Saturday, September 20, 2008

Stigler On Neoclassical Economics

How economists perceive neoclassical economics may not be constant through time. Here is Stigler using the label in 1941:
"The basis of evaluation in this work is that body of contemporary theory which is given the nebulous description, neo-classical economics. This theoretical corpus stems directly from Marshall, but it has gained much in rigor at the hands of Walras, Wicksteed, and Edgeworth, and more recently the theory has been advanced by a host of economists too numerous even to mention. There is no unanimity regarding 'neo-classical' theory, but on the other hand, the divergences of opinion between competent students are certainly less than at any time since Mill. This statement is somewhat circular, it must be confessed, since a fundamental test of competence is the comprehension and acceptance of this theoretical system." -- George J. Stigler (1941), Production and Distribution Theories: The Formative Period, MacMillan, p. 8
"William Stanley Jevons is the forerunner of neo-classical economics. He did not so much depart from as supplement the classical theory, although the hasty lecteur can easily secure a contrary impression. Jevons, indeed, considered his theory to be revolutionary; he gave an impetus to and enthusiastic statement of the utility theory of value; 'his belief that all evil economic influences were incarnate in John Stuart Mill' is well known; and his mathematical mode of exposition was calculated to emphasize his apparent opposition to classical theory. But his theory of production and distribution ... is fundamentally classical. An indication of the orthodox nature of his approach is suggested by the fact that both Marshall and Edgeworth accepted his wage theory in toto." -- ibid., p. 13
My notes say I should find a passage using the label somewhere around page 266, in Stigler’s chapter on Wicksell. I don’t see this.
"[John Bates] Clark independently discovered both the marginal utility and the marginal productivity theories. He is best known, of course, for his exposition of the marginal productivity theory; it is indicative that, even at present, many continental economists consider Clark’s theory to be the marginal productivity theory. His chief task, indeed, was that of popularization – a task that was filled with appropriate detail, emphasis, and lucidity.

On the other hand, Clark performed one function for which economics has less cause for gratitude. In all of his major works, although perhaps to a decreasing extent through time, he introduced what has been called a ‘naïve productivity ethics’ – his marginal productivity theory contained a prescription as well as an analysis. The dubious merits of this ethical system need not concern us, but it is a cause for regret that Clark’s exposition, more than that of any other eminent contemporary economist, afforded some grounds for the popular and superficial allegation that neo-classical economics was essentially an apologetic for the existing economic order. Clark was a made-to-order foil for the diatribes of a Veblen." -- ibid., p. 297

1 comment:

Blissex said...

«"The dubious merits of this ethical system need not concern us, but it is a cause for regret that Clark’s exposition, more than that of any other eminent contemporary economist, afforded some grounds for the popular and superficial allegation that neo-classical economics was essentially an apologetic for the existing economic order. Clark was a made-to-order foil for the diatribes of a Veblen.

That's just too funny! If only Clark's laughable stuff was the only issue. If only the "ethics" of marginal productivity had remained the only "made to order" foil for Veblen and others...

That Serious Economics is indeed "an apologetic for the existing economic order" has been confirmed abundantly by the many and even more flawed attempts to fix its formal and substantial problems with the ever greater sophistries used to support the central verity of Serious Economics, which is still precisely Clark's ethics, that distribution of income is mathematically and impartially determined by marginal productivity.

An increasing set of shysterisms has had to be deployed to "support" it, culminating in the shameful dissembling that is the Arrow-Debreu-Lucas system.