The Political Economy Challenge to Mainstream Economics

The Political Economy Challenge to Mainstream Economics

Discussions of contemporary capitalism have long been dominated by one line of thinking, which we will define below as the "mainstream" of economics. This mainstream has either ignored, or labored to discount, alternative ways of thinking about the economy, such as those that we described in our preface and that fill up this book. A major consequence of the mainstream refusal to take up alternative ways of seeing the economy is that most students taking economics courses in the United States today will not hear about them. We hope that this chapter will provide a good argument for our readers to push ahead to see what mainstream economists have been hiding from them.

WHAT IS MAINSTREAM ECONOMICS?

Like all areas of social inquiry the mainstream school of economics constitutes a broad spectrum of often-conflicting ideas. Thus, when we refer to "mainstream economists," we are necessarily lumping them into a single category that is an obvious distortion, much like that of any such categorization. Our critique in this chapter refers mostly-but not exclusively-to economic models that (one) are narrowly conceived, (two) are quantitative and expressed in complicated mathematical terms, and (three) depend upon certain restrictive assumptions about how people behave, always have behaved, and always will behave. Without question, there are mainstream economists who engage in lively debates on virtually all of the topics we take up in this chapter. Many of them move beyond the strict confines of models and assumptions to examine institutional aspects of the economy. And many emempirically investigate people's actual behavior, instead of assuming that they all behave in the same, predictable way.

Why, then, do we focus on those mainstream economists who most narrowly conceive the subject? There are two parts to our answer. The first is that this subset of economists dominates contemporary economics and exercises its dominance through its almost exclusive control over graduate training in economics and the most prestigious economics journals. It is also the subset that has produced all but a few of the Nobel Prize winners in economics. The second reason for our focus is that, of all schools of economic thought we know about, this one is least likely to produce results useful to the public. Therefore, a genuinely interesting irony underlies what we write about in this chapter: the very "best" economists, in the view of this dominating subset, produce some of the least useful kinds of economics. We recognize that this is a substantial conclusion, and we hope that reading this and the following chapters will lead our readers to consider it at least as reasonable.

A central part of our argument is that there is a critical distinction between all versions of mainstream economics and what we call political economy. This distinction is a matter of methodology, or "method of analysis." Mainstream economists are trained to limit the scope of their analyses- that is to limit the breadth of knowledge they bring to bear on an issue- much more than so than do political economists. In choosing a relatively narrow focus, almost all mainstream economists have gradually and systematically excluded from their studies the political economy point of view. The political economy critique presented here is both a general critique of the mainstream methodology, and a more specific critique of the subset of mainstream economics that is most narrow in its approach.