Letter

In response to Fifty years of political economics at Sydney University – what has it meant for

Neoclassical pseudo-science

Further to Evan Jones’ sensible defence of the political economy versus neoclassical economics, he quotes neoclassicist Warren Hogan Jr implying “the positive role of the scientific method” for the latter.

I spent four decades as an actual scientist (studying the Earth) and more time digging into the horrors of mainstream economics. Hogan’s claim is laughable. Neoclassical economics is built on flagrantly unrealistic assumptions, such as that we can all predict accurate probabilities of all future possibilities, that we are selfish competitors and there are no social interactions (in fact, humans are highly social), and that there are no economies of scale (or “increasing returns to scale”).

Economies of scale actually pervade the economy and they are highly destabilising. Change any of these or other assumptions and the alleged “optimal general equilibrium” is lost. The justification for free markets, in fact the whole neoliberal ideology, is lost. Real economies are far-from-equilibrium complex systems whose behaviour is radically different from the gentle neoclassical equilibrium.

Neoclassical economics is not just inaccurate, it is grossly misleading. It has confused mathematics with science. It is pseudo-science. Neoliberalism has been an economic failure and a social disaster, and that was foreseeable from the beginning.

— Geoff Davies from Braidwood NSW