A 1963 Critique of Neoclassical Economics: Did Anything Change?

In 1963 Hans Alberts, Darrell Arnold and Frank Maier-Rigaud published a ‘critique’ of neoclassical economics which recently has been translated into english. It’s depressing: despite all the valid points they make the dominance of neoclassical economics has only increased – remember that before around 1963 Arrow still dared to publish his ‘Arrow-paradox‘ of social indifference curves (adding different neoclassical individual indifference curves does not lead to a neoclassical social indifference curves) while even Gary Beckerpublished an article which implicated that we do not need neoclassical indifference curves to derive the downward sloping demand curve… After around 1963, however, the ranks closed.

And despite such devastating criticisms from their own ranks, despite the criticisms voiced in the Alberts e.a. article, despite overwhelming new neurological evidence that neoclassical ‘utility’ is a figment of the ‘left brain interpreter‘ made up after our choices and despite all these neoclassical economic historians which, after carefull study of real people and real societies, left the neoclassical building, Robert Lucas style ”We are the Borg’ social indifference curves and money and debt does not matter’ kinds of thinking still rules. Well, the example of the historians show that not all is lost. Sometimes, resistance is not futile. So, here a snippet from the article:

In my view, it should not have only been possible for us to have learned from Max Weber that the dominant style of economic activity in many parts of the worldisasocialproduct,that it has a traceable historicalde velopment,and that it may be subject to great alterations in the future. It should also have been possible for us to have drawn the obvious consequence of his studies for theory formation; namely that it will only lead to general insights if it penetrates behind the quasi-invariances of the economic style that began with the industrial economy. Changing economic studies in accord with these insights would require a decisive shift in theoretical perspective, a shift that would perhaps resemble traditionally heterodox currents of economic thought more than the pure economics of the neoclassical variety