Neoclassical economics in brief

hudson-200x300I am often critical of neoclassical economics on this blog, but I don’t think I have ever offered a definition of it. This school of thought and its modern developments dominate the mainstream, so here are some typically iconoclastic thoughts from Professor Michael Hudson, an economist whose work is very much in the non-mainstream or heterodox tradition. The extract is taken from his new book J is for Junk Economics – A Guide to Reality in an Age of Deception (2017):

Neoclassical Economics: A term coined by Thorstein Veblen for the conservative reaction in the last quarter of the 19th century opposing the socialist tendencies toward which the classical economics was leading. The main aims of this post-classical economics were to strip away the characterization of ground rent and other economic rent as unearned income, and to ward off any analysis showing how governments played a productive role as investors in public infrastructure, money creators or regulators. And by taking the existing institutional and property environment for granted, the marginalist approach avoided discussion of the structural reforms needed to cope with economic polarization, the economy-wide expansion of debt, and the finance, insurance and real estate sector mode of rent-seeking and “virtual wealth”. So a more apt term would have been post-classical economics, because it rejected the political dimension of political economy.”

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