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A paradigmatic change is needed for understanding the real market

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  • Zhang, Weiying

Abstract

Economics in China has been neoclassicalized in the past few decades. In this article, I argue that neoclassical economics is not a good theory of the market. It misleads both economists and government in understanding the economic issues. China is particularly vulnerable to its defects. In contrast, the Austrian School of economics is a better theory of the market since it studies the real market, not an imaginary market. The most important difference between the two economics paradigms is their understandings of the entrepreneurship. Entrepreneurship is missed in neoclassical economics. In the Austrian School economics and Schumpeterian economics, entrepreneurship is the soul of the market. The paradigm shift of economics is urgently needed but it will be a slow process. Chinese economists should play a role in this transformation.

Suggested Citation

  • Zhang, Weiying, 2021. "A paradigmatic change is needed for understanding the real market," China Economic Review, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:chieco:v:66:y:2021:i:c:s1043951x21000201
    DOI: 10.1016/j.chieco.2021.101602
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    References listed on IDEAS

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    1. Meir Kohn, 2004. "Value and Exchange," Cato Journal, Cato Journal, Cato Institute, vol. 24(3), pages 303-339, Fall.
    2. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    3. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
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