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The Archaic, the Obsolete and the Mythical in Neoclassical Economics

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  • Hamid Hosseini

Abstract

. The assumptions of omniscient rationality and of optimizing behavior of neoclassical economics are serious flaws in that theoretical system. By imitating Newtonian mechanics, by going back to 18th century psychology and philosophy and to Benrtham's rationalism and hedonism, and by assuming the ideal world of perfect competition, neoclassical economics had to ignore its psychological dimension and thus focus on the behavior of a simple and abstract “economic man”, who lacks social, ethical and political dimensions, and who is not a creature of habit, hunches, impulses, etc. The rationality postulate cannot be tested empirically and economic behavior is much too complicated to warrant use of the classical optimization techniques of Newtonian mechanics. Economics, dealing with open systems and being an evolutionary science, once again is not logically consistent with the application of classical Newtonian optimization techniques.

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  • Hamid Hosseini, 1990. "The Archaic, the Obsolete and the Mythical in Neoclassical Economics," American Journal of Economics and Sociology, Wiley Blackwell, vol. 49(1), pages 81-92, January.
    • Handle: RePEc:bla:ajecsc:v:49:y:1990:i:1:p:81-92
    DOI: 10.1111/j.1536-7150.1990.tb02262.x
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