I feel like I have spent my entire life attempting to uncover the actual history of neoclassical economics: its origins in 19 th century physics; it’s curious revulsion from indeterminist currents in the natural sciences; its mutations on both the left and the right; its hybridization with the military and operations research; its symbiosis with the computer; and lately, its conversion to a theory of “information” and an engineering set of ambitions. If there is anyone who appreciates the shape-shifting character of this hybrid ‘orthodoxy,’ it is me. So in one corner, we have this mutant which stridently denies its own hybrid character, and pretends to a fake unified political heritage dating back to Adam Smith. On the other, we have the rise of the NTC [Neoliberal Thought Collective], itself an amalgam of three or more individual schools of thought—the Austrians, the Ordoliberals, and the American Chicago School. Now, if anyone wants to make strong reductionist statements about this squirming warring mass of doctrines, to the effect that any conceptual differences don’t matter, then they are welcome to risk their reputation as a serious thinker. In the current climate, where not just doctrinal history but even economic history is banished from the economics curriculum, nothing I can do or say can prevent the further debasement of economic discourse.
However, I agree with Professor Vernengo that the question of the relationship of neoclassical economics to the NTC is both fascinating and important, for many reasons. My response to his own classification is that a little attention to history reveals that most of the early members of the Mont Pelèrin Society ranged from skeptical to outright hostile to neoclassical economics as it existed in the 1930s-50s. Vernengo says few thinkers I cite qualify as non-neoclassical; yet in this short paper alone I have cited Wilhelm Röpke, Friedrich Hayek, Ludwig von Mises, Alexander Rüstow and Bruno Leoni: renunciators all. [22] The major exceptions were the Chicago Boys and Lionel Robbins; but even then Chicago was engaged in pitched battle with the rest of the profession as to what ‘good’ orthodoxy encompassed. Therefore, I think it is fair to say that early neoliberalism arose almost entirely separate from the prior neoclassical tradition, in part because they had become extremely suspicious of the political options prevalent amongst neoclassical economists back then, and in part because of their origins in continental traditions opposed to neoclassical economics. However, as the NTC grew more powerful and numerous, I have argued elsewhere that characteristically neoliberal doctrines came to be increasingly absorbed within the heartland of neoclassical microeconomics.[23] Professor Vernengo seeks to support his theses concerning the unity of neoclassical and neoliberal economics in reference to macroeconomics, but the problem there is that even economists in good standing tend to admit that modern macro is just a sequence of faddish enthusiasms, displaying little continuity or intellectual substance.[24] The real key to understanding modern economics is the absorption of the central tenet of markets as superior information processors within the heartland of cutting-edge microeconomics. By the turn of the millennium, the economics orthodoxy had become palpably more neoliberal, even though they themselves had little comprehension of that fact. This goes far to explain why some on the Left reflexively equate the economic orthodoxy with neoliberalism, in order to pronounce a pox on both their houses. Equally, it can begin to explain the obliviousness of someone like Simon Wren-Lewis.
This tendency to conflate the two has the unintended side effect of severely restricting the range of political options in modern discourse. George Monbiot (2016) has captured some of the impasse bequeathed by modern economics:
Every invocation of Lord Keynes is an admission of failure. To propose Keynesian solutions to the crises of the 21st century is to ignore three obvious problems. It is hard to mobilise people around old ideas; the flaws exposed in the 70s have not gone away; and, most importantly, they have nothing to say about our gravest predicament: the environmental crisis.
Although the NTC has denounced Keynes as the Devil Incarnate in the past, that does not mean that Keynesianism constitutes any sort of currently viable theoretical position to counteract the neoliberal onslaught. Keynes was the exemplary Classical Liberal of the interwar period; the neoliberal ascendancy has effectively neutralized that political position in a thousand ways in the interim. The Loyal Keynesian Opposition has therefore been a disaster within 21st century economics. Post-Keynesians and other heterodox factions seem not to grasp that effective political mobilization requires a thoroughgoing alternative to the neoliberal definition of what a market is, comprehension of how diverse markets work, and appreciation for what it means to participate in a market society. Endless denunciations of “capitalism” do little more than evoke a thoroughly superseded HisMat, which lacks all relevance to the modern situation. Just as the inspiration for the Neoliberal Thought Collective did not originate within the economic orthodoxy of the 1930s-50s, it seems likely that opposition to neoliberalism will not arise from within modern economics, either.
