Hip Heterodoxy by Chris Hayes is an entertaining and lively article that provides a great introduction to a vital subject. Economics and economists have a powerful influence that permeates society. That influence operates through ideas, and because these ideas are so influential it is vital for a democratic society to understand how economists’ ideas are developed and promulgated. Who gets to contribute, who gets marginalized or excluded, and why?

Today’s orthodoxy is laissez-faire neo-classical economics, and that orthodoxy significantly frames public understanding of the economy in terms of “free markets”; frames public expectations of what the economy can deliver; frames public beliefs about what institutional arrangements are feasible, and frames thinking about what policy issues are important and what policy solutions are possible.

Interestingly, because neo-classical economics is so dominant, even politicians and policymakers who are dissatisfied with the economy and feel better is possible may be unable to escape the pull of its ideas. That is because those ideas have been repeatedly drummed into their heads in classrooms and through the media, whose journalists and commentators are also steeped in them. Their policy advisers are also similarly influenced, so that though there are two waiters (the Democrats and Republicans), there is often really only one policy chef.

The “one chef” phenomenon is the underlying problem that gives significance to the debate between orthodoxy and heterodoxy, and why it is so important to get a fair hearing for heterodoxy. Today, there are some small signs of thawing within orthodoxy, which is tackling some issues long raised by heterodox economists – hence, the claim that heterodoxy is hip. However, the reality is the thaw is largely superficial and may even serve to provide cover for resisting real change.

The underlying challenge is getting to the core assumptions of laissez-faire neo-classical theory, which deeply embed normative positions. That is where the real action is. However, those assumptions remain largely off the table, and getting them on to the table is a huge task – not just an intellectual one, but also a political and sociological one because these assumptions serve extraordinarily powerful economic interests. One part of the narrow intellectual task is taking down the defenses that surround neo-classical economics. A second part is exposing the analytical inadequacies of neo-classical theory. A third part is putting up an alternative. Here’s a go at part one.

Most economists are well intentioned and believe they are doing honest “scientific” work that delivers “truth” to the public. Though there are some (Milton Friedman was a prime example), who are deeply partisan and interested in permanently suppressing alternative views, most economists reject alternatives out of a sense of truth over error. That suggests debate about the profession should not be about honesty or individual intent.

That said, good intentions can still produce bad outcomes, and in economics the problem starts with what I term the “science myth.” Economists subscribe to a belief that they can access truth through mathematical modeling, econometrics, and now lab experiment. This meta-view implies only one point of view can be correct. However, the reality is the scientific method can never prove things as true: it can only falsify. Moreover, the complex nature of social reality means the facts (which are themselves the subject of debate) can often be consistent with different theories. That means a truly scientific economics has to accept the co-existence of other theories, including heterodox theories, because they cannot be rejected on scientific grounds.

The science myth is one pillar of exclusion. A second pillar is the sociology of knowledge, which concerns how social forces affect knowledge production. That sociology applies in economics, though economists live in a state of denial about this because the sociology of knowledge sits so uneasily with the science myth and the idea of truth.

Economic ideas have a profound influence on real world outcomes, which means powerful social interests will seek to control what gets accepted as knowledge. Furthermore, economists are themselves members of society and will therefore be influenced by what currently passes as knowledge. On top of that economists are motivated by their own economic self-interest, which means they are willing to produce knowledge that their customers want. - be they investment banks, business think-tanks, or the IMF and World Bank. Moreover, since cognitive dissonance makes it hard to produce knowledge you do not believe in, that willingness to produce easily merges into belief. Consequently, for all of these reasons, economists can be quite comfortable producing knowledge that supports the economic interests of the rich and powerful (see The Knowledge Police in Economics).

The science myth then provides a tight cover for this knowledge. Those who gate-keep the profession, letting some ideas in and excluding others, can do so with clear conscience. Indeed, because they subscribe to the science myth most economists are blithely unaware of their gatekeeping and resentful when it is pointed out. That is because rather than seeing themselves as gatekeepers. they see themselves as truth-keepers exercising appropriate quality standards. This is one lesson from the closing of the heterodox economics department at the University of Notre Dame and its replacement by an orthodox neo-classical economics department. Finally, it is doubly difficult to expose the science myth and its mind-closing effects because the general public also believes it.

None of this is a conspiracy theory. Instead, it just reflects the way the social world works – but that is something society should be aware of. Economists are ordinary people and subject to social influences and pressures that work to include some ideas and exclude others – but this is not a matter of truth vs. error.

Parenthetically, it should also be noted that though these practices exclude heterodox economic ideas, heterodox economists are also subject to some of the same failings – especially regarding the science myth. Thus, even though they have little social power, heterodoxy is all too often prone to nasty intellectual splits in which each side asserts it holds the truth. That is a shame.

The best that can be done is to develop theories, examine their logical and empirical consistency, and then try and persuade others to adopt those theories. This involves using the tools of language, mathematical modeling, and empirical observation based on history, case studies, statistics and econometrics, and lab experiments. It is not the tools of neo-classical economics that are at fault. Instead, the problem is suppression of rival theories that meet the tests of logical and empirical consistency. That suppression is on arbitrary grounds of taste regarding theory and presentation of argument. Moreover, neo-classical economics often fails to apply these tests to itself.

That brings up recent developments in orthodox economics including behavioral economics, chaos theory, computer simulation, and laboratory experiment. These recent developments have definitely enriched mainstream economics and promote some convergence with many ideas heterodox economists have long written about. However, there are two dangers that suggest skepticism. First, they leave completely intact and unexposed the science myth and sociology of economics. That is a continuing barrier to getting alternative perspectives on to the table, which suggests the core normative assumptions of neo-classical theory will go unchallenged.

Second, there is the “amoeba defense” problem. Thus, the mainstream takes up ideas heterodox economists have long thought about, makes no references to that pedigree, and then incorporates a neutered version of the ideas into itself. This process of mutation thereby strips ideas of their alternative content.

The reality is that paradigm change in economics comes not from within, but from without. That seems to be the lesson from the history of economics. It was the Great Depression in the 1930s that spurred the intellectual triumph of Keynesian economics. The triumph of new classical macroeconomics in the 1980s was driven by the OPEC oil price shocks and productivity growth slowdown of the 1970s that gave rise to stagflation. The collapse of the Soviet Union in 1989 discredited central planning by unaccountable undemocratic government, and that collapse was then used to make an unjustifiable leap to claiming it proved the case for laissez-faire minimalist government.

This has relevance for today. If heterodoxy is hip it is not because orthodox economics is opening up. Rather, it is because economic events are shaking economists’ cage. Those events are globalization and the evisceration of the American Dream, and they have unsettled the public and politicians, opening space for alternative theoretical accounts of what is going on.

Economists like David Card, Alan Blinder, Paul Krugman, and Joe Stiglitz are troubled by these events and have written about them. Their writings reinforce and add credibility to the sense that something troubling is afoot. Moreover, their writings implicitly add to the sense that orthodox economics is not up to explaining what is happening, thereby furthering the case for deep intellectual change – which is why they generate such blowback from their orthodox colleagues.

That said, Card, Blinder, and Krugman remain within the orbit of mainstream economics. For instance, Blinder remains an unreconstructed free trader, as I think does Krugman. Why? One reason may be that they all subscribe to the science myth, and ideas like comparative advantage continue to be marketed as truth. Other reasons are to do with the sociology of knowledge. These are leading professional economists that occupy powerful positions, giving rise to personal and strategic reasons to stay within the bounds of the mainstream. A third reason, to paraphrase Keynes, is the difficulty in escaping old ideas. A fourth reason is that alternative ideas have not been given the space and attention needed to flourish – which brings us back to the University of Notre Dame intellectual suppression problem.