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Neoclassical economics: science or neoliberal ideology?

Author

Listed:
  • David Slattery

    (Cranfield School of Management)

  • Joseph Nellis

    (Cranfield School of Management)

  • Kosta Josifidis

    (University of Novi Sad)

  • Alpar Losonc

    (University of Novi Sad)

Abstract

This paper calls for a new approach to economic theorising in the aftermath of the global financial crisis of 2007–2008. We examine two key theories which suggest that markets are stable self-correcting efficient systems. These theories, namely General Equilibrium Theory and the Efficient Markets Hypothesis, are at the heart of neoclassical economics and give neoliberal ideology much of its intellectual legitimacy. We demonstrate the flaws in these theories and the misleading prescriptions they provide for public policy. We suggest that these theories have survived, despite their inherent weaknesses, not as objective science but as ideology, and specifically allied to neoliberal ideology. We advocate a fundamental change of approach.

Suggested Citation

  • David Slattery & Joseph Nellis & Kosta Josifidis & Alpar Losonc, 2013. "Neoclassical economics: science or neoliberal ideology?," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(3), pages 313—326-3, December.
    • Handle: RePEc:elg:ejeepi:v:10:y:2013:i:3:p313-326
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    References listed on IDEAS

    as
    1. LeRoy, Stephen F, 1976. "Efficient Capital Markets: Comment," Journal of Finance, American Finance Association, vol. 31(1), pages 139-141, March.
    2. Rosenberg, Alexander, 1992. "Economics--Mathematical Politics or Science of Diminishing Returns?," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226727233, December.
    3. David Slattery & Joseph G. Nellis, 2011. "Rethinking the Role of Regulation in the Aftermath of the Global Financial Crisis: The Case of the UK," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(3), pages 407-423, September.
    4. Hyman P. Minsky, 1992. "The Financial Instability Hypothesis," Economics Working Paper Archive wp_74, Levy Economics Institute.
    5. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
    6. Clower, Robert & Leijonhufvud, Axel, 1975. "The Coordination of Economic Activities: A Keynesian Perspective," American Economic Review, American Economic Association, vol. 65(2), pages 182-188, May.
    7. Smith, Eric & Foley, Duncan K., 2008. "Classical thermodynamics and economic general equilibrium theory," Journal of Economic Dynamics and Control, Elsevier, vol. 32(1), pages 7-65, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    neoclassical economics; general equilibrium theory; efficient markets hypothesis; neoliberalism;
    All these keywords.

    JEL classification:

    • B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other

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