William Chaney, a Marxist economist, criticizes neoclassical economics, discusses its assumptions, contradictions, and dominance. He explores positive externalities, problematic presumptions in neoclassical economics, and the ideological superstructure behind its dominance. Chaney also talks about challenging mainstream economic concepts and promoting dissident economics on college campuses.
Neoclassical economics naturalizes capitalism and fails to account for downstream problems like monopolies.
The belief in individual rational choices in the free market contradicts the tendency of capitalism to lead to monopolies.
The formation of monopolies within neoclassical economics raises questions about government intervention versus market competition.
Alternative economic theories challenge neoclassical economics and offer new possibilities for economic systems.
Deep dives
Neoclassical Economics: The Dominant Economic Theory
Neoclassical economics is the reigning economic orthodoxy and the dominant economic theory today. It is an extension of classical economics, which praised capitalism and believed it would lead to social harmony. Neoclassical economics changed the definition of value from labor to how much someone is willing to pay for a commodity. It explains the economy through the concept of individuals making choices based on their preferences, resources, and technology. The goal is to reach equilibrium, a harmonious state where conflicts between individuals disappear. However, neoclassical economics faces challenges like the tendency towards monopolies, government intervention, externalities, and the contradiction between individual rationality and marketing. Some economists argue that monopolies are a result of government intervention, while others claim they are more efficient. The separation between neoclassical economics and the business school reflects the difference between ideology and practicality, while the debates surrounding monopolies often revolve around the role of government and the efficiency of the market.
The Problem of Starting with the Rational Individual
Starting with the individual as the core metric unit in economics raises questions about free will and the presumption of rationality. The belief in radical free will and rational choices in the free marketplace has implications for marketing strategies that artificially create demand for unnecessary products. This contradicts the notion of rational individuals making choices in their own self-interest. It also raises questions about the tendency of capitalism to lead toward monopolies and the idea that competition alone can prevent monopoly formation. The blame is often shifted to the government, but the influence of money in politics often results in the monopolist buying off politicians. The core assumption of neoclassical economics fails to account for these downstream problems that arise from the focus on the individual as the starting point.
Monopolies and the Role of Government
The issue of monopoly formation within neoclassical economics is a complex subject. While some economists recommend government intervention and trust-busting policies to address monopolies, others argue that monopolies are more efficient. The argument that government policies and interventions enable monopolies is commonly made, but fails to consider the tendency of capitalism to naturally produce monopolies. The problem of monopolies is exacerbated by the influence of money in politics, with the monopolist often buying off politicians to prevent trust-busting. The question of government intervention versus market competition is a divisive issue in neoclassical economics, with different economists offering varying perspectives.
Challenges with Monopolies and Oligopolies
The formation of monopolies is a recurring challenge in neoclassical economics. While competition is idealized, the reality often leads to monopolies or oligopolies. Arguments are made that monopolies can be more efficient due to economies of scale. However, the issue of monopolies goes beyond economic efficiency and extends to their impact on society. The control and influence exerted by monopolies reshape markets and limit the choices available to consumers. The debate surrounding monopolies involves the question of government intervention or regulation and the long-term effects on competition and consumer welfare. The existence and consequences of monopolies are subjects of ongoing discussion within neoclassical economics.
The dominance of neoclassical economics
Neoclassical economics has remained dominant despite its flaws because it serves the ideological function of capitalism and has a scientific veneer. It is funded and prioritized by the capitalist class, and uses tools from other sciences to create the appearance of objectivity. It presents a unified theory that can explain various economic phenomena, even if the explanations don't always make sense. Neoclassical economics has the power to produce explanations that benefit both the capitalists and regular working people, reinforcing its position as the dominant economic theory.
Challenging neoclassical economics
There are various alternative economic theories that challenge neoclassical economics, including Marxian economics, Keynesian economics, institutional economics, feminist economics, ecological economics, and decolonial economics. These theories provide different perspectives on the economy, critiquing the assumptions and premises of neoclassical economics. They offer alternatives for how the economy can be organized, such as socialism, communism, and the solidarity economy. By exploring these alternative theories, we can challenge the hegemony of neoclassical economics and envision new possibilities for economic systems.
Resources for alternative economic education
There are two online courses available for those interested in alternative economic education. The 'Economics for Emancipation' course provides a radical introduction to economics for activists, covering topics like how capitalism works, alternative economic systems, and the history of the U.S. economic system. It is designed to be accessible and participatory, and the materials are available for free. The 'Rethinking Econ 101' course is a syllabus aimed at challenging neoclassical economics within universities. It covers neoclassical economics, alternative economic theories, and explores possibilities for student organizing to introduce these alternative perspectives into university curriculum. Both courses offer valuable resources for those seeking to challenge and expand economic education.
Seizing the opportunity
The current moment presents an opportunity to challenge the dominance of neoclassical economics. With the neoliberal era in decline, there is growing recognition of the need for alternatives to the status quo. By organizing, educating, and challenging the orthodoxy, we can pave the way for a more equitable and just economic system. It is crucial to engage in dialogue, build power, and explore different economic perspectives beyond neoclassical economics to envision and create a better future.
William Chaney returns to the show, this time to discuss macro economics, criticize neoclassical economics from a marxist perspective, The Center for Popular Economics, how economics attempts to naturalize capitalism, neoliberalism as applied libertarianism, and much more! Check out the Center for Popular Economics: https://www.populareconomics.org economics for emancipation (course in radical economics 101 for activists) — https://economics4emancipation.net rethinking economics 101 (course in heterodox economics 101 for students) — https://www.rethinkeconomics.org/econ101/ shoutouts/partners in the rethinking economics 101 course: — ecological economics for all — institute for new economic thinking — united states society for ecological economics Outro Music: "strange arithmetic" by the coup --------------------------
