Modern Political Economics by Yanis Varoufakis & Joseph Halevi & Nicholas Theocarakis

Author:Yanis Varoufakis & Joseph Halevi & Nicholas Theocarakis
Language: fra
Format: epub

9.5 The Dance of the Meta-axioms

Models are an open invitation to meddle with assumptions, and formalist neoclassical models have been no exception. Since Nash’s 1950 paper, we have had six decades of such meddling. Some of th^se amendments were so extensive that many, including economists who had previously been most critical of neoclassicism,50 began to discern a fundamental shift from neoclassical formalism. In evidence, they cite the noteworthy relaxation of the assumptions about what people are like51 and, more generally, the observation that the traditional neoclassical core (e.g. General Equilibrium) seems to have been sidelined by non-formalist pursuits, for example, experimental economics, simulations, neuroeconomics, evolutionaiy models, etc.

This section cautions against such a verdict. It suggests that neoclassicism’s stranglehold over the economics mainstream is as strong as it has ever been. Indeed, the more it seems to ■.‘loosen up’, the greater its power over the hearts and minds of economists, politicians and business. This claim is based on the observation that, at close inspection, the centrifugal forces occasioned by dissatisfaction with the original formalist neoclassical position, after initially pushing the mainstream away from the neoclassical nucleus, eventually subside, turning centripetal. At that point, they return the analysis either to the original neoclassical position or, even worse, to a position at a higher plane of neoclassical abstraction on which the original ‘problem7 not only remains unsolved but is, indeed, amplified and potentially more misleading.

The dynamic mechanism, at work is outlined below in diagrammatic form (se^ Figure 9.1). We term it the Dance of the Meta-axioms featuring the following simple steps: Starting from the original formalist neoclassical position 1, some theoretical challenge c is issued (either from within neoclassicism or from without); for example, the opinion that economics assumes too much rationality on behalf of investois, or that it underplays the importance of social norms.

In some cases, the challenge is ignored outright (arrow i) while in others it is addressed (arrow a) via a relaxation that occurs within one (or both) of the first two meta-axioms. At that stage, because of the by now all too familiar Inherent Error, the analysis hits an invisible Wall of Radical Indeterminacy and the profession recoils in horror. To ‘close' the model, either it retreats to the original position (1) or it backslides (arrow b), via a severe tightening of the third meta-axiom (the shift from e to E), to some new position 4; a position where the

Five examples:

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