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Microfoundations, Methodological Individualism and Alternative Economic Visions

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  • Alessandro Vercelli

Abstract

This article analyzes the standard descriptive and prescriptive uses of the phrase ‘microfoundations of macroeconomics’ as practised since the early 1970s within the discipline of economics. From a descriptive point of view, we maintain that generally this phrase is used to mean a very specific and idiosyncratic way of conceiving the relationship between individual and collective economic behaviour. From a prescriptive point of view, we argue that the requirement for robust macroeconomics that must repose on this particular approach is unjustified and dogmatic. The rapid and widespread adherence by the most influential economists and economic institutions to this approach since the early 1970s deeply transformed macroeconomics by inhibiting the systematic pursuit of alternative approaches. We claim that this extreme form of reductionism greatly restricts the empirical scope and policy efficacy of macroeconomics. We conclude that the relationship between individual and collective economic behaviour is a crucial issue that has to be pursued without any dogmatic a priori imperatives.

Suggested Citation

  • Alessandro Vercelli, 2016. "Microfoundations, Methodological Individualism and Alternative Economic Visions," Review of Political Economy, Taylor & Francis Journals, vol. 28(1), pages 153-167, January.
  • Handle: RePEc:taf:revpoe:v:28:y:2016:i:1:p:153-167
    DOI: 10.1080/09538259.2016.1108133
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    1. Denis, A., 2010. "A century of methodological individualism part 2: Mises and Hayek," Working Papers 10/03, Department of Economics, City University London.
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    Cited by:

    1. Richard Arena & Eric Nasica, 2021. "Keynes's Methodology and the Analysis of Economic Agent Behavior in a Complex World," GREDEG Working Papers 2021-10, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    2. Dieter Bögenhold, 2018. "Schumpeter’s Split Between “Pure” Economics and Institutional Economics: Why Methodological Individualism Was Not Fully Considered," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(3), pages 253-264, August.
    3. Jan Toporowski & Andy Denis, 2016. "Microfoundations: Introduction," Review of Political Economy, Taylor & Francis Journals, vol. 28(1), pages 90-91, January.

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