A reassessment of institutionalist-mainstream relations.

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A reassessment of institutionalist-mainstream relations.

Relations between institutionalists and main stream economists can scarcely be said to be improving and arguably have worsened in the past dozen years. Main stream economics has seen the emergence of "new classical economics" (to monetarism have been added supply-side economics and rational expectations). In microeconomics, mainstream theorists have continued to pursue their Pareto optimizing ways, unconcerned by either real-world power concentration, performance failures, or institutionalist criticism. Ayres's early criticism of price theory is as cogent and relevant today as it was when he originally expressed it |Ayres 1944~.

By most commonly accepted standards, developments in "new classical" economics have thus far had a greater impact on conventional economics than on modern institutionalism. I argue that this can be explained by "the sociology of persuasiveness."

The Impact of New Classical Economics on the Mainstream

What constitutes a viable basis for an economic school of thought growing or shrinking? On the surface, one might argue that it could or should reflect the degree to which history is kind to the underlying hypotheses. By this standard...

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