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Pat Gunning wrote in response to my argument that the flaw of what remains
of the coherent neoclassical model that became dominant in the 1960s and
70s lies in continued strong attachment to methodological individualism.
His argument is that individuals are thinking and creative; institutions
are products of individual creativity; therefore methodological
individualism is an approriate approach to the study of institutions. Of
course, individuals are thinking, creative creatures. I have said this in
print many times. [See, for example, "On the Difficulty of Evolutionary
Analysis" in the _Cambridge Journal of Economics_ 22:4 (July 1998) or
"Culture: Core Concept Under Attack" _Journal of Economic Issues_ 21: 2
(June 1987).]. The issue is to select the most appropriate unit of analysis
for understanding the economy. A focus on individuals limits the focus of
analysis to choice among a set of alternatives and begs the question of how
and why those alternatives are the relevant set for the chooser. To
understand that you need the methods, both ethnographic and statistical,
that are more commonly found in the disciplines of history, sociology, and
anthropology, and in well-done OIE. Perry Mehrling describes very well the
basis for the OIE criteria for selection of approriate analysis: that
which allows better understanding of how economies as systems of
interrelated institutions work, how they change, and how that change can be
managed to produce results that would be recognized as better by
participants in the system.
Unfortunately for much of modern analysis the criteria used to evaluate
what is good economic analysis is differently determined. Peter Dorman in a
recent post to AFEEMAIL puts it very well, so I will simply quote him:
Economists "have acquired, at great personal cost, a prodigious expertise
in certain techniques, and their worth (self- and market) depends on their
continuing to deploy them. To assert heterodox methods would be to enter a
different methodological world, far less mapped out and conventionally
rigorous, and this would result in both less prestige within the profession
and less ability to sell one's work on the funding and policy markets. The
hegemony of neoclassical economics is no longer intellectual, but (pardon
me for this) institutional, embedded in the structure of the profession and
its economic and social incentives."
Ann Mayhew
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