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Chapter in Bob Jessop and Karim Knio's Book, The Pedagogy of Economic, Political and Social Crises

Title: 'Vision and Ideology in Economic Theory: The Post-Crisis Persistence of Mainstream General Equilibrium Macroeconomics', in Bob Jessop and Karim Knio (eds) (2018) The Pedagogy of Economic, Political and Social Crises: Dynamics, Construals and Lessons, London: Routledge, pp. 105-120.

Extract from text: The problem facing mainstream macroeconomics is that competitive pricing dynamics are now treated as the norm on both sides of the Schumpeterian divide between vision and ideology. It is the assumption of competitive pricing dynamics that makes DSGE models thinkable in the first instance; it is their methodological condition of possibility. Yet this same assumption now routinely informs policy recommendations from DSGE modellers on how best to manage economic relations. What might originally have been merely a set of tools to guide attempts to make sense of the world in abstract terms have since become increasingly difficult to disentangle from the assertion that competitive pricing is essential to the efficient allocation of scarce resources in the modern economy. Initially, the assumption of continuous market-clearing dynamics was just a means of making the mathematics of a purely hypothetical general equilibrium model operable. Increasingly, however, this same assumption is invoked to justify remaking economic institutions and attitudes so that the world operates just like the model.

Sat 22 Sep 2018, 15:12 | Tags: book chapter, Routledge