Sickonomics: Diagnoses and Remedies

Abstract

In their recent analysis of the alleged decay in modern economics, Ben Fine and Dimitris Milonakis claim to find its source and origin in the “marginal revolution” of the 1870s. They argue that this development led to “methodological individualism” and the detachment of economics from society and history. I contest their account of the marginal revolution and of the role of Alfred Marshall among others. They also fail to provide an adequate definition of methodological individualism. I suggest that neoclassical economics adopted a denuded concept of the social rather than removing these factors entirely. No such removal is possible in principle. It is also mistaken to depict neoclassical economics as the science of prices and the market. In truth, neoclassical economics fails to capture the true nature of markets. I consider some sketch an alternative explanation of the sickness of modern economics, which focuses on institutional developments since World War II.

Notes

1 The author is very grateful to Wilfred Dolfsma and anonymous referees for comments on an earlier version on this paper.

2 David Colanders (2005, 2009) work offers a more empirical and dispassionate approach. Tony Lawson (2006) and Fred Lee (2009) present mutually contrasting and remarkably different analyses from that offered by Ben Fine and Dimitris Milonakis (2009; Milonakis and Fine 2009).

3 Extracted from the two volumes (Milonakis and Fine 2009: 2, 6, 11–12, 15, 26, 93, 218, 249, and Fine and Milonakis 2009: 8, 12, 17, 22, 31, 131).

4 According to the JSTOR database, there is no appearance of the terms “marginal revolution” or “marginalist revolution” in any leading English language journal of economics before 1950 (Burns 1950). The term probably appeared in some monographs before that date, but I have been unable to trace any examples.

5 See Backhouse and Medema (2009) on how the Robbins definition gradually spread through the discipline.

6 This would logically imply that prominent economists such as Ronald Coase, Friedrich Hayek and Richard Posner (whose work makes very little use of mathematics), many earlier economists such as Adam Smith, David Ricardo, Carl Menger and Alfred Marshall (who used mathematics to a very limited extent, if at all), and perhaps others such as Milton Friedman and Paul Krugman (who have criticized the contemporary abuse of mathematical formalism in economics) should be regarded as heterodox rather than mainstream. Lawson acknowledges in print that Hayek is heterodox, but does not acknowledge any of the others, as far as I am aware.