ABSTRACT
Traditional economics is no doubt hegemonic and imperialistic, extending its reach to all aspects of social life – marriage, crime, education, art, health, history, geography – while at the same time impugning other social sciences for lacking a formalistic model. And while ostensibly convincing to the point of intimidation, the simplistic, hegemonic, and monist approach is highly misleading if one can peer through the veneer. Economic imperialism is the antithesis of pluralism and as such is inconsistent with the objectives of this book. If we want economics to be relevant (it must be!) and if we want our students to understand how the economy works, then economics needs other social sciences. Economics must become pluralist and not imperialistically monist. To understand how we must first understand why. Traditional economics purports not to explain or understand reality, but rather to make it possible, via an appropriate set of assumptions, to demonstrate the compatibility of individual decisions, i.e. the mathematical existence of equilibrium. But traditional economics fails even at this fundamental objective. This chapter discusses individualist fallacies which reveal the need for other methodological foundations, especially a theory which accounts for institutions. Moreover, we show that traditional economic theory is often nothing more than a list of conditions for the existence of an equilibrium that could never be achieved even if those conditions were all fulfilled. Why look for such conditions, if this research does not help to make predictions or to prescribe economic policy? Don’t we need economic theories that help to understand the economic world or to whisper in the ears of princes?
