Heterodox economics
Encyclopedia
"Heterodox economics" refers to approaches or to schools of economic thought that are considered outside of "mainstream economics
". Mainstream economists sometimes assert that it has little or no influence on the vast majority of academic economists in the English speaking world. "Mainstream economics" is called "orthodox economics" by its critics. "Heterodox economics" is an umbrella term used to cover various approaches, schools, or traditions. These include institutional
, post-Keynesian
, socialist
, Marxian
, feminist
, Austrian
, ecological
, resource-based, and social economics among others.
These views may be contrasted with the framework used by the majority of economists, commonly referred to by its supporters as mainstream and by critics as orthodox or conventional. Mainstream economics studies economic phenomena using microeconomic
and macroeconomic theory
and econometrics
.
The International Confederation of Associations for Pluralism in Economics (ICAPE) does not define "heterodox economics" and has avoided defining its scope. ICAPE defines its mission as "promoting pluralism in economics
."
In defining a common ground in the "critical commentary," one writer described fellow heterodox economists as trying to do three things: (1) identify shared ideas that generate a pattern of heterodox critique across topics and chapters of introductory macro texts; (2) give special attention to ideas that link methodological differences to policy differences; and (3) characterize the common ground in ways that permit distinct paradigms to develop common differences with textbook economics in different ways.
One study suggests four key factors as important to the study of economics by self-identified heterodox economists: history, natural systems, uncertainty, and power.
after the neoclassical revolution of the 1870s. In addition to socialist critics of capitalism, heterodox schools in this period included advocates of various forms of mercantilism
, such as the American School
dissenters from neoclassical methodology
such as the historical school
, and advocates of unorthodox monetary theories such as Social credit
. Other heterodox schools active before and during the Great Depression
included Technocracy and Georgism
.
Physical scientists and biologists were the first individuals to use energy flows to explain social and economic development. Joseph Henry
, an American physicist and first secretary of the Smithsonian Institution, remarked that the "fundamental principle of political economy is that the physical labor of man can only be ameliorated by… the transformation of matter from a crude state to a artificial condition...by expending what is called power or energy."
The rise, and absorption into the mainstream of Keynesian economics
, which appeared to provide a more coherent policy response to unemployment
than unorthodox monetary or trade policies contributed to the decline of interest in these schools.
After 1945, the neoclassical synthesis
of Keynesian and neoclassical economics resulted in a clearly defined mainstream position based on a division of the field into microeconomics (generally neoclassical but with a newly developed theory of market failure
) and macroeconomics (divided between Keynesian and monetarist views on such issues as the role of monetary policy). Austrians and post-Keynesians who dissented from this synthesis emerged as clearly defined heterodox schools. In addition, the Marxist and institutionalist schools remained active.
Up to 1980 the most notable themes of heterodox economics in its various forms included:
From approximately 1980 mainstream economics
has been significantly influenced by a number of new research programs, including behavioral economics, complexity economics
, evolutionary economics
, experimental economics
, and neuroeconomics
. As a consequence, some heterodox economists, such as John B. Davis, proposed that the definition of heterodox economics has to be adapted to this new, more complex reality:
as representing the appropriate tool for understanding the workings of economic and social life. The reasons for this rejection may vary. Some of the elements commonly found in heterodox critiques are listed below.
is the assumption of the "rationality of economic agents". Indeed, for a number of economists, the notion of rational maximizing behavior is taken to be synonymous with economic behavior (Becker 1976, Hirshleifer 1984). When some economists' studies do not embrace the rationality assumption, they are seen as placing the analyses outside the boundaries of the Neoclassical economics
discipline (Landsberg 1989, 596). Neoclassical economics
begins with the a priori assumptions that agents are rational
and that they seek to maximize their individual
utility
(or profits
) subject to environmental constraints. These assumptions provide the backbone for rational choice theory
.
Many heterodox schools are critical of the homo economicus
model of human behavior used in standard neoclassical model. A typical version of the critique is that of Satya Gabriel:
correspondences for which market clearing
equilibrium
prices exist, if there are large numbers of consumers and producers. Under convexity assumptions or under some marginal-cost pricing rules, each equilibrium will be Pareto efficient
: In large economies, non-convexity also leads to quasi-equilibria that are nearly efficient.
However, the concept of "market equilibrium" has been criticized by Austrians, post-Keynesians and others, who object to applications of microeconomic theory to real-world markets, when such markets are not usefully approximated by microeconomic models. Heterodox economists assert that micro-economic models rarely capture reality.
Mainstream microeconomics may be defined in terms of the "optimization and equilibrium", following the approaches of Paul Samuelson
and Hal Varian
. On the other hand, heterodox economics may be labeled as falling in a "institutions-history-social structure" nexus.
Geoists view as exploitative of labor the privatization of natural resources
but not the private ownership of real capital. The issue is focused by the discussion of economic rent
and producer surplus. The primary charge from geoists is that neoclassical economics has aggregated natural resources and capital in a theory of production that is incorrect because of the economic differences of land versus capital.
David Colander
, an advocate of complexity economics
, argues that the ideas of heterodox economists are now being discussed in the mainstream without mention of the heterodox economists, because the tools to analyze institutions, uncertainty, and other factors have now been developed by the mainstream. He suggests that heterodox economists should embrace rigorous mathematics and attempt to work from within the mainstream, rather than treating it as an enemy.
Energy economics
relating to thermoeconomics
, is a broad scientific
subject area which includes topics related to supply
and use of energy
. Thermoeconomists argue that economic systems always involve matter
, energy
, entropy
, and information
. Thermoeconomics is based on the proposition that the role of energy
in biological evolution should be defined and understood through the second law of thermodynamics
but in terms of such economic criteria as productivity
, efficiency, and especially the costs and benefits of the various mechanisms for capturing and utilizing available energy to build biomass and do work. As a result, thermoeconomics are often discussed in the field of ecological economics
, which itself is related to the fields of sustainability
and sustainable development
.
codes
scrolled to at JEL: B5 - Current Heterodox Approaches.
§ Scrolled to at JEL: C73 - Stochastic and Dynamic games; Evolutionary games.
Research is also being done in the multidisciplinary field of cognitive science
on individual decision making
, information
as a general phenomena, distributed cognition
and their implications on economic dynamicity.
Some schools in the social sciences aim to promote certain perspectives: classical and modern political economy
; economic history
; economic sociology
and anthropology
; gender and racial issues in economics; economic ethics
and social justice
; development studies
; and so on.
Books
Articles, conferences, papers
Journals
Mainstream economics
Mainstream economics is a loose term used to refer to widely-accepted economics as taught in prominent universities and in contrast to heterodox economics...
". Mainstream economists sometimes assert that it has little or no influence on the vast majority of academic economists in the English speaking world. "Mainstream economics" is called "orthodox economics" by its critics. "Heterodox economics" is an umbrella term used to cover various approaches, schools, or traditions. These include institutional
Institutional economics
Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behaviour. Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the "ceremonial" sphere of society on the...
, post-Keynesian
Post-Keynesian economics
Post Keynesian economics is a school of economic thought with its origins in The General Theory of John Maynard Keynes, although its subsequent development was influenced to a large degree by Michał Kalecki, Joan Robinson, Nicholas Kaldor and Paul Davidson...
, socialist
Socialist economics
Socialist economics are the economic theories and practices of hypothetical and existing socialist economic systems.A socialist economy is based on public ownership or independent cooperative ownership of the means of production, wherein production is carried out to directly produce use-value,...
, Marxian
Marxian economics
Marxian economics refers to economic theories on the functioning of capitalism based on the works of Karl Marx. Adherents of Marxian economics, particularly in academia, distinguish it from Marxism as a political ideology and sociological theory, arguing that Marx's approach to understanding the...
, feminist
Feminist economics
Feminist economics broadly refers to a developing branch of economics that applies feminist lenses to economics. Research under this heading is often interdisciplinary or heterodox...
, Austrian
Austrian School
The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...
, ecological
Ecological economics
Image:Sustainable development.svg|right|The three pillars of sustainability. Clickable.|275px|thumbpoly 138 194 148 219 164 240 182 257 219 277 263 291 261 311 264 331 272 351 283 366 300 383 316 394 287 408 261 417 224 424 182 426 154 423 119 415 87 403 58 385 40 368 24 347 17 328 13 309 16 286 26...
, resource-based, and social economics among others.
These views may be contrasted with the framework used by the majority of economists, commonly referred to by its supporters as mainstream and by critics as orthodox or conventional. Mainstream economics studies economic phenomena using microeconomic
Microeconomics
Microeconomics is a branch of economics that studies the behavior of how the individual modern household and firms make decisions to allocate limited resources. Typically, it applies to markets where goods or services are being bought and sold...
and macroeconomic theory
Macroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...
and econometrics
Econometrics
Econometrics has been defined as "the application of mathematics and statistical methods to economic data" and described as the branch of economics "that aims to give empirical content to economic relations." More precisely, it is "the quantitative analysis of actual economic phenomena based on...
.
The International Confederation of Associations for Pluralism in Economics (ICAPE) does not define "heterodox economics" and has avoided defining its scope. ICAPE defines its mission as "promoting pluralism in economics
Pluralism in economics
The pluralism in economics movement is a campaign to eliminate monism in economics. The movement's adherents have stated that substantive and methodological monism currently dominates mainstream economics....
."
In defining a common ground in the "critical commentary," one writer described fellow heterodox economists as trying to do three things: (1) identify shared ideas that generate a pattern of heterodox critique across topics and chapters of introductory macro texts; (2) give special attention to ideas that link methodological differences to policy differences; and (3) characterize the common ground in ways that permit distinct paradigms to develop common differences with textbook economics in different ways.
One study suggests four key factors as important to the study of economics by self-identified heterodox economists: history, natural systems, uncertainty, and power.
History
A number of heterodox schools of economic thought challenged the dominance of neoclassical economicsNeoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
after the neoclassical revolution of the 1870s. In addition to socialist critics of capitalism, heterodox schools in this period included advocates of various forms of mercantilism
Mercantilism
Mercantilism is the economic doctrine in which government control of foreign trade is of paramount importance for ensuring the prosperity and security of the state. In particular, it demands a positive balance of trade. Mercantilism dominated Western European economic policy and discourse from...
, such as the American School
American School (economics)
The American School, also known as "National System", represents three different yet related constructs in politics, policy and philosophy. It was the American policy for the 1860s to the 1940s, waxing and waning in actual degrees and details of implementation...
dissenters from neoclassical methodology
Methodology
Methodology is generally a guideline for solving a problem, with specificcomponents such as phases, tasks, methods, techniques and tools . It can be defined also as follows:...
such as the historical school
Historical school of economics
The Historical school of economics was an approach to academic economics and to public administration that emerged in 19th century in Germany, and held sway there until well into the 20th century....
, and advocates of unorthodox monetary theories such as Social credit
Social Credit
Social Credit is an economic philosophy developed by C. H. Douglas , a British engineer, who wrote a book by that name in 1924. Social Credit is described by Douglas as "the policy of a philosophy"; he called his philosophy "practical Christianity"...
. Other heterodox schools active before and during the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
included Technocracy and Georgism
Georgism
Georgism is an economic philosophy and ideology that holds that people own what they create, but that things found in nature, most importantly land, belong equally to all...
.
Physical scientists and biologists were the first individuals to use energy flows to explain social and economic development. Joseph Henry
Joseph Henry
Joseph Henry was an American scientist who served as the first Secretary of the Smithsonian Institution, as well as a founding member of the National Institute for the Promotion of Science, a precursor of the Smithsonian Institution. During his lifetime, he was highly regarded...
, an American physicist and first secretary of the Smithsonian Institution, remarked that the "fundamental principle of political economy is that the physical labor of man can only be ameliorated by… the transformation of matter from a crude state to a artificial condition...by expending what is called power or energy."
The rise, and absorption into the mainstream of Keynesian economics
Keynesian economics
Keynesian economics is a school of macroeconomic thought based on the ideas of 20th-century English economist John Maynard Keynes.Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and, therefore, advocates active policy responses by the...
, which appeared to provide a more coherent policy response to unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
than unorthodox monetary or trade policies contributed to the decline of interest in these schools.
After 1945, the neoclassical synthesis
Neoclassical synthesis
Neoclassical synthesis is a postwar academic movement in economics that attempts to absorb the macroeconomic thought of John Maynard Keynes into the thought of neoclassical economics...
of Keynesian and neoclassical economics resulted in a clearly defined mainstream position based on a division of the field into microeconomics (generally neoclassical but with a newly developed theory of market failure
Market failure
Market failure is a concept within economic theory wherein the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-off...
) and macroeconomics (divided between Keynesian and monetarist views on such issues as the role of monetary policy). Austrians and post-Keynesians who dissented from this synthesis emerged as clearly defined heterodox schools. In addition, the Marxist and institutionalist schools remained active.
Up to 1980 the most notable themes of heterodox economics in its various forms included:
- rejection of the atomistic individual conceptionMethodological individualismMethodological individualism is the theory that social phenomena can only be accurately explained by showing how they result from the intentional states that motivate the individual actors. The idea has been used to criticize historicism, structural functionalism, and the roles of social class,...
in favor of a socially embedded individual conception; - emphasis on time as an irreversible historical process;
- reasoning in terms of mutual influences between individuals and social structures.
From approximately 1980 mainstream economics
Mainstream economics
Mainstream economics is a loose term used to refer to widely-accepted economics as taught in prominent universities and in contrast to heterodox economics...
has been significantly influenced by a number of new research programs, including behavioral economics, complexity economics
Complexity economics
Complexity economics is the application of complexity science to the problems of economics. It studies computer simulations to gain insight into economic dynamics, and avoids the assumption that the economy is a system in equilibrium.- Models :...
, evolutionary economics
Evolutionary economics
Evolutionary economics is part of mainstream economics as well as heterodox school of economic thought that is inspired by evolutionary biology...
, experimental economics
Experimental economics
Experimental economics is the application of experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in...
, and neuroeconomics
Neuroeconomics
Neuroeconomics is an interdisciplinary field that seeks to explain human decision making, the ability to process multiple alternatives and to choose an optimal course of action. It studies how economic behavior can shape our understanding of the brain, and how neuroscientific discoveries can...
. As a consequence, some heterodox economists, such as John B. Davis, proposed that the definition of heterodox economics has to be adapted to this new, more complex reality:
-
- ...heterodox economics post-1980 is a complex structure, being composed out of two broadly different kinds of heterodox work, each internally differentiated with a number of research programs having different historical origins and orientations: the traditional left heterodoxy familiar to most and the 'new heterodoxy' resulting from other science imports.
Rejection of Neoclassical Economics
There is no single "heterodox economic theory"; there are many different "heterodox theories" in existence. What they all share, however, is a rejection of the neoclassical orthodoxyNeoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
as representing the appropriate tool for understanding the workings of economic and social life. The reasons for this rejection may vary. Some of the elements commonly found in heterodox critiques are listed below.
Criticism of the neoclassical model of individual behavior
One of the most broadly accepted principles of neoclassical economicsNeoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
is the assumption of the "rationality of economic agents". Indeed, for a number of economists, the notion of rational maximizing behavior is taken to be synonymous with economic behavior (Becker 1976, Hirshleifer 1984). When some economists' studies do not embrace the rationality assumption, they are seen as placing the analyses outside the boundaries of the Neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
discipline (Landsberg 1989, 596). Neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
begins with the a priori assumptions that agents are rational
Rationality
In philosophy, rationality is the exercise of reason. It is the manner in which people derive conclusions when considering things deliberately. It also refers to the conformity of one's beliefs with one's reasons for belief, or with one's actions with one's reasons for action...
and that they seek to maximize their individual
Methodological individualism
Methodological individualism is the theory that social phenomena can only be accurately explained by showing how they result from the intentional states that motivate the individual actors. The idea has been used to criticize historicism, structural functionalism, and the roles of social class,...
utility
Utility
In economics, utility is a measure of customer satisfaction, referring to the total satisfaction received by a consumer from consuming a good or service....
(or profits
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
) subject to environmental constraints. These assumptions provide the backbone for rational choice theory
Rational choice theory
Rational choice theory, also known as choice theory or rational action theory, is a framework for understanding and often formally modeling social and economic behavior. It is the main theoretical paradigm in the currently-dominant school of microeconomics...
.
Many heterodox schools are critical of the homo economicus
Homo economicus
Homo economicus, or Economic human, is the concept in some economic theories of humans as rational and narrowly self-interested actors who have the ability to make judgments toward their subjectively defined ends...
model of human behavior used in standard neoclassical model. A typical version of the critique is that of Satya Gabriel:
Neoclassical economic theory is grounded in a particular conception of human psychology, agency or decision-making. It is assumed that all human beings make economic decisions so as to maximize pleasure or utility. Some heterodox theories reject this basic assumption of neoclassical theory, arguing for alternative understandings of how economic decisions are made and/or how human psychology works. It is possible to accept the notion that humans are pleasure seeking machines, yet reject the idea that economic decisions are governed by such pleasure seeking. Human beings may, for example, be unable to make choices consistent with pleasure maximization due to social constraints and/or coercion. Humans may also be unable to correctly assess the choice points that are most likely to lead to maximum pleasure, even if they are unconstrained (except in budgetary terms) in making such choices. And it is also possible that the notion of pleasure seeking is itself a meaningless assumption because it is either impossible to test or too general to refute. Economic theories that reject the basic assumption of economic decisions as the outcome of pleasure maximization are heterodox.
Criticism of the neoclassical model of market equilibrium
In microeconomic theory, cost-minimization by consumers and by firms implies the existence of supply and demandSupply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...
correspondences for which market clearing
Market clearing
In economics, market clearing refers to either# a simplifying assumption made by the new classical school that markets always go to where the quantity supplied equals the quantity demanded; or# the process of getting there via price adjustment....
equilibrium
Economic equilibrium
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the values of economic variables will not change. It is the point at which quantity demanded and quantity supplied are equal...
prices exist, if there are large numbers of consumers and producers. Under convexity assumptions or under some marginal-cost pricing rules, each equilibrium will be Pareto efficient
Pareto efficiency
Pareto efficiency, or Pareto optimality, is a concept in economics with applications in engineering and social sciences. The term is named after Vilfredo Pareto, an Italian economist who used the concept in his studies of economic efficiency and income distribution.Given an initial allocation of...
: In large economies, non-convexity also leads to quasi-equilibria that are nearly efficient.
However, the concept of "market equilibrium" has been criticized by Austrians, post-Keynesians and others, who object to applications of microeconomic theory to real-world markets, when such markets are not usefully approximated by microeconomic models. Heterodox economists assert that micro-economic models rarely capture reality.
Mainstream microeconomics may be defined in terms of the "optimization and equilibrium", following the approaches of Paul Samuelson
Paul Samuelson
Paul Anthony Samuelson was an American economist, and the first American to win the Nobel Memorial Prize in Economic Sciences. The Swedish Royal Academies stated, when awarding the prize, that he "has done more than any other contemporary economist to raise the level of scientific analysis in...
and Hal Varian
Hal Varian
Hal Ronald Varian is an economist specializing in microeconomics and information economics. He is the Chief Economist at Google and he holds the title of emeritus professor at the University of California, Berkeley where he was founding dean of the School of Information...
. On the other hand, heterodox economics may be labeled as falling in a "institutions-history-social structure" nexus.
Criticism of the neoclassical model of labor markets
Marxists view capitalism as inherently exploitative of labor, and regard neoclassical theories of the labor market as ideological devices to rationalise exploitation.Geoists view as exploitative of labor the privatization of natural resources
Land (economics)
In economics, land comprises all naturally occurring resources whose supply is inherently fixed. Examples are any and all particular geographical locations, mineral deposits, and even geostationary orbit locations and portions of the electromagnetic spectrum. Natural resources are fundamental to...
but not the private ownership of real capital. The issue is focused by the discussion of economic rent
Economic rent
Economic rent is typically defined by economists as payment for goods and services beyond the amount needed to bring the required factors of production into a production process and sustain supply. A recipient of economic rent is a rentier....
and producer surplus. The primary charge from geoists is that neoclassical economics has aggregated natural resources and capital in a theory of production that is incorrect because of the economic differences of land versus capital.
Most recent developments
Over the past two decades, the intellectual agendas of heterodox economists have taken a decidedly pluralist turn. Leading heterodox thinkers have moved beyond the established paradigms of Austrian, Feminist, Institutional-Evolutionary, Marxian, Post Keynesian, Radical, Social, and Sraffian economics—opening up new lines of analysis, criticism, and dialogue among dissenting schools of thought. This cross-fertilization of ideas is creating a new generation of scholarship in which novel combinations of heterodox ideas are being brought to bear on important contemporary and historical problems, such as socially-grounded reconstructions of the individual in economic theory; the goals and tools of economic measurement and professional ethics; the complexities of policymaking in today's global political economy; and innovative connections among formerly separate theoretical traditions (Marxian, Austrian, feminist, ecological, Sraffian, institutionalist, and post-Keynesian) (for a review of post-Keynesian economics, see Lavoie (1992); Rochon (1999)).David Colander
David Colander
David C. Colander is the Christian A. Johnson Distinguished Professor of Economics at Middlebury College. He is known for his study of the economics profession itself, and the sociology of economics. His books The Making of an Economist and its later edition, The Making of an Economist, Redux, have...
, an advocate of complexity economics
Complexity economics
Complexity economics is the application of complexity science to the problems of economics. It studies computer simulations to gain insight into economic dynamics, and avoids the assumption that the economy is a system in equilibrium.- Models :...
, argues that the ideas of heterodox economists are now being discussed in the mainstream without mention of the heterodox economists, because the tools to analyze institutions, uncertainty, and other factors have now been developed by the mainstream. He suggests that heterodox economists should embrace rigorous mathematics and attempt to work from within the mainstream, rather than treating it as an enemy.
Energy economics
Energy economics
Energy economics is a broad scientific subject area which includes topics related to supply and use of energy in societies. Due to diversity of issues and methods applied and shared with a number of academic disciplines, energy economics does not present itself as a self contained academic...
relating to thermoeconomics
Thermoeconomics
Thermoeconomics, also referred to as biophysical economics, is a school of heterodox economics that applies the laws of thermodynamics to economic theory. The term "thermoeconomics" was coined in 1962 by American engineer Myron Tribus, and developed by the statistician and economist Nicholas...
, is a broad scientific
Science
Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe...
subject area which includes topics related to supply
Energy supply
Energy supply is the delivery of fuels or transformed fuels to point of consumption. It potentially encompasses the extraction, transmission, generation, distribution and storage of fuels...
and use of energy
Energy
In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...
. Thermoeconomists argue that economic systems always involve matter
Matter
Matter is a general term for the substance of which all physical objects consist. Typically, matter includes atoms and other particles which have mass. A common way of defining matter is as anything that has mass and occupies volume...
, energy
Energy
In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...
, entropy
Entropy
Entropy is a thermodynamic property that can be used to determine the energy available for useful work in a thermodynamic process, such as in energy conversion devices, engines, or machines. Such devices can only be driven by convertible energy, and have a theoretical maximum efficiency when...
, and information
Information
Information in its most restricted technical sense is a message or collection of messages that consists of an ordered sequence of symbols, or it is the meaning that can be interpreted from such a message or collection of messages. Information can be recorded or transmitted. It can be recorded as...
. Thermoeconomics is based on the proposition that the role of energy
Energy
In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...
in biological evolution should be defined and understood through the second law of thermodynamics
Second law of thermodynamics
The second law of thermodynamics is an expression of the tendency that over time, differences in temperature, pressure, and chemical potential equilibrate in an isolated physical system. From the state of thermodynamic equilibrium, the law deduced the principle of the increase of entropy and...
but in terms of such economic criteria as productivity
Productivity
Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...
, efficiency, and especially the costs and benefits of the various mechanisms for capturing and utilizing available energy to build biomass and do work. As a result, thermoeconomics are often discussed in the field of ecological economics
Ecological economics
Image:Sustainable development.svg|right|The three pillars of sustainability. Clickable.|275px|thumbpoly 138 194 148 219 164 240 182 257 219 277 263 291 261 311 264 331 272 351 283 366 300 383 316 394 287 408 261 417 224 424 182 426 154 423 119 415 87 403 58 385 40 368 24 347 17 328 13 309 16 286 26...
, which itself is related to the fields of sustainability
Sustainability
Sustainability is the capacity to endure. For humans, sustainability is the long-term maintenance of well being, which has environmental, economic, and social dimensions, and encompasses the concept of union, an interdependent relationship and mutual responsible position with all living and non...
and sustainable development
Sustainable development
Sustainable development is a pattern of resource use, that aims to meet human needs while preserving the environment so that these needs can be met not only in the present, but also for generations to come...
.
Fields or schools of heterodox economics
# Listed in Journal of Economic LiteratureJournal of Economic Literature
The Journal of Economic Literature is a peer-reviewed academic journal on economy published by the American Economic Association. It was established in 1963 as the Journal of Economic Abstracts. As a review journal, it mainly features essays and reviews of recent economic theories...
codes
scrolled to at JEL: B5 - Current Heterodox Approaches.
§ Scrolled to at JEL: C73 - Stochastic and Dynamic games; Evolutionary games.
Research is also being done in the multidisciplinary field of cognitive science
Cognitive science
Cognitive science is the interdisciplinary scientific study of mind and its processes. It examines what cognition is, what it does and how it works. It includes research on how information is processed , represented, and transformed in behaviour, nervous system or machine...
on individual decision making
Decision making
Decision making can be regarded as the mental processes resulting in the selection of a course of action among several alternative scenarios. Every decision making process produces a final choice. The output can be an action or an opinion of choice.- Overview :Human performance in decision terms...
, information
Information
Information in its most restricted technical sense is a message or collection of messages that consists of an ordered sequence of symbols, or it is the meaning that can be interpreted from such a message or collection of messages. Information can be recorded or transmitted. It can be recorded as...
as a general phenomena, distributed cognition
Distributed cognition
Distributed cognition is a psychological theory developed in the mid 1980s by Edwin Hutchins. Using insights from sociology, cognitive science, and the psychology of Vygotsky it emphasizes the social aspects of cognition. It is a framework that involves the coordination between individuals,...
and their implications on economic dynamicity.
Some schools in the social sciences aim to promote certain perspectives: classical and modern political economy
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...
; economic history
Economic history
Economic history is the study of economies or economic phenomena in the past. Analysis in economic history is undertaken using a combination of historical methods, statistical methods and by applying economic theory to historical situations and institutions...
; economic sociology
Economic sociology
Economic sociology studies both the social effects and the social causes of various economic phenomena. The field can be broadly divided into a classical period and a contemporary one. The classical period was concerned particularly with modernity and its constituent aspects...
and anthropology
Economic anthropology
Economic anthropology is a scholarly field that attempts to explain human economic behavior using the tools of both economics and anthropology. It is practiced by anthropologists and has a complex relationship with economics...
; gender and racial issues in economics; economic ethics
Ethics
Ethics, also known as moral philosophy, is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice and crime, etc.Major branches of ethics include:...
and social justice
Social justice
Social justice generally refers to the idea of creating a society or institution that is based on the principles of equality and solidarity, that understands and values human rights, and that recognizes the dignity of every human being. The term and modern concept of "social justice" was coined by...
; development studies
Development studies
Development studies is a multidisciplinary branch of social science which addresses issues of concern to developing countries. It has historically placed a particular focus on issues related to social and economic development, and its relevance may therefore extend to communities and regions...
; and so on.
See also
- Kinetic exchange models of marketsKinetic exchange models of marketsKinetic exchange models are multi-agent dynamic models inspired by the statistical physics of energy distribution, which try to explain the robust and universal features of income/wealth distributions....
- EAEPE
- Post-autistic economicsPost-autistic economicsThe movement for Post-Autistic Economics was born through the work of Sorbonne economist Bernard Guerrien. The movement is best seen as a forum of different groups critical of the current mainstream: from behavioral and heterodox to feminist, green economics and econo-physics...
- Real-world economics reviewReal-world economics reviewThe real-world economics review is a journal of heterodox economics, published by the post-autistic economics network since 2000, and formerly known as the post-autistic economics review...
Publications on heterodox economics
Articles- Flaherty, Diane, 1987. "radical political economy," The New Palgrave: A Dictionary of Economics, v, 4. pp. 36–39.
- _____, 2008. "radical economics," The New Palgrave Dictionary of Economics, 2nd Edition.Abstract.
- Lee, Frederic. S. 2008. "heterodox economics", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
Books
- Lee, Frederic S. 2009. A History of Heterodox Economics Challenging the Mainstream in the Twentieth Century. London and New York: Routledge. 2009
- Arestis, Philip; Sawyer, Malcolm C., A Biographical Dictionary of Dissenting Economists, 2000, pp. 736, ISDN 978 1 85898560 2
- Blatt, John Markus:, 1983, Dynamic Economic Systems: A Post-Keynesian Approach, Armonk, ISBN 0-7108-0273-0
- Cohn, Steven Mark, 2006. COHN, Reintroducing Macroeconomics: A Critical Approach. M. E. Sharpe, Inc, December. ISBN 978-0-7656-1450-6 ISBN 978-0-7656-1451-3
- Davis, John, ed., 2003. The Theory of the Individual in Economics: Identity and Value. Routledge. ISBN 0-415-20219-1
- Fullbrook, Edward, 2004. editor. A Guide to What’s Wrong with Economics. London: Anthem Press, November ISBN 1-84331-148-8
- Harvey, John T. and Robert F. Garnett, Jr., ed., 2007. Future Directions for Heterodox Economics, Series Advances in Heterodox Economics, The University of Michigan Press, . ISBN 978-0-472-03247-1
- Lavoie, M., 1992. Foundations of Post-Keynesian Economic Principles, Aldershot: Edward Elgar.
- McDermott, John, 2003. Economics in Real Time: A Theoretical Reconstruction, Series Advances in Heterodox Economics, The University of Michigan Press. ISBN 978-0-472-11357-6
- Rochon, Louis-Philippe, 1999. Credit, Money and Banking: An Alternative Post-Keynesian Approach, Cheltenham: Edward Elgar.
- Rochon, Louis-Philippe and Rossi, Sergio, editors, 2003. Modern Theories of Money: The Nature and Role of Money in Capitalist Economies. Edward Elgar Publishing. ISBN 1-84064-789-2
- Stanfield, J. R. 1979. Economic Thought and Social Change. Carbondale, IL: Southern Illinois University Press. ISBN 978-0-809-30914-6
- Stanfield, J. R. 1986. The Economic Thought of Karl Polanyi. London: Macmillan Press and New York: St. Martin's Press ISBN 978-0-312-23658-8
- Stanfield, J.R. 1995. Economics, Power, and Culture: Essays in the Development of Radical Institutionalism. London: Macmillan Press. ISBN 978-0-312-12208-9
Articles, conferences, papers
- Cohn, Steve. 2003. 2003. "Common Ground Critiques of Neoclassical Principles Texts," Post-Autistic Economics Review, (18), article 3.
- Colander, D. 2002, "The Death Of Neoclassical Economics," Journal of the History of Economic Thought, 22(3),. pp. 127–43. Online readable, free link - Copyright JHET, All rights reserved
- Lavoie, Marc, 2006. Do Heterodox Theories Have Anything in Common? A Post-Keynesian Point of View.
- Lavoie, Catherine, & Larry Lawson, 1990. Financial system restructuring: lessons from Veblen, Keynes, and Kalecki. Journal of Economic Issues 24 (1): 115-31.
- Lawson, Tony, 2006. "The Nature of Heterodox Economics," Cambridge Journal of Economics, 30(4), pp. 483–505. Pre-publication copy.
- Minsky, Hyman, 1996. Uncertainty and the institutional structure of capitalist economies. Journal of Economic Issues 30(2):357-68.
- Ranson, Baldwin, 2007. Heterodox theoretical convergence: possibility or pipe dream? (Notes and Communications)(Report). Journal of Economic Issues. 1 (March).
- Seccareccia, M. 1997. Early Twentieth-Century Heterodox Monetary Thought», Money, Financial Institutions, and Macroeconomics, ed. by A.J. Cohen, H. Hagemann and J.N. Smithin, Boston: Kluwer Academic Publishers, pp. 125–39
Journals
- American Journal of Economics and Sociology (AJES)
- Cambridge Journal of Economics (CJE
- Capital & Class
- Contributions to Political Economy (CPE)
- Forum for Social Economics
- International Journal of Political Economy
- International Journal of Social Economics (IJSE)
- Intervention: European Journal of Economics and Economic Policies
- Journal of Economics Issues (JEI)
- Journal of Post Keynesian Economics (JPKE)
- Metroeconomica
- Monthly Review
- New Left Review (NLR)
- PSL Quarterly Review (PSLQR)
- Review of International Political Economy (RIPE)
- Review of Political Economy (ROPE)
- Review of Radical Political Economics (RRPE)Review of Radical Political EconomicsThe Review of Radical Political Economics is the quarterly journal of the Union for Radical Political Economics www.URPE.org. Launched in 1968, it is a leading venue for scholarly articles on radical political economics, including Marxist, feminist, lnstitutional, ecological, and post-Keynesian...
- Review of Social Economy (ROSE)
- World Review of Political Economy (WRPE)