, such as tastes and
> technology, as exogenously determined by ature or other forces outside of
> the economist's concern (naturalism).
>
> To Mirowski's list, I would add a final tenet, hopefully as a friendly
> amendment. To neoclassicals,
>
> 7. institutional forms in the economy are either to be explained as
> exogenous impositions, from, say, the political sphere, or as explainable
> in terms of individual preferences and technology, along with such
> "natural" phenomena as incomplete information and transactions costs.
>
> On the other hand, the broad vision of liberalism (which includes the
> classical _laissez-faire_ liberalism or Mrs. Thatcher and Ronnie Raygun and
> Milton Friedman and the technocratic liberalism of Bill Clinton or Lawrence
> Summers) can be defined by can be defined by its primary question:
>
> Given a large number of atomized and roughly equal self-interested
> individuals (or households) and natural constraints, what institutions and
> policies allow a society to attain the common good? Following
> methodological individualism, the liberal view starts with the "private"
> sphere of individuals (or households), presumed to be isolated and to exist
> prior to the whole, and then develops or derives the "public" sphere of
> collective activity.
>
> The basic (constitutional) decision about institutions, aimed at solving
> the problem of the conflict between individual interests and the public
> interest, is made by a social contract (sometimes hypothetical or tacit, as
> with John Rawls). The social contract involves an agreement among
> individuals concerning the basic issues of the nature and distribution of
> property and power. The basic assumption is that underlying the hurly-burly
> of competition among the variety of viewpoints and interests is a basic
> societal consensus, since otherwise liberals could not talk about the
> "public interest" or the "common good." Typically, liberals follow John
> Locke to assume that the preservation of pre-existing property rights is
> part of this consensus. However, most do not go all the way with
> _laissez-faire_ since property-owners can benefit from some restrictions on
> their property rights.
>
> Note also, that (following Locke), property does not simply include land,
> stocks & bonds, means of production, etc., but also the individual's own
> life and liberty.
>
> Jim Devine jdevine@xxxxxxxxxxxxxxx &
> http://clawww.lmu.edu/Faculty/JDevine/JDevine.html