Heterodox Economics

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Contextual Citation

"Bona fide heterodoxy:Truly heterodox orientation wants to get rid of the conceptual universe of “infinite wants” economics. It proposes to replace mainstream’s preoccupation with market equilibrium, debt money, and interest with empirical energy accounting and nonmarket economic approaches. Some heterodox scholarship proclaims its origin in the adaptation of new theories that have developed outside economics and have affected diverse scientific fields."

- Peter Pogany [1]

Typology

Schools of Heterodox Economic Thought

By Peter Pogany:

  • "Technocracy was born during the New Deal with the establishment of “Technocracy Incorporated,” an organization that has remained active to present day.
    Sustainable material wealth production in harmony with the long-run availability of physical resources is the fundamental tenet of a technocratic future. Economic growth in industrialized countries is possible through enhancing the efficiency of the current level of capital stock. Technocracy advocates a radical new approach to controlling the evolution of technology.
  • Dependency Theory developed in the 1950s under the guidance of Raul Prebisch (Director of the United Nations Economic Commission for Latin America). It set forth the notion that resources tend to flow from poor and underdeveloped states ("periphery") to wealthy states ("core"), enriching the latter at the expense of the former.
    Despite losing most of its heterodox edge over the decades, Dependency Theory keeps resurfacing in new forms and remains a constant reference in economic development literature.
  • Structurtalist Economics emerged also in the 1950s through the activities of the Economic Commission for Latin America and it is closely related to Dependency Theory. Adherents contend that structural and institutional rigidities retard and otherwise negatively influence economic development in the Third World. The discipline has gone through several renewals but retained its critical spirit.
  • Thermoeconomics dates to the early1960s. Myron Tribus (MIT, Nobel Laureate) and Nicholas Georgescu-Roegen played crucial roles in its development.
    The Encyclopedia of Human Thermodynamics links economists to other scholars in a broader field dedicated to the energy-based analysis of social issues, including the relationship between economic activities and the ecological order (i.e., sustainability).
  • Neo-Ricardism (“sraffian economics”) promulgates insight into the economic process based on a new, closer reading of David Ricardo’s (as well as Marx’s) labor theory of value by Piero Sraffa during the 1960s. The critique originally leveled at the classics turned into an attack on the marginal school.
    While the dispute over whether or not “sraffian economics” can be made compatible with the prevailing doctrine of time-resistant, equilibrium-bound economic order has remained inconclusive, the strand has inspired much heterodox research and exposed the fruitlessness of building ever more sophisticated and extensive mathematical models around unquestioned neoclassical axioms.
  • World Systems Theory crystallized around the writings of Immanuel Wallerstein, particularly since the 1974 publication of his “The Modern World-System.” Despite its failed prediction that the Cold War would end through rapprochement and integration between what was believed to be two separate world systems, the theory is still considered relevant in exploring the development and current problems of capitalism.
  • Bioeconomics began its career in the 1980s. It unites biology and economics in order to develop comprehensive theories about the relationship between the economy and the environment; to apply the concepts and methodologies of life sciences to economics. Practitioners of the field make a point of exposing the lacuna between academic economics and lived reality.
  • Ecological Economics entered the scene with the 1987 publication of the like-named book by Spanish economist Juan Martinez-Alier (Universitat Autonoma de Barcelona, Spain). Nicholas Georgescu-Roegen, Kenneth E. Boulding, and Herman E. Daly are among the many prominent figures with foundational significance in this branch.
    In contradistinction to mainstream economics, which considers nature part of the economic process (i.e., the provider of agricultural and mining products), the starting point of Ecological Economics is that the satisfaction of material needs is forever and unchangeably constrained by physical conditions. At least at the global level, output should be considered a throughput that society must bring in line with a judicious use of exhaustible natural resources and with the ecosystem’s absorptive and regenerative capacity.
    By combining social and natural sciences, Ecological Economics is interdisciplinary in both its conceptualization and methodology. It places a heavy emphasis on the laws of thermodynamics.
  • Ecofeminism is a program within Ecological Economics that emphasizes the feminine perspective over environmental and resource problems. Its beginning is dated to 1974 and is closely related to the work of Françoise d'Eaubonne.
  • Evolutionary Economics has its roots in the works of Marx and Engels, particularly their Darwinian perspective on social evolution. The “American Pragmatic School” (Peirce and Dewey), and the institutionalists, e.g., Veblen, have been cited as early predecessors.
    Its modern version began during the early 1980s with the works of Richard Nelson (Columbia University) and Sydney Winter (University of Pennsylvania). The compendium entitled The Evolutionary Foundation of Economics (2005), edited by Kurt Dopfer, brought together related research activities in a shared framework.
    Evolutionary Economics discards homo oeconomicus, the rational optimizer, as the cornerstone of theorizing. Its suggested approach renders the concept of “object of choice” multifaceted and, by taking biological evolution as its model, it finds markethistorically established eternal returns without irreversibility wholly inadequate for the purpose of understanding economic problems.
  • Econophysics dates back to the beginnings of general equilibrium analysis (in particular to Walrasian modeling) in the early 20th century. It reemerged in the mid-1990s, thanks to the work of Jing Chen (University of Northern British Columbia) and Yi-Cheng Zhang (Institut de Physique Theorique, Fribourg, Switzerland)
    Econophysics as we know today first focused on financial data, trying to apply statistical physics to stock market fluctuations. Later, the interest expanded to general economics. The field is interdisciplinary by design and retains a critical perspective on mainstream economics.
  • Feminist Economics assumed its current scope in 1990 with the establishment of the “International Association for Feminist Economics,” later recognized by the United Nations as an NGO.
    Feminist Economics cultivates “gender aware theory and analysis” and has become an outspoken critic of traditional academe’s limited views on the individual, the household, labor issues, and international economic relations.
  • Post-Autistic Economics (a purposefully caustic term) sprang from student disenchantment with the limited and limiting nature of mainstream economic instruction and scholarship in the year 2000. It enjoys top quality professional support and is openly hostile to the neoclassical capture and domination of academic institutions and government positions.
  • Green Economics began in 2004 with the founding of the Green Economics Institute in the UK. By appending the discoveries and concerns of Ecological Economics to a social agenda, the adherents of the discipline have created a political lobby. The International Journal of Green Economics is the main outlet for research produced in the field.
  • The four Cs – Catastrophe, Chaos, Complexity, and Cybernetics in economic literature developed around mathematical discoveries in nonlinear dynamics. Taken together, they are an important sign that economics is fatigued by the sterility of overdriven mentalrational consciousness and that it wants to supersede its current dead-end by opening up to interdisciplinary approaches in a quest for deeper, more satisfying, all-embracing insights.
    The four Cs are introduced in an ascending sequence of the respectability they have retained, from almost complete obliteration to survival on the margin through tolerant indifference. Understandably, Catastrophe and Chaos fared the worst. By their very nature, they do not accept models of smooth cyclicality and eternal life imputed to economic institutions.
  • Catastrophe came into vogue during the 1970s as Rene Thom’s discoveries about discontinuities in dynamic systems appeared to be highly relevant to economists stunned by dramatic developments in energy markets and by “stagflation.” Criticism, which began in 1977 when Catastrophe Theory appeared to have reached the status of full-blown paradigm, turned into outright ridicule during the 1980s. Neoclassical convictions leave no space for idle, pessimistic chat about singularities (bifurcations, macromutations, phase transitions) disrupting the economy’s built-in rational tendency to return to growth and equilibrium.
    From a Gebserian standpoint it is noteworthy that Catastrophe Theory was criticized for being too qualitative and for not including time as an explicit independent variable in the analysis; i.e., not considering time a spatially-interpretable dimension, a “geometricized magnitude.”
  • Chaos penetrated economic thought during the 1980s. Its first application to financial data and stock market fluctuations conveyed a general criticism of the simplistic modeling and statistical data-smoothing deployed in the mathematical analysis of social phenomena.
  • Complexity Economics began in 1984 with the establishment of “The Santa Fe Institute” (SFI) in New Mexico. SFI is dedicated to the study of complex systems in general. Complexity Economics starts out by considering productive activities an endogenously evolving, adaptive aggregate.
  • Cybernetics first saw daylight in centrally planned countries in the 1960s. Economists, deprived of signals inherent in market prices, tried to comprehend the broader meaning of system and structure and to quantify interactions between the part (e.g., enterprise) and the whole (e.g., an industry or the national economy). The branch has retained relevance in the post-communist epoch as science -- insufficiently informed about the ecological impact of human activities -- tries to render feedback loops and circular causality between the economy and the environment more concrete."

(http://www.humanthermodynamics.com/Fifth_Structure_Emergence_in_Economics.pdf?)

More information

  • Peter Pogany
  • Daly, H. and Farley, J., Ecological Economics, Principles and Applications, Pearson and Longman, Delhi, India, 2004.
  • Dopfer, K. (ed.), The Evolutionary Foundation of Economics, Cambridge University Press, Cambridge, UK, 2005.
  • Jing Chen, The Physical Foundation of Economics, World Scientific Publishing Co., Pte. Ltd., Singapore, 2005.