Talk:Neoclassical economics

From Wikipedia, the free encyclopedia
Jump to: navigation, search
WikiProject Economics (Rated B-class, Top-importance)
WikiProject icon This article is within the scope of WikiProject Economics, a collaborative effort to improve the coverage of Economics on Wikipedia. If you would like to participate, please visit the project page, where you can join the discussion and see a list of open tasks.
B-Class article B  This article has been rated as B-Class on the project's quality scale.
 Top  This article has been rated as Top-importance on the project's importance scale.

nice job on the rewrite[edit]

nice job on the rewrite - might be good to also review factors of production to see if what's said there is truly neutral w.r.t. classical, neoclassical, Marxist, green views.


If members of Congress believed neoclassical economic theory, why might they be persuaded to reduce taxes on wage and interest incomes?

behavioral economics heterodox?[edit]

Is it really correct to place behavioral economics among the other heterodox schools? It surely is a lot more mainstream than the other schools. For example it has received one Nobel prize (two if you count Herbert Simon), two John Bates Clarck medals and papers written from the behavioral perspective are reguraly published in the most prestigious journals. 09:33, 4 August 2006 (UTC)

Criticisms of neoclassical economics[edit]

Neoclassical economics is sometimes criticised for having a normative bias. In this view, it does not focus on explaining actual economies, but instead on describing a "utopia" in which Pareto optimality obtains. Key assumptions of neoclassical economics which are widely criticised as unrealistic include:

The focus on individuals in the economy may obscure analysis of wider long term issues, such as whether the economic system is desirable and stable on a finite planet of limited natural capital.

I'm removing this first "assumption" as it is not actually an assumption. If someone else want to rework it and put it back in so that it makes sense, go ahead. 19:58, 28 February 2007 (UTC)

You're right that the third sentence above suggests a series of assumptions (immediately followed by criticisms for each) but does not follow through. A rewrite is needed to fix the inconsistency. --Thomasmeeks 20:28, 28 February 2007 (UTC)

The whole section needs a broad rewrite. I may do it when I have time. Criticism seem to come in a few types: -Utility assumptions/Rational Agents -Profit Maximization on the firm side -Aggregation issues (basically everyone knows this is a problem, question is degree) -Philisophical (Method): too much math/computers/blackboxes -Philisophical (Objective): what NCE wants to do is impossible/not useful. -Political: People don't like results or feel the wrong questions are being asked. How much detail do we really need on the 101 criticism? Everyone has a pet critique of the dominant theory, many are rather technical and others can be addressed within the framework. What do you keep of the current mess? 01:48, 2 May 2007 (UTC)

The criticism section is not too clear. A non-expert cannot easily tell which are minor criticism and which is major. Perhaps first divide it up as above remarks then start trimming. KAM 12:11, 1 June 2007 (UTC)
I wonder why there are no major citations in the criticism part. Some nobel price winning economists (i.e. Stiglitz) strongly disagree with the theory. This is not reflected in the article. -- (talk) 23:16, 1 March 2011 (UTC)

Platonists == neoclassical economists?[edit]

I read somewhere that neoclassical economics is platonism. Why is that so? __earth (Talk) 02:43, 20 February 2008 (UTC)

It isn't. Someone is either making sweeping over-generalizations, or using terms so loosely as to be very unhelpful. —SlamDiego←T 21:34, 7 March 2008 (UTC)

SlamDiego←T 08:08, 7 July 2008 (UTC)

On the distinctions amongst neoclassical economics, Austrian School economics, and marginalism[edit]

This article is presently written as if necoclassical economics subsumes marginalism more generally.

The first published appearance of the term “neoclassical” in reference to economics is in Veblen's “The Preconceptions of Economic Science”, Pt III (QJE v14 (1900)):

No attempt will here be made even to pass a verdict on the relative claims of the recognised two or three main “schools” of theory, beyond the somewhat obvious finding that, for the purpose in hand, the so-called Austrian school is scarcely distinguishable from the neo-classical, unless it be in the different distribution of emphasis.

Note that Veblen writes of a world in which the Austrian School is viewed as different from the neoclassical economists (though Veblen sees them as having shared preconceptions to which he objects).

Yet, in textbooks written by neoclassical economists (and by many anti-marginalists), neoclassical economics and marginalism are usually simply treated as the same thing, and Austrian School economics are treated as a variety of neoclassical economics.

In fact, the Austrian School is certainly marginalist. The neoclassical economists have also always been at least somewhat marginalist, albeït that for a time they walked away from marginal utility (and not all of them have reëmbraced it). But neither school subsumes the whole of marginalism.

The reason that the neoclassical school is called “neoclassical” or “neo-classical” is that, while they embraced marginal utility in the explanation of the demand curve, they explained the supply curve much as had the classical economics, in terms of objective costs whose structure was determined by physical processes. The Austrian School, meantime, saw the supply curve as a complementary demand curve, with the marginal utilities of producers determining their willingness to trade good for money. The neoclassical economists utterly failed to understand this view, and mistook the Austrian School for claiming that price were simply determined by one demand curve. Hence Marshall's foolish-yet-lauded analogy of cloth being cut by both blades of scissors.

The neoclassical economist were so convinced that Marshall's synthesis had captured all of the insights of marginalism that they began to write the history of economics as if marginalism had come together with Marshall's Principles. Many eventually lost the distinction between marginalism in general and neoclassical economics in particular, and hence (since the Austrian School were plainly marginalist) began to write of the Austrian School as “neoclassical”. But the Austrian School has for the most part resisted such unfortunate confusions. —SlamDiego←T 03:10, 18 March 2008 (UTC)

Is there a paper on this explaining how neoclassical economics has essentially tried to rewrite history? I'm afraid that I don't understand the difference between the neoclassical supply curve and the "complementary demand curve". Your description is somewhat vague; with this kind of vagueness, it's no wonder that there's a lot of misunderstanding. I've always thought that neoclassical economics viewed the supply curve as a model; a convenient abstraction. They take this abstraction a little more seriously than Austrians. When prices rise, it makes sense that producers will increase production to meet that rise, while at the same time consumers will slacken somewhat. Of course, this is complicated by advertising and other factors, but it makes sense. II 07:17, 7 July 2008 (UTC)
I don't know if someone has produced an executive summary on how neoclassical economics has rewritten history (generally less as a matter of trying to do so than as a consequence of grossly failing to understand rivals), but one can, for example, find discussion of the issue of the supply curve mentioned in Schumpeter's History of Economic Analysis (1954). You might also profit from Cost and Choice by Buchanan. As to your objection that my characterization above of the Austrian School notion of the supply curve is “somewhat vague”, well, your implicit demand is somewhat absurd; if I were to have write my comments anticipating-and-answering every question that you (and other readers) might have, then I'd be producing something of book-length or greater.
Your characterization of the Austrian School view of the supply curve, and what differentiates it from the Marshallian model, is wholly in error. The Austrian School have always understood that price could no more determined without the supply schedule than without the demand schedule; they have always understood that the supply curve would generally be upward sloping. But the Marshallian conception is that costs are objective, and the supply curve could be inferred essentially as an act of accountancy. The Austrian School instead recognizes that the supply curve is an expression of the producer's demand for money, for which he pays with a good or service; the supply curve is every bit as much determined by considerations of marginal utility as is the curve that we ordinarily call the demand curve. —SlamDiego←T 08:08, 7 July 2008 (UTC)
Hmm. I haven't actually characterized the Austrian School view. To be honest, I'm not to clear on the Marshallian model. As I've said, the Marshallian model appears to be to be a useful model; an abstraction. I'm sorry if I've offended you; these things naturally tend towards vagueness. I'm just trying to figure out what's going on. I know that the Austrian School has a lot of writing, and I'm sure that someone has written something on this. If you're a figure in economics, you could write it up. Accountancy? Marshall doesn't go around trying to calculate the actual supply curve. So if the Marshallian view is that these things are objective, is the Austrian view that the supply curve is subjective? Certainly the supply curve is constantly in flux; it's slope is wildly variable, based upon the existing conditions at the time. The linear upward model presented at the undergrad level is a gross simplification, and nonlinear models are probably little better. The moment that it looks like there is a recession coming, or it looks like the demand is actually from inflation, the supply curve may tank (as people come to realize this). I'm partial to Knight's perspective on economics, myself. II 08:36, 7 July 2008 (UTC)
One cannot say that they neoclassical economists take the supply curve more seriously than does the Austrian School without thus characterizing the Austrian School view (as taking the supply curve less seriously). Marshall may or may not have ever given an example of ostensibly calculating the supply curve from his principles, but a great many intro micro courses have done exactly that (and lawyers and regulators have certainly done it). Yes, the Austrian School has long insisted that the supply curve is every bit as subjective as is “the” demand curve. (And Knight would have told you this as well; he was very good with the notion of cost.) The objective enters into the the determination of value by way of possible marginal rates of transformation, rather than as either blade of the scissors.
As to my writing things up, I would have to invest a lot of time producing citations (to avoid complaints of WP:OR), and I already spend too much time with Wikipedia. —SlamDiego←T 09:01, 7 July 2008 (UTC)
I meant writing it up and publishing it in an academic journal. But this would require lots of citations. Still don't really know how to interpret this subjective/objective thing. Certainly what the supply curve looks like is subject to the "eye of the beholder", but certainly also there exists a "real" (in a manner of speaking) "supply and demand curve" -- a schedule at which people will produce/consume. Like I said, this is constantly in flux, and people are certainly not aware of their own predilections, but they will act a certain way under conditions. Are you referring to something similar to Soros' reflexivity (social theory), where each feeds on each other? II 09:36, 7 July 2008 (UTC)
A journal article might be worthwhile, but I'd be surprised if one hadn't appeared somewhere (probably in some grousing Austrian School journal), and just not got a lot of attention.
The supply and demand curves are real, but not only are they (as you note) in flux, they are (at best) observable only one point at a time. And we could only infer the precise shape of the unobservable portions if we have access to private information, including desires and expectations. And it is thus and in this sense that the subjectivity obtains. —SlamDiego←T 09:55, 7 July 2008 (UTC)
SlamDiego is misrepresenting the article. Notice the link to the stub article for reservation demand in the overview section. This is a reference to a subjective theory of factor supplies. By the way, Jevons thought that his theory was not an extension of classical economics. He somewhere referred to Ricardo as something like "that able but misguided man who shunted political economy onto the wrong track". Whether neoclassical economics is a reaction against or an extension of classical economics is debated both by neoclassical and non-neoclassical economists, independently of whatever Austrians may have to say. I deliberately wrote the original version of this article to take a NPOV on this question. And that allowance for both views has persisted. I don't think I took a position on this topic either when I wrote the original version of the Austrian School article. (talk) 23:52, 7 July 2008 (UTC) RLV
I made no representation (mis- or otherwise) as to whether the article had any awareness of subjective factors in factor demand.
Jevons indeed said that his work was not an extension of classical economics; it was Marshall who drew upon classical economics to explain the supply curve. That's why I keep associating neoclassical economics with the latter rather than with the former. (One could labor the effect of Marshall upon Jevons, but that would be beside the point here.)
Whatever the intentions about POV when the original version of this article was written, it has got basic facts wrong. Since you've relied heavily upon secondary sources for your own knowledge, one might locate any POV-pushing in those sources; but, as I said, the misrepresentations that come from within the neoclassical tradition itself are largely a matter of simply failing to understand their rivals. —SlamDiego←T 04:19, 8 July 2008 (UTC)
"Since you've relied heavily upon secondary sources" is an attack upon the man and assumes facts not in evidence. The claim that Marshall drew upon classical economics is a controversial POV. In fact many think Appendix I ("Ricardo's Theory of Value") in Marshall's Principles of Economics is mistaken about the content of classical economics. One can look above and see that SlamDiego's ill-posed objections are to neoclassical economists' supposed opinions of Marshall. His ill-posed objections are not limited to Marshall, and he writes (incorrectly) "The article is presently written as..." (talk) 07:40, 8 July 2008 (UTC) RLV
No, I infer (rather than assume) that you rely upon secondary sources, because
  1. the alternative would be that you were willfully misrepresenting some of the content of the primary sources; and,
  2. meanwhile, when you do quote some of those primary sources, you quoted them not from the primary sources but as excerpted in secondary sources, as when (in your 'blog) you turn to Kirzner to report on the position of v. Mises.
As to whether Marshall interpretted any classical economists right, I've here not taken a position on that at all; it's purely tangential. What is not tangential is that Marshall's school was named “neoclassical” because it represented itself as producing a more complete explanation of price by combining a classical cost-based theory with marginalism; some marginalists (including the Austrian School) were never party to that. As the neoclassical tradition evolved, further distinctions arose; there was never a fusion of the schools. —SlamDiego←T 10:26, 8 July 2008 (UTC)
Suppose SlamDiego did not violate the norms of Wikipedia and of civilized conversation. Then he would not feel obliged to share his unjustified inferences about what I have read. I hope II is amused by SlamDiego's insistence that II has "characterized" Austrian Economics, but SlamDiego, in stating "Marshall ... drew upon classical economics to explain the supply curve," was not taking "a position on" "whether Marshall interpretted any classical economists right." Anyways, it is not all that relevant to the article why "Marshall's school was named 'neoclassical'." Neoclassical economics has not been used for over half a century to refer exclusively to economists following Marshall. As far as I can tell, SlamDiego even agrees with this claim. In the next section, SlamDiego pretends that I offered an argument for calling the Austrian School "Neoclassical". I never did. As it is, neither my comments here nor the article contradicts the claim that, looking back, Austrian school economists are today justified in asserting that there never was a fusion of Austrian schools with non-Austrian neoclassical schools. (talk) 00:17, 9 July 2008 (UTC) RLV
We needn't merely suppose such a thing; you need merely to recognize that the norms of civilized conversation do not require me to refrain from repeatedly exploding ill-constructed arguments.
It is quite possible to draw upon something without correctly interpretting it. (This is plainly illustrated in the case of religion, where many people draw upon this-or-that scripture, but contradict each other in thier interpretations). I said that Marhsall drew upon classical economics; but there is no inconsistency in my refraining from making any claim about whether he interpretted it correctly.
The problems aren't merely that “neoclassical” economics was begun as a name distinguishing some marginalist from others; the problems include:
  1. that the name was applied to the remainder of marginalism on the demonstrably false presumption that they had eventually accepted the Marshallian critique;
  2. that the name has not been accepted by the Austrian School;
  3. the sweeping use of “necoclassical” is effectively confined to two groups — those from within the tradition of Marshall, and various opponents of marginalism who in fact focus on flaws that are not really general to marginalism.
These are points that I've already made repeatedly.
In the next section, you in fact did present an argument for calling the Austrian School “neoclassical”, regardless of whether you intended the argument to be taken as decisive. My point was that the argument had no validity of any sort. —SlamDiego←T) 06:38, 9 July 2008 (UTC)
(And investigation shows that you're the author of the passage from the article that I quoted in that next section. Further, well after you'd written that problematic passage, you objected “I do not understand what distinction - probably original research - SlamDiego makes between marginalism and neoclassical economics.”) —SlamDiego←T 08:15, 9 July 2008 (UTC)

[Outdent]I wish you two would stop going for each other's throats. SlamDiego has some legitimate points. Neoclassical economics may be called the marginalist school (this is unreferenced, but certainly often stated, for example, here). Marginalism, however, is likely something that applies to all economics -- it is key to the economic approach. It dates back far enough that it has certainly had a strong influence on both Austrians and neoclassical economists. Neoclassical economics, as the dominant branch, has adopted the theory as if it were unique to itself. Perhaps that was unjust, but the world is not just. SlamDiego is free to look for an article on criticizing this in an Austrian journal -- I've begun a list of them here, and many have plenty of free access content. I may be browsing through them myself, and I'll let you know if I see something. In the meantime, we should probably let neoclassical have the "marginalist" claim. I don't have enough experience to say how much Austrians use marginalism; I imagine they use it plenty, but are less obvious about it. It is part of the economic intuition. II | (t - c) 04:00, 9 July 2008 (UTC)

ImperfectlyInformed, there is a very great difference between my systematically analyzing bad arguments, and going at someone's throat; I am not much interested in anyone's throat. (As an exercise, walk through things chronologically, to see who personalizes things and when. Hint: It starts with this diff.)
The issue here isn't whether it is just for “the dominant branch” to claim marginalism “as if it were unique to itself”; the issues is whether the claim is factual; Wikipedia isn't supposed to present something as fact if it can be shown to be false. Anyway, you should find a number of essays on how the distinctions were under-appreciated; amongst mainstream historians of thought, there is now little or no controversy over the claim that the Austrian School tradition was always distinct. That confusion belongs mostly to the past, and to writers whose exposure to history of thought is mostly -th hand, with .
As to the use that the Austrian School makes of marginalism. they are always quite obviously using it. It isn't that the other schools have ever failed to recognize the Austrians as marginalists. What other schools have failed to recognize are the distinctive features. For one discussion of the distinctive nature of Austrian School marginalism, see Mc Culloch's “The Austrian Theory of the Marginal Use and of Ordinal Marginal Utility” in Zeitschrift für Nationalökonomie 37 (1977).SlamDiego←T 06:38, 9 July 2008 (UTC)
Committing a tu quoque fallacy is hardly a defense of a prior rhetorical fallacy. I don't know why SlamDiego thinks accusing a discussant of being "willfully misleading" is not personalizing discussion. (talk) 01:16, 10 July 2008 (UTC) RLV
I've not committed any tu quoque fallacy. ImperfectlyInformed made the mistake of asserting that we were at each others throats, and I explained that I was not interested in your throat. As to my comment at another, earlier discussion (at “Marginalism”), that came after you not only were indeed willfully misleading but had already personalized that discussion. —SlamDiego←T 03:54, 10 July 2008 (UTC)
I may have been sensitized to this from reading Schumpeter years ago. I don't like the passage in the intro in the article that says, "Neoclassical economics is often called the marginalist school". Among schools in neoclassical economics, I can name the school of Lausanne, several Chicago schools of different periods, and perhaps the neoclassical synthesis - if you want to call that a school of thought. I would prefer saying that, "Neoclassical economics is often called marginalism." I think that more consistent with your link. I've already noted Garegnani as one who prefers that label. I think I could find Blaug using that label for diverengent reasons.
I think it untrue to say that marginalism applies to all economics - at least, if you mean something more by "marginalism" that a combination of the math of differentiability and theorems about dual Linear Programs. I would not call Post-Keynesian economics, Institutional economics, or various régulationists schools "marginalist", for example. I think Gonçalo knows perfectly will that some economists disagree with some of those 12 principles of the neoclassical theory of value he lists.
As for SlamDiego's claims:
(1) He has presented no evidence that the broadening of the label "neoclassical" was associated with an acceptance of Marshall's theory of supply curves and Marshall's perception of the Austrians of his day. Since I think Wicksteed was a neoclassical (this does not preclude Wicksteed also being called "Austrian school") and had the better of that argument, I'm unlikely to agree with SlamDiego here.
(2) I've already pointed out that article asserts that one can distinguish between Menger and the other two revolutionaries. I've also asserted that neither the article nor myself argues against the claim that, looking back, Austrian schools economists are today justified in asserting that there never was a fusion of Austrian schools with non-Austrian neoclassical schools. I didn't take the opportunity to disagree with the article's classification of Austrians as Heterodox. I did not take any such opportunity because I agree with that classification.
(3) I don't know that SlamDiego has presented evidence that the use of "neoclassical" is confined to the two groups he presents. For example, Samuelson uses the label "neoclassical synthesis", and Samuelson in his pure theory work drew on general equilibrium theory and argued against the more Marshallian Chicago school. So he seems to be an easy counter-example. I understand why some would say heterodox economists, including Austrians, use "neoclassical" to mean "mainstream theory we disagree with today." I don't think that supports SlamDiego.
The question is not whether those who use "neoclassical" in a broad way are factually correct, whatever that would mean for the use of a label. The question is whether reliable sources say it is used in some such broad way. Did you read my documentation that a reliable source, namely David Colander, says that "neoclassical" is used in a broad way? And since the article doesn't classify Austrians as Neoclassical, I find it hard to find a point in SlamDiego's complaints. (These days I might be more likely to say that the three conventionally listed as the founders of neoclassical economics promulgated the "marginal revolution".)
I find where SlamDiego looks for distinction between Austrians and Neoclassicals to be quite archaic and odd. I don't think many current Austrians look to the structure of utility theory in Menger and his immediate followers. Current Austrians do argue that the subjectively of opportunity costs is not adequately incorporated in mainstream theory, but Marshall's particular formulation is not a live issue.
If you want to read about the distinction, I would suggest looking at some of Kirzner's collections. He writes about the difficulty he had at New York University in understanding how Mises was distinguishing his approach from, for example, Lionel Robbins. (Maybe the article should mention Robbins' book on methodology.) I think Robert Murphy gives the lecture at the Mises Institute's summer program about the distinction, and you can download mp3s there. (talk) 02:01, 10 July 2008 (UTC) RLV
Hopefully my edit has resolved some of the concerns. I know one of you might raise concerns about the New School, but the source, although just a self-published website, seems to be fairly well-researched, and I feel strongly that this is a good place to make an exception. I actually think the categorizing of the term neoclassical which they use makes sense. SlamDiego: Many Austrian economics may reject their association with the word "neoclassical", but they do share some of its assumptions and methods (marginalism, rational maximizing of welfare). That's why both they and the Chicago school are so rabidly laissez-faire (IMO). II | (t - c) 02:49, 10 July 2008 (UTC)
As to your attempt to critique my remarks:
  1. I've not presented evidence that the broadening of “neoclassical” was associated with acceptance of Marshall's theory of the supply curve because because I've in fact repeatedly noted that the theory was not accepted by all rival marginalist. Meanwhile, your belief that Wicksteed was neoclassical begs the question.
  2. Since it is generally acknowledged that there are differences amongst those within the actual neoclassical tradition, it isn't to-the-point that the article acknowledges distinctions between Menger and other marginalists. What is to the point is when, how, and by whom the label “neoclassical” has ever been applied to the Austrian School. And I've repeated labored the answers to those questions.
  3. I didn't present any evidence that some had narrowed “neoclassical” to refer to Samuelsonian economics because McCloskey's 'blog entry is essentially concerned with that. Perhaps one would want to label McCloskey heterodox, but he plainly doesn't want “neoclassical” to refer generically to theory that he opposes; as the the Austrian School, they don't defined “neoclassical” as you suggest.
You don't acknowledge, and probably don't recognize, where I look for a distinction between the Austrian School and the neoclassicals. (Perhaps if you'd spent less time trying to get at my throat and more time trying to get at my argument….) Again, the question is of when, how, and by whom the label “neoclassical” has ever been applied. I started with the beginning, where “neoclassical” was used to distinguish the Marshallians from the Austrian School, explained that there had never been a fusion, but noted that they neoclassicals had mistakenly believed that one had effectively occurred. None of this denies evolution within both of the respective traditions; it is implicit or explicit in some of my prior remarks that both traditions evolved. But discussion of the original differences illustrates that the Austrian School is not a heretical development from neoclassical economics, and is an essential part of an explanation that the label is inappropriate. —SlamDiego←T 03:54, 10 July 2008 (UTC)
I'm not trying to go for your throat. I think it would be great if you elaborated on the difference, while noting that they are very similar, to the point where they can, and have, been grouped under the same umbrella. Veblen's quote demonstrates the similarity between the Austrians and neoclassicals; Robert has a quote in his blog similarly noting that Mises admitted that the two schools were very similar. II | (t - c) 04:06, 10 July 2008 (UTC)
I've not thought that you were going for my throat.
Neoclassical economics was a development within marginalism; which is why Veblen would both introduce the term to distinguish it from the Austrian School and yet, at a higher level of abstraction, group the Austrian School with the neoclassicals. I have earlier quoted the full sentence from v. Mises, and provide a link to the full text of the chapter in which it appears; but, even truncated, it merely refers to one idea, and that is the idea that value is explained by marginal utility. Neoclassical economics was distinct in attempting to explain the supply curve based upon costs, and in attributing the upward slope of the supply curve first-and-foremost not to diminishing marginal utility but to diminishing marginal physical product. Neoclassical economics contnued a tradition (found in some classical economic thought) of modelling their theory after the physical sciences, and presuming wide applicability of quantitative mathematics; Austrian School economics tended (and largely tends) to avoid explicit mathematics (indeed, most Austrian School economists think or seem to think that they are simply not using mathematics most of the time), and to proceed from attempted logical deductions about rational, purposeful action. Neoclassical economics original presumed the real existence of quantitative happiness of some sort, and employed quantitative reasoning to infer conclusions; when the assumption of such stuff came under challenge, the neoclassical economists discarded their notion of diminishing marginal utility as without meaning. (On this matter, see “Utility and Preference” in Hicks's Value and Capital.) The Austrian School instead thought of marginal utility as priorty rank of marginal use (on this matter see the article by McCulloch to which I referred you), and had no need to walk away from their conception of diminishing marginal utility. Neoclassical economics accepted indifference curves; Austrian School economists look askance at any but metaphorical use of them (and most Austrian School economists would object even to that). The various neoclassicals embraced some or all of the models named “pure competition”, “perfect competition”, “imperfect competition”, and “monopolistic competition”; the Austrian School rejected them. Neoclassical price theory is essentially a theory of equilibria; Austrian School price theory is a theory of discovery, in which equilibria are at best like strange attractors.
I'm focussing on the distinction between the Austrian School and neoclassical economics because I am (as an act of courtesy) answering the question that you've asked and because that distinction is familiar to me. I do not imply (or think) that there are no marginalisms that are neither neoclassical nor Austrian School. —SlamDiego←T 06:28, 10 July 2008 (UTC)

Neoclassical economics?[edit]

McCloskey, an economic historian, says that neoclassical is a "misnomer", as should include Austrians and Marshallians. I'd like to expand on this criticism and make it a section under the criticisms. Let me know if you find any other papers. Here is a paper on the origins of the term, which should be relevant for this page. ImpIn | (t - c) 04:00, 10 June 2008 (UTC)

Well, McCloskey is correct that Samuelsonian economics has sort-of run off with the name “neoclassical”. I don't know whether that was deliberate, or just an unfortunate, thoughtless telescoping of “neoclassical synthesis” (which is itself a telescoping of a more complex description). But, as I noted in the prior section, “neoclassical” should not include the Austrian School.
BTW, I found McCloskey's 'blog entry rather hard to read; it is awash in nicknames and metaphors, most of which provide zero value-added. —SlamDiego←T 03:12, 29 June 2008 (UTC)
I'm not particularly interested in SlamDiego's reading difficulties when it comes to McCloskey.
The article does not claim that the Austrian school is part of or the same as neoclassical economics. The term "Austrian school" appears in the article twice - in stating that Hicks "was influenced by the Austrian school economist" Hayek and in the list of schools of heterodox economics at the end of the article. Furthermore, the article explicitly allows for discussion of differences among Jevons, Menger, and Walras. (If somebody had questioned me on references, I would have pointed to Jaffe.)
Furthermore, SlamDiego is confused. Veblen's coinage may have limited neoclassical economics to those following Marshall, but that doesn't restrict how others have used the term. I document the usage of "Neoclassical economics" in a more general meaning in a blog post. (Given Debreu's Theory of Value, I don't think "neoclassical economics" is limited to assumptions that enable the application of the differential calculus.) You can also see Mises, in the 1930s, stating that the Austrian school did not have a separate doctrine. SlamDiego's complaint about the distinction between Austrian and Marshallian treatment of the cost or supply of factors is about a distinction that did not endure. If you have read Wicksteed, for example, you know that British economists had available an Austrian-like analysis of supply in their own language.
I think the claim that economists in the 1930s did not see a distinction between the Austrian school and neoclassical economics more generally is consistent with the Austrians having implicit ideas about the knowledge of agents that, when developed, make them a separate school of thought.
Pierangelo Garegnani prefers the label "marginalism" to "neoclassical economics" because the latter label implies a false continuity between classical and neoclassical economics. Marshall was confused, and the Classicals had a distinct approach that can be revived. Any encyclopedic treatment of the labels would have to treat this perspective. But I think it best just to ignore SlamDiego's confusion here. (talk) 08:44, 5 July 2008 (UTC) RLV
Robert, the article plainly says

Neoclassical economics is conventionally dated from William Stanley Jevons's Theory of Political Economy (1871), Carl Menger's Principles of Economics (1871), and Leon Walras's Elements of Pure Economics (18741877). These three economists have been said to have promulgated the marginal utility revolution, or Neoclassical Revolution.

(Underscores mine.) Menger, of course, was the principle preceptor of the Austrian School; it would be silly to ignore or miss the fact that a claim is being made about the Austrian School, regardless of whether the term “Austrian School” appears in those sentences.
I'm hardly confused for rejecting any notion that the encyclopedia should play Humpty Dumpty. I plainly acknowledge that some people have been using “neoclassical” to mean pretty much everything that flowed from marginalism, and others have been restricting “neoclassical” to those who went along with the neoclassical synthesis. The real confusion here is that which results from such uses, which have been almost exclusively by two groups — those who embrace the tradition that flowed from Marshall or the neoclassical synthesis, and those who recognize (or believe that they recognize) fatal flaws in those traditions and want a cheap victory over the rest of marginalism — hanging Samuelson or Marshall like an albatross around the neck of every marginalist. Again, Austrian discomfort with rival marginalist traditions was present from the out-set. You're simply misinterpretting v. Mises. The quotation that you used in your 'blog comes from chapter 7 of Epistemological Problems of Economics. In full, the sentence reads

Morgenstern's work, which you have before you, has said almost all that is necessary about the fact that these three schools of thought differ only in their mode of expressing the same fundamental idea and that they are divided more by their terminology and by peculiarities of presentation than by the substance of their teachings.

(Underscore mine.) That chapter is concerned exactly with the thing that allowed the marginalists to be collectively recognized as marginalists — hence the reference to a singular idea rather than to ideas — and not with things such as equilibrium concepts and so forth. With his very first work on economics (The Theory of Money and Credit, 1911), Mises explicitly attacked important presumptions of rival schools. (Granted that, as time passed, he came to see the differences as even greater and more significant than he at first thought.)
Your reference to calculus is a straw man. No one claimed that the neoclassical school always presumed differentiability (or integratability).
Your example of Wicksteed confuses the notion of an economists actual nationality with the school to which he belonged. The fact that Wicksteed was British didn't mean that he was in the tradition of Marshall, nor that he stayed in the tradition of Jevons. (The present Austrian School seems mostly to be American economists.) Wicksteed was amongst those who objected to Marshall's theory of the supply curve, which was a large part of what put the “classical” in “neoclassical”.
The lack of perceived difference in the '30s stemmed more from failed communication than from an actual lack of difference.
If your earlier argument for calling the Austrian School “neoclassical” were sound, then the argument of Garegnani would be unsound. The issue, in either case, is inappropriate conflation. But Garegnani's objection is that a name is a poor description, whereäs I don't insist that it be a description at all, merely that it be used with due consistency. —SlamDiego←T 16:19, 5 July 2008 (UTC)

Etymology: when was the term first used?[edit]

Who started using the term, and when? Does Jevons use the term? II 04:11, 6 July 2008 (UTC)

As I noted above, the first published appearance of the term “neoclassical” in reference to economics is in Veblen's “The Preconceptions of Economic Science”, Pt III (QJE v14 (1900)). —SlamDiego←T 04:45, 6 July 2008 (UTC)
I've placed the quotation inside a Template:Quotation, to make it easier to spot. (It used to be just indented.) —SlamDiego←T 04:57, 6 July 2008 (UTC)


Well, Robert, removing an assertion as OR from the body of the article even as one provides a quotation that substantiates it is certainly… different. And problematic:

  1. “Original research″ is non-trivial claims for which a “reliable source″ cannot be found (as distinct from, say, claims for which a reference simply has not been provided).
  2. The “References” section of a WIkipedia article is for references substantiating what is in the body, not for thoughts that one wishes to render somehow subparenthetical. (I've sometimes wished for wider use of footnotes, but….)
  3. While the Stigler quote nicely supports the deleted claim, it really doesn't do a good job of substantiating what is left behind in the body after the alleged “Original Research″ is deleted.

So I'll move the deleted claim back to the body, even while retaining the reference. —SlamDiego←T 00:56, 30 September 2008 (UTC)

Opening paragraph[edit]

This article is very bad - it doesn't explain consisely what neo-classical economics is. It never fails to amaze me how people who have studied economics still struggle to explain such important concepts as the neo-classical synthesis. What is wrong with:

"Neo-classical economics (or "New-Classical economics) is a collective term for a number of economic therories that emerged during the 1960s and 1970s. Common to all neo-classical theories is the assumption of continuous equilibrium in labor and product markets. There is, however, a dichotomy of thinking those in the "real-business cycle" school originating from the work of Edward Prescott at the University of Minnesota, and the "imperfect information" school originating from Milton Friedman and Robert Lucas at the University of Chicago. —Preceding unsigned comment added by (talk) 11:04, 29 November 2008 (UTC)

First, don't attempt to jump the queue with your comments; when you're starting a new section, put it at the bottom of the page. (And, when one is replying to someone else, one should put one's comments after theirs, and generally indent those comments, so that threads of discussion are easily distinguished.)
Second, this article is not restricted to the neoclassical synthesis, which is named as it is in reference to the broader concept of neoclassical economics. It wouldn't surprise me if you had a degree in economics, since the teaching of history of thought has generally been very poorly handled and largely gone by the way-side. In any case, you're confused, and should withdraw from editing this article (bad as it is in parts) until you are more familiar with its subject matter. —SlamDiego←T 12:36, 29 November 2008 (UTC)