May 20, 2015

Modern economics is dead

Comment on Mark Blaug's 'Modern economics is sick'


The sickness of economics started with Jevons/Walras/Menger and the complaints about it, too. However, Schumpeter told us: “If we feel misgivings ..., all we have to do is to start appropriate research. Anything else is pure filibustering.” (1994, p. 577)

Blaug told us: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (1998, p. 703)

The first thing that has to go is the ‘totem of the micro’, that is, supply-demand-equilibrium. Here is the three-dimensional market of Constructive Heterodoxy (2015)#1:

Egmont Kakarot-Handtke

Blaug, M. (1998). Economic Theory in Retrospect. Cambridge: Cambridge University Press, 5th edition.
Kakarot-Handtke, E. (2015). Essentials of Constructive Heterodoxy: The Market. SSRN Working Paper Series, 2547098: 1–10. URL
Schumpeter, J. A. (1994). History of Economic Analysis. New York, NY: Oxford University Press.

#1 For the formal foundations and the new curriculum see cross-references.