Heterodox microeconomics and the foundation of heterodox macroeconomics
The resolution of the controversy over the microfoundations of macroeconomics is important to heterodox economics. In this essay, I argue that the controversy is due to misspecification. That is, the conventional understanding of the controversy is that it is a reductionist exercise of macroeconomics to mainstream microeconomics. However, mainstream microeconomics is theoretically incoherent and hence cannot provide the microfoundations for any macroeconomics, mainstream or heterodox. In addition, a common position in heterodox economics is that heterodox macroeconomics generates a mainstream microeconomics sub-structure. But it is argued that this is not the case; rather it generates a heterodox microeconomics substructure. The essay concludes with the argument that in heterodox economics the micro-macro dichotomy does not exist and hence the controversy should be dismissed.
|Date of creation:||25 Apr 2011|
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- Rizvi, S Abu Turab, 1994. "The Microfoundations Project in General Equilibrium Theory," Cambridge Journal of Economics, Oxford University Press, vol. 18(4), pages 357-77, August.
- Tae‐Hee Jo, 2011.
"Social Provisioning Process and Socio‐Economic Modeling,"
American Journal of Economics and Sociology,
Wiley Blackwell, vol. 70(5), pages 1094-1116, November.
- Jo, Tae-Hee, 2011. "Social Provisioning Process and Socio-Economic Modeling," MPRA Paper 28969, University Library of Munich, Germany.
- Lee, Frederic, 2011. "Heterodox surplus approach: production, prices, and value theory," MPRA Paper 31824, University Library of Munich, Germany.
- Frederic Lee & Steve Keen, 2004. "The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory," Review of Social Economy, Taylor & Francis Journals, vol. 62(2), pages 169-199.
- Lee, Frederic & Jo, Tae-Hee, 2010. "Heterodox production and cost theory of the business enterprise," MPRA Paper 27635, University Library of Munich, Germany.
- Lee, Frederic, 2011. "Old controversy revisited: pricing, market structure, and competition," MPRA Paper 30490, University Library of Munich, Germany.
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