From Political Economy to Economics: Method, the social and the historical in the evolution of economic theory (Economics as Social Theory)
Dimitris Milonakis, Ben Fine
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Economics has become a monolithic science, variously described as formalistic and autistic with neoclassical orthodoxy reigning supreme. So argue Dimitris Milonakis and Ben Fine in this new major work of critical recollection. The authors show how economics was once rich, diverse, multidimensional and pluralistic, and unravel the processes that lead to orthodoxy’s current predicament. The book details how political economy became economics through the desocialisation and the dehistoricisation of the dismal science, accompanied by the separation of economics from the other social sciences, especially economic history and sociology. It is argued that recent attempts from within economics to address the social and the historical have failed to acknowledge long standing debates amongst economists, historians and other social scientists. This has resulted in an impoverished historical and social content within mainstream economics.
The book ranges over the shifting role of the historical and the social in economic theory, the shifting boundaries between the economic and the non-economic, all within a methodological context. Schools of thought and individuals, that have been neglected or marginalised, are treated in full, including classical political economy and Marx, the German and British historical schools, American institutionalism, Weber and Schumpeter and their programme of Socialökonomik, and the Austrian school. At the same time, developments within the mainstream tradition from marginalism through Marshall and Keynes to general equilibrium theory are also scrutinised, and the clashes between the various camps from the famous Methodenstreit to the fierce debates of the 1930s and beyond brought to the fore.
The prime rationale underpinning this account drawn from the past is to put the case for political economy back on the agenda. This is done by treating economics as a social science once again, rather than as a positive science, as has been the inclination since the time of Jevons and Walras. It involves transcending the boundaries of the social sciences, but in a particular way that is in exactly the opposite direction now being taken by "economics imperialism". Drawing on the rich traditions of the past, the reintroduction and full incorporation of the social and the historical into the main corpus of political economy will be possible in the future.
p. 9) notes support of Keynes for Commons, citing a personal letter from the one to the other: ‘There seems to be no other economist with whose general way of thinking I feel myself in such genuine accord’. And, for Marangos (2006, p. 51), Commons ‘was just as persistent as Keynes in proclaiming that laissez-faire must be abandoned if capitalism was to be saved’. It is no accident that Commons, much like Keynes, see Chapter 14, considers Malthus rather than Ricardo to be his predecessor. Indeed,
of value on the grounds that labour is no longer the sole form of property that commands a contribution from output, and must, therefore, make up a constituent part of price. Capital, labour and land all form part and parcel of the property relations of commercial society, and so the cost attached to each must be found in the price. This leads Smith to put forward a components theory of value or natural price – that it is made up of wages, proﬁts and rents that contribute to it either directly,
continues by citing Blaug’s (1997, p. 278) judgement that: With the publication of these three [one each from the troika] postclassical texts, ‘for the ﬁrst time, economics became the science that studies the relation between given ends and given scarce means that have alternative uses for the achievement of those ends’. Yet, White observes ‘That neat linear account is, however, misleading … no Robbins-type statement can be found in Walras’s Elements … and the link to Menger appears “distant and
nature of the material to be dealt with’. Indeed, how can you have natural-type laws concerning equilibrium by analogy with mechanics when ‘the material to be investigated is composed of subjects whose actions stem from free and autonomous choice’? Signiﬁcantly, his absolute and inﬂuential rejection of the mathematisation of social science was ‘pushed by Say almost to the point of the idiosyncratic rejection of mathematics tout court’, p. 60. Yet, perversely, Say is now mostly remembered for his
have produced similar results, and British historical economics 149 that, therefore, it is possible to formulate economic laws which describe the action of economic causes at all times and in all places … If this assumption were sound, it would seem to follow that these economic laws could be most conveniently studied in the present, under our own eyes, as it were; but that when once recognised and stated, they serve to explain the past. Cunningham denies that there is any such ‘royal road’