On the Need for New Economic Foundations: A Critique on Mainstream Macroeconomics

Hoffman, Robert
October 2012
Cadmus;Oct2012, Vol. 1 Issue 5, Part 1, p74
Academic Journal
The body of macroeconomic theory known as the neoclassical-Keynesian synthesis, hereafter mainstream macroeconomics, has dominated the practice of economics since the middle of the twentieth century and is largely unchallenged in institutions that teach economics. Not only does mainstream macroeconomics underlie monetary and fiscal policies intended to promote economic growth, full employment, and price stability, but it also provides the lens through which economic activity is measured and performance is evaluated. Most importantly, it has spawned a generally accepted ideology or conventional wisdom that frames economic issues and 'acceptable' policy responses to them. Woe to the economist or politician who strays beyond the constraints imposed by the beliefs emanating from this body of theory. Mainstream economic theory has always had its critics, but the failure of mainstream economists to predict the collapse of 2008 and the failure of the policy responses to the crisis have stimulated a new round of criticism. This paper surveys a range of criticisms made by economists and non-economists alike and finds that grounds exist for the rejection of mainstream macroeconomic theory. It is mathematically incoherent and irrelevant insofar as the assumptions upon which it is based are not supportable; its concepts are abstract and not measurable, and not capable of addressing the real questions of sustainability, economic stability, power, justice, and equity that affect the human condition. The conclusions reached are: 1) mainstream economic theory took a profoundly wrong path in the mid-twentieth century 2) foundations for a new synthesis of economic thinking are needed capable of addressing the issues that emerged in the late 20th century and integrating findings from other sub-disciplines of economics and other sciences.


Related Articles

  • LA REVOLUCIÓN DE LOS NUEVOS CLÁSICOS: REDES, INFLUENCIA Y METODOLOGÍA. Salazar, Boris; Otero, Daniel // Revista de Economía Institucional;Primer Semestre 2015, Vol. 17 Issue 32, p39 

    The New Classical Revolution has been told as the story of a sudden and unstoppable assault on the Keynesian paradigm that attained immediate unanimity among macroeconomists due to its irresistible scientific method. After following the citation network of the seven articles on macroeconomic...

  • GENERALIZING THE TWO-SECTOR KEYNESIAN AND NEOCLASSICAL MACROMODELS. Benavie, Arthur // Southern Economic Journal;Jan77, Vol. 43 Issue 3, p1218 

    It is our purpose in this paper to argue that both the Neoclassical and the Keynesian models have defects which may render them inappropriate as analytical tools for analyzing short-run macro behavior.
    In this paper, we generalize both models as instruments for analyzing the short-run. We...

  • THE SPREAD OF KEYNESIAN ECONOMICS: A COMPARISON OF THE BELGIAN AND ITALIAN EXPERIENCES (1945-1970). MAES, IVO // Journal of the History of Economic Thought (Cambridge University;Dec2008, Vol. 30 Issue 4, p491 

    The article analyzes the spread of economic ideas based on a case study of the diffusion of Keynesian economics in two continental European countries, Belgium and Italy. It looks at the factors that determine the dissemination of economic ideas, distinguishing also between the academic world and...

  • Post Keynesyen Ekonominin Metodolojik Temelleri. ESEN, Ethem; YILDIRIM, Kemal // Optimum: Journal of Economics & Management Sciences / Ekonomi ve;Winter2020, Vol. 7 Issue 1, p147 

    Post Keynesian view, which has emerged as a new approach to the economy, evolves as an alternative approach to the economic policies of Orthodox economic thought. However, with its evolving methodological and comprehensive structure, it continues to develop as an original positive school of...

  • LEFT KEYNESIANISM AND CURRENT ANTIMARGINALISM. Osadchaia, I. // Problems of Economics;Sep77, Vol. 20 Issue 5, p3 

    Focuses on the economic theory of left keynesianism as an alternative to the prevailing neoclassical paradigm. Differentiations among the bourgeois political economy; Identification of left keynesianism as the theoretical platform of contemporary antimarginalism; Criticism on the neoclassical...

  • KEYNES AND THE MARSHALL-WALRAS DIVIDE. de Vroey, Michel // Journal of the History of Economic Thought;Jun99, Vol. 21 Issue 2, p117 

    Examines the relationship between the Marshallian and the Walrasian research programs on the interpretation of the Keynesian theory of economics. Characteristics of the Marshallian equilibrium concept; Observation of Keynes that wage earners cannot bargain on the real wage; Assessment of the...

  • Beneath "First Principles": Controversies Within the New Macroeconomics. DeMartino, George // Journal of Economic Issues (Association for Evolutionary Economi;Dec93, Vol. 27 Issue 4, p1127 

    Focuses on the debate on the economic theories of neoclassicism and Keynesianism. Investigation of the principles of Keynesianism; Examination of the ontological and epistomological positions taken in economic science; Discourse on the dynamic model of economic theory; Trajectory of the theory...

  • Deviations from uncovered interest rate parity: a Post Keynesian explanation. Harvey, John T. // Journal of Post Keynesian Economics;Fall2004, Vol. 27 Issue 1, p19 

    Finding satisfactory explanations of deviations from uncovered interest rate parity (UIRP) has proved to be a frustrating experience for Neoclassical economists. Studies have focused on the role of risk, but thus far no one has been able to put forward a source thereof that can account for the...

  • KEYNESIANSKI ELEMENTI V SLOVENSKI TRANZICIJI. Kračun, Davorin // Our Economy (Nase Gospodarstvo);2006 Supplement, Vol. 52, p64 

    Keynes has not been an explicit reference in the transition of Central and Eastern European countries. Ex-post analysis of transition models brings out significant PostKeynesian elements in many countries, especially in Slovenia. In the economic policy performed by Slovenia during transition,...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics