The Emperor's Clothes

Abstract

David Colander argued to this Society two years ago that the term “neoclassical economics” ought to be declared dead (Colander 2000). I concur with him on the verdict, but do so for different reasons. Colander's argument was that neoclassicism possessed six primary attributes, and much of mainstream economics cannot be characterized in these terms. My argument is simpler. It is that neoclassical economics was primarily a theory of the human individual in economic life (albeit a flawed one), but contemporary mainstream economics does not possess a theory of the human individual. This conclusion may not surprise those who have reflected on the rise of formalism in economics in the postwar period. But for two reasons I think it important to emphasize the disappearance of a theory of the individual from economics. First, because neoclassicism implemented and defended for nearly a century one particular philosophical conception of the individual central to western thought since the Enlightenment, the abandonment of this commitment by mainstream economics is an important part of our understanding of its evolution and its relation to social thinking generally. Second, the demise of the individual in mainstream economics is also significant because, having abandoned the individual, mainstream economics is no longer capable of offering a defense of the individual in contemporary society. Indeed its project, I will suggest, is in important respects anti-individualist. It may be naïve on my part to think contemporary society still engaged in a defense of the individual. Nonetheless, I hold that thinking about the individual remains fundamental to how many people think about the social world, and that consequently mainstream economics' abandonment of the individual may render it historically irrelevant, perhaps contributing to its fragmentation and dissolution as an identifiable approach in economics. Thus the important conclusion to draw may not be Colander's: that we have seen the death of neoclassical economics. It may be that at issue today is the death of mainstream economics.