The Pathetic State of Neoclassical Economics

[Onion Eater]

The Post-Autistic Economics Network has recently published a paper:

What is Neoclassical Economics? (The three axioms responsible for its theoretical oeuvre, practical irrelevance and, thus, discursive power.)

There is nothing more frustrating for critics of neoclassical economics than the argument that neoclassical economics is a figment of their imagination; that, simply, there is scientific economics and there is speculative hand-waiving (by those who have never really grasped the finer points of mainstream economic theory). In this sense, neoclassicism resembles racism: while ever present and dominant, no one claims to be guided by it. Critics must find a clear definition of neoclassicism if only in order to liberate neoclassical economists from the temptation to barricade themselves behind infantile arguments viz. the non-existence of their school of thought. Then, the good debate may begin.

I find it absolutely PATHETIC that neoclassical economics is so weak that they allow their enemies to define their foundations. Never clearly stated their axioms in their own literature? Tsk! Tsk! How sad!

In sharp contrast, I state my axioms right up front before proving any theorems from them:

1) One's value scale is totally (linearly) ordered:

i) Transitive; p ≤ q and q ≤ r imply p ≤ r

ii) Reflexive; p ≤ p

iii) Anti-Symmetric; p ≤ q and q ≤ p imply p = q

iv) Total; p ≤ q or q ≤ p

2) Marginal (diminishing) utility, u(s), is such that:

i) It is independent of first-unit demand.

ii) It is negative monotonic; that is, u'(s) < 0.

iii) The integral of u(s) from zero to infinity is finite.

3) First-unit demand conforms to proportionate effect:

i) Value changes each day by a proportion (called 1+εj, with j denoting the day), of the previous day's value.

ii) In the long run, the εj's may be considered random as they are not directly related to each other nor are they uniquely a function of value.

iii) The εj's are taken from an unspecified distribution with a finite mean and a non-zero, finite variance.

Read my Simplified Exposition of Axiomatic Economics for a more detailed, but still undergraduate-level discussion of my economic theory. This paper requires knowledge of multi-variable calculus but omits the real analysis that plagues readers of my 1999 book.