Abstract
This paper aims to survey the literature on the theoretical enterprise of providing the microfoundations of macroeconomics. To do so, it evaluates that project from the viewpoint of economic methodology, mostly of critical realism. Its novelty lies in analysing the reductionism inbuilt in the project and its unsuitability both to its own terms and to the purpose of illuminating socioeconomic reality. We also stress that, in addition to a project of science (the sound or rigorous way of doing ‘scientific’ economics), it includes an implicit ontology of market sociability that establishes links between microfoundations and the neoliberal ideology. Some attempts at overcoming the reductionist individualism of microfoundations are also evaluated, such as complexity theory and old institutionalism, pointing out its potential and shortcomings. In order to deal with a complex, hierarchically multi-level structured and open reality, economic theory should not adopt explanations that give precedence to a single level. It should instead prefer approaches in which micro and macro levels are mutually conditioned and relatively autonomous.
Highlights
There is an extensive literature on the microfoundations of macroeconomics which is of a wider interest than that curbed to the academic debate as it influences how macro policies are construed and with which persuasion strategies they are prescribed to governments and to public opinions
This paper highlights the effects that interpreting the economy has on the economic policy
After surveying some problems of the microfoundations project we related them to its implicit reductionist ontology by using philosophical ontology as developed by the critical realism for its insistence on the issue of the matching between methods of analysis and subject matter. Following this lead and Soromenho»s (2000) argument, we present the ontology of the microfoundations project as the sociability of independent producers in which the only
Summary
There is an extensive literature on the microfoundations of macroeconomics which is of a wider interest than that curbed to the academic debate as it influences how macro policies are construed and with which persuasion strategies they are prescribed to governments and to public opinions. BRAZILIAN KEYNESIAN REVIEW, 6(2), p.192-214, 2nd Semester/2020 social link is the contingent act of exchange This ontological conception is suitable to the project in two ways: on one hand, it maintains the agents' autonomy (deemed as atoms in their relations to one another) and, on the other, assuming that the agents' behavior is strictly self-interested and hyper-rational, it draws implications to the systemic level by searching for coordination mechanisms to make the individual plans mutually compatible. This project complies with the methodological individualism desideratum its ontological implications forcefully misrepresent what we know about real world agents.
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