For a heterodox mainstream economics: an academic manifesto

Abstract

The hard core of neoclassical economics (general equilibrium, rational expectations macroeconomics, and endogenous growth models) is essentially mistaken because it adopts a hypothetical-deductive method that is suitable for the methodological sciences, whereas a substantive social science requires an empirical or historical-deductive method. Although Marshallian microeconomics is also hypothetical-deductive, it is a major achievement because it actually founded a methodological science: economic decision making, later completed by game theory. As deductive thought allows for mathematical reasoning, the resulting models are apparently scientific and constitute the core of mainstream economics. But often they are economic 'reasonings,' not real theories able to predict and orient. This fact became obvious in the 2008 global financial crisis. Now is the time to change the mainstream; and the present paper is an academic manifesto in this direction. We need a modest and pragmatic economic theory-a Keynesian-structuralist economics that takes into consideration not just agency but structures and institutions too.