ABSTRACT
This chapter examines in further detail the orthodox approach to markets, along with the problems identified by critics and the limited attempts within the mainstream to address these problems. The orthodox approach to markets is based on the neoclassical theory that first appeared in the late nineteenth century and came to dominate economics in the twentieth century. Modern orthodox economics says nothing about classical political economy, on the premise that neoclassical theory has replaced classical. Teaching of economics proceeds in the style of natural sciences, where later theories supersede earlier ones as the discipline evolves. Pivotal to the orthodox approach is the rational individual trader attaining the best possible outcome. Agents in orthodox modelling have fixed preferences that predate involvement in the market and remain unaffected by trade. Many mainstream economists, conceding the unrealistic character of perfect competition, wish to insert greater realism into orthodox modelling.
