The nature of heterodox economics

Abstract

Tony Lawson’s critique of mainstream economics is that it is everywhere formalistic and deductive, that this leads it to a closed systems approach based on identifying social event regularities, and that this is an inappropriate strategy for dealing with the subject matter with which economics is concerned (Lawson, 1997, 2003). Heterodox economics is then distinguished by its rejection of all this and by its commitment to an ontological analysis that takes social reality to be intrinsically dynamic or processual, interconnected and organic, structured, exhibits emergence, and includes value and meaning and is polyvalent (Lawson, 2006, pp. 495-496). Broadly, I agree with these conclusions. My concern is that they may be truer of economics circa 1980, and neither fully capture the state of economics since then, nor provide us with a sufficient understanding of the current direction of development of economics. I have previously argued that in the last two decades the economics research frontier has undergone significant transformation associated with the emergence of a collection of new research strategies, most of which criticize traditional neoclassical assumptions and originate in other sciences (Davis, 2006c; also cf. Colander et al., 2004). Here, however, my goal is to discuss heterodox economics, or more specifically, the changing nature of heterodox economics and its changing relation to orthodox economics. I will argue a view I believe is largely contrary to Lawson’s, namely, that: (i) heterodox economics is more heterogeneous than he and many others believe and moreover heterogeneous in ways generally not recognized by many who see themselves as heterodox, (ii) the reference of the term “heterodox economics” is quite different from what most economists, heterodox and orthodox, believe it to be, and (iii) understanding this heterogeneity is important for understanding the direction of development of current economics.1