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Axiomatical examination of the neoclassical economic model. Logical assessment of the assumptions of neoclassical economic model

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  • Ada MARINESCU

    (The School of Advanced Studies of the Romanian Academy, Bucharest, Romania)

Abstract

We analyze in this paper the main assumptions of the neoclassical theory, considered as axioms, like the rationality of the economic actor, equilibrium of the markets, perfect information or methodological instrumentalism. Attempts to apply to formalism in economy are related to expressing human behaviors in mathematical models and to identifying strict causalities or necessities in the structure of economic behavior. Rationality is a model which supposes that all actors act always by following the pattern of maximization and makes behavior predictable. We consider that the basic principle on which this theory is build is actually human rationality. The individual action which strictly conforms to the principles of optimizing rationality is the most primitive level from which we can deduce the whole structure of neoclassical economic theory. The neoclassical deductive system is based on the axiom of individual universal rationality. If we analyze logically this theoretical construction, we reach the conclusion that rational behavior, which means choosing based on a function of optimum, has the potential to explain all economic phenomenon, at least in an abstract and theoretical manner. It explains the behavior of an ideal agent and of an ideal economy, and its extreme generality makes it a universal principle. Correspondence with reality matters less in this strictly abstract approach compared to the possibility to build a coherent and convincing system. The proposal and axiomatic derivation of formal models was equivalent to discovering a simplified structure, obviously reductive, of the reality, but which offered through its universality the possibility of unitary interpretation of economic phenomenon. Thus the need to offer sure, stable and general foundations characterizes the neoclassical approach.

Suggested Citation

  • Ada MARINESCU, 2016. "Axiomatical examination of the neoclassical economic model. Logical assessment of the assumptions of neoclassical economic model," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(607), S), pages 47-64, Summer.
  • Handle: RePEc:agr:journl:v:xxiii:y:2016:i:2(607):p:47-64
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    References listed on IDEAS

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    1. Tony Lawson, 2013. "What is this 'school' called neoclassical economics?," Cambridge Journal of Economics, Oxford University Press, vol. 37(5), pages 947-983.
    2. David Colander, 2018. "The Death Of Neoclassical Economics," Chapters, in: How Economics Should Be Done, chapter 5, pages 46-62, Edward Elgar Publishing.
    3. David Colander, 2009. "Complexity and the History of Economic Thought," Chapters, in: J. Barkley Rosser Jr. (ed.),Handbook of Research on Complexity, chapter 16, Edward Elgar Publishing.
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