ABSTRACT
Scholars generally view the history of economics in the twentieth century as an intellectual history, that is, in terms of the history of economic thought. However, for the past decade, there has slowly emerged research on the social construction of communal activities that promoted and sustained the economic ideas and theories. This type of research generates what can be called community histories. Clearly the intellectual and the community histories of economics are distinct in their subject matter, but they are symbiotically related in that one presupposes the other and changes in one will affect the other. The essays in this book are primarily concerned with community histories not of mainstream economics, but of a non-comparable, alternative economics, specifically heterodox economics. But in saying this, an immediate problem emerges in that most scholars in the history of economics do not believe that heterodox economics has an intellectual history and hence deny that a heterodox economics community existed of which a history can be written. That is, they adopt the position-the continuity-pluralism thesisthat neoclassical economics dominated economics for all of the twentieth century, although there were often periods of internal pluralism. The significance of the thesis to scholars of the history of economics is its suggestion that throughout the last century no theoretical alternatives to neoclassical economic theory existed; only heretical views that enriched the dominant economic discourse and made important theoretical contributions, while the ones that made no contributions deservedly disappeared.1 Moreover, the thesis dismisses the possibility that heretical ideas could evolve into nonneoclassical ones independently of their heretical originators or that welldeveloped non-comparable theoretical alternatives take time to emerge. Thus the continuity-pluralism thesis effectively makes the economic landscape of the twentieth century non-contestable, thereby rendering alternative economists invisible, the existence of alternative economics implausible, and the writing of its intellectual and community history impossible. The continuity-pluralism thesis clearly captures the development of neo-
classical economics since 1900 if not before. For example, the tools, models, and discourse that comprise and concretely define neoclassical price theory can be identified from the textbooks assigned in introductory, intermediate,
and graduate economic courses. Table 1.1 lists the twenty-nine core tools and models included in American neoclassical price theory textbooks in the last one hundred years. It is divided into four time periods, the first being the base period, while the next two represent the supposed periods of pre-1940 pluralism and the post-war ascendancy of neoclassical economics, and the last period represents neoclassical economics at the end of the twentieth century. The first entry in each column represents the number of textbooks that included the tool or model and the second entry in parentheses gives the percentage of textbooks that included the tool or model. What Table 1.1 establishes is that the core theoretical tools of neoclassical price theory circa 1900-10, such as scarcity, maximization, utility and marginal utility, marginal products and the law of diminishing returns, supply and demand curves, and marginal productivity principle of distribution, and the core model of competition have been retained throughout the century. In addition, it shows that the number of core theory components have increased over time, to include, for example, utility functions and income and substitution effects, production functions, monopolistic competition, oligopoly, game theory, and general equilibrium. These two points imply that while there have been significant theoretical developments in neoclassical economics there has been no break-that is a period when neoclassical economics did not exist and a period in which it did exist. Rather neoclassical economics as defined in terms of the tools, models, and discourse of its price theory has always been with us. Finally, the twenty-nine tools and models are currently taught to every mainstream economist in their core graduate microeconomic theory courses as well as taught in undergraduate microeconomic theory courses.2 Since the core tools and models and associated discourse (in conjunction with the deductive-formalist methodology) underpin virtually every book, article, and model that utilizes neoclassical microeconomic theory, they constitute the minimum standards of what the profession expects every new PhD economist to know3 (Klamer and Colander 1990; Hansen 1991; Kasper et al. 1991; Krueger et al. 1991; Knoedler and Underwood 2003). While neoclassical doctrinal continuity existed in American economics
throughout the twentieth century, it was not necessarily one of harmony. Within neoclassical economics there was accepted and encouraged contested theoretical knowledge, that is, pluralism. The controversy over the supply curve and the rise of imperfect/monopolistic competition circa 1930, pricing and the marginalist controversy circa 1940s, the controversy over the different theories of the firm circa 1960s, and the rational expectations revolution circa 1970s are well-known examples of this internal pluralism. There were also the not-so-well controversies over demand theory circa 1940s-1960s and the economics of information circa 1950s onwards that involved the Chicago School, Cowles Commission, and the MIT crowd that also demonstrated the existence of pluralism within neoclassical economics (Mirowski and Hands 1998; Mirowski 2007). However, pluralism was not extended to alternative
Table 1.1 Neoclassical price theory/microeconomics in the twentieth century as represented in American textbooks*
Time Periods
1899-1910 1911-40 1941-70 1971-2002
Tools and Models Economics defined as the allocation of scarce resources
5 (19) (81) 37 (86)
Scarcity, scarce factor inputs 9 (75) 23 (88) 24 (77) 31 (72) Production possibility frontier 7 (33) 36 (84) Opportunity costs 5 (42) 12 (46) 18 (58) 33 (77)
Demand Side Utility/diminishing marginal utility 12 (100) 22 (85) 26 (84) 43 (100) Maximize utility 8 (67) 18 (69) 28 (90) 43 (100) Utility functions, indifference curves, marginal rate of substitution
21 (68) 43 (100)
Income/substitution effects 20 (65) 43 (100) Individual consumer/market demand curve
11 (92) 26 (100) 31 (100) 43 (100)
Price elasticity of demand 7 (58) 22 (85) 31 (100) 43 (100)
Production and Costs Production function 15 (48) 39 (91) Single input variation,marginal products 12 (100) 25 (96) 29 (94) 43 (100) Law of diminishing returns 12 (100) 26 (100) 30 (97) 39 (91) Proportional input variation, returns to scale
1 (8) 2 (8) 14 (45) 34 (79)
Isoquants, marginal rate of technical substitution
11 (35) 36 (84)
Marginal costs: MC = Px/MPx 3 (25) 12 (46) 31 (100) 42 (98) Firm/market supply curve 11 (92) 25 (96) 30 (97) 42 (98)
Markets Perfect, pure, or free competition 10 (83) 24 (92) 31 (100) 43 (100) Profit maximization 6 (50) 22 (85) 31 (100) 43 (100) Marginal cost = price 1 (8) 10 (38) 31 (100) 43 (100) Imperfect/monopolistic competition 7 (27) 31 (100) 40 (93) Firm demand curve 6 (23) 29 (94) 42 (98) Marginal revenue = marginal costs (or equivalent)
7 (27) 31 (100) 42 (98)
Oligopoly with firm demand curve 19 (61) 34 (79) Kinked demand curve 17 (55) 27 (63) Game theory 6 (25) 32 (74)
Distribution and General Equilibrium Marginal productivity principle 6 (50) 14 (54) 26 (84) 30 (70) Wage rate = MPL x Price, Profit = MPK x Price
10 (83) 18 (69) 27 (87) 42 (98)
General equilibrium 17 (55) 30 (70) Pareto-efficiency/optimality 8 (26) 31 (72) Total Number of Textbooks 12 26 31 43
Note: * The list of textbooks examined is found in Appendix A.1
