Growth theory after Keynes, part II: 75 years of obstruction by the mainstream economics culture

Abstract

Part I of this essay explained the sequence of events that enabled the neoclassical paradigm to regain its dominant position in mainstream economics following serious challenges by ‘Keynesian’ economists. This second essay seeks to answer the question of why the economics profession was so willing to sustain the neoclassical paradigm in the face of the reality-based challenges by ‘Keynesian’ economists like Harrod and Domar. The answer is sought in the culture of economics, the history of science in general, and the study of power in the field of political economy. This article draws heavily on the work of the French sociologist Pierre Bourdieu, who divides culture into habitus (procedures and dispositions) and doxa (more abstract beliefs and philosophies), in order to provide insight into how culture affects economic thinking. Bourdieu’s concept of symbolic violence helps to explain how a narrower neoclassical growth model was enthusiastically accepted as a replacement for the ‘Keynesian’ Harrod-Domar growth model. Financial and business interests clearly understood the power of culture and they used their accumulated wealth to support the neoliberal doxa and neoclassical habitus that would induce economists to willingly provide intellectual cover for policies that benefitted those financial and business interests. We conclude with a discussion on how the history of thought on economic development might have evolved if the Keynesian paradigm, and its dynamic Harrod-Domar model, had prevailed.