=================== HES POSTING =================== I have come to believe that the term neoclassical is no longer a useful term to capture the ideas that are taught to economists in graduate school. What is taught, and what is believed by the majority of economists, is much more of a pragmatic application of ideas about individual self-interest interacting into some result. Most policy work is econometrically based data mining, not application of theory. The strong arguments that held the neoclassical economic paradigm together theoretically have been eliminated and replaced with a pragmatism about policy. Game theory with no definite result has replaced any theoretical defense of the competitive model in standard graduate micro. In macro there is a mess, but what remains in the majority of schools is essentially data analysis with slight modifications due to theoretical preconceptions. So while I agree with Drue that the U.S. institutional structure does not approximate "the neoclassical paradigm" I also agree with Robin that the mainstream economic approach is kept because it sheds some light, or seems to, on economic policy. I see far less ideological content than does Drue and Joan Robinson. The reality is that the majority of economists I talk to--including the high up ones--are liberal. They favor redistribution and are open to state action if they believe it will be beneficial. Look who supports the economists for peace movement. Libertarians and conservatives feel as disenfranchised as radicals (well, almost). Clearly, the Samuelson-Solow-Arrow nexus is liberal. Liberals are, by nature, hesitant about significantly changing institutions which leads to a pragmatism about policy and a hesitancy about changing institutions. This makes their ideas fit in well with political forces which are also hesitant about changing institutions. The few people who care about internal coherence of the broader paradigmatic approach are exploring other options--that's why complexity theory at Santa Fe was supported by Arrow. It has not been accepted because it has not yet had the major insight or event that overcomes the inertia associated with the old approach. I think what has caused the problem is the combination of theory and policy--something Marshall warned against. The only economists who can really delve into theory in a neutral way are those who keep themselves out of any political fray. The combination of theory and policy advocacy makes it seem that the policy arguments are based in theory when in fact they are based in a pragmatism. Most economists simply aren't much interested in theory. The rise of the support of the market among these pragmatic economists and among economists has more to do with recent history--the market seems to be working--than it does with theory. The fall of communism, the success of market oriented development plans, and the continued strength of the U.S. economy has led to the pro-market mood of the country. David Colander ============ FOOTER TO HES POSTING ============ For information, send the message "info HES" to [log in to unmask]