HOME

TheInfoList




Mainstream economics is the body of knowledge, theories, and models of
economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interact ...

economics
, as taught by universities worldwide, that are generally accepted by
economists An economist is a professional and practitioner in the social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within t ...
as a basis for discussion. Also known as orthodox economics, it can be contrasted to
heterodox economics #REDIRECT Heterodox economics#REDIRECT Heterodox economics Heterodox economics is any economic thought or theory that contrasts with orthodox schools of economic thought, or that may be beyond neoclassical economics.Frederic S. Lee, 2008. "heterodo ...
, which encompasses various schools or approaches that are only accepted by a minority of economists. The economics profession has traditionally been associated with
neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are driven by the supply and demand In microeconomics, supply and demand is an economic model In econo ...
. This association has however been challenged by prominent historians of economic thought like David Collander. They argue the current economic mainstream theories, such as
game theory Game theory is the study of mathematical model A mathematical model is a description of a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. ...
,
behavioral economics Behavioral economics (also, behavioural economics) studies the effects of psychological, cognitive bias, cognitive, emotional, cultural and social factors on the decision making, decisions of individuals and institutions and how those decision ...
,
industrial organization In economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societie ...
,
information economics Information economics or the economics of information is a branch of microeconomics, microeconomic theory that studies how information and information systems affect an economy and economic decisions. Information has special characteristics: It is ...
, and the like, share very little common ground with the initial axioms of neoclassical economics. In certain countries such as e.g Sweden, it's practically impossible to get recognized as a conventional economist within the academy without accepting neoclassical axioms.


History

Economics has always featured multiple
schools of economic thought A school is an educational institution designed to provide learning spaces and learning environments for the teaching of students (or "pupils") under the direction of teachers. Most countries have systems of formal education, which is someti ...
, with different schools having different prominence across countries and over time. The current use of the term "mainstream economics" is specific to the post–
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a global war A world war is "a war War is an intense armed conflict between states State may refer to: Arts, entertainment, and media Literatur ...
era, particularly in the
English-speaking world Speakers of English English usually refers to: * English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, early medieval England, which has eventually become the Wo ...
, and to a lesser extent globally. Prior to the development and prevalence of classical economics, the dominant school in Europe was
mercantilism Mercantilism is an economic policy The economic policy of government A government is the system or group of people governing an organized community, generally a state State may refer to: Arts, entertainment, and media Li ...

mercantilism
, which was rather a loose set of related ideas than an institutionalized school. With the development of modern economics, conventionally given as the late 18th-century ''
The Wealth of Nations ''An Inquiry into the Nature and Causes of the Wealth of Nations'', generally referred to by its shortened title ''The Wealth of Nations'', is the ''magnum opus 's ''The Creation of Adam'' (c. 1512), part of the Sistine Chapel ceiling The ...

The Wealth of Nations
'' by
Adam Smith Adam Smith ( 1723 – 17 July 1790) was a Scottish economist, philosopher as well as a moral philosopher Ethics or moral philosophy is a branch of philosophy that "involves systematizing, defending, and recommending concepts of right and ...

Adam Smith
, British economics developed and became dominated by what is now called the classical school. From ''The Wealth of Nations'' until the
Great Depression The Great Depression was a severe worldwide economic depression An economic depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a economic recession, recess ...
, the dominant school within the English-speaking world was classical economics, and its successor,
neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are driven by the supply and demand In microeconomics, supply and demand is an economic model In econo ...
. In continental Europe, the earlier work of the
physiocrats , a physician who is considered the founding father of physiocracy, published the "Tableau économique" (Economic Table) in 1758 Image:Pierre Samuel du Pont de Nemours (1739-1817).png, Pierre Samuel du Pont de Nemours, a prominent physiocrat. In ...
in France formed a distinct tradition, as did the later work of the
historical school of economics The historical school of economics was an approach Approach may refer to: Aviation *Final approach (aeronautics) *Instrument approach *Visual approach Music * Approach (album), ''Approach'' (album), by Von Hertzen Brothers * ''The Approach'', an ...
in Germany, and throughout the 19th century there were debates in British economics, notably the opposition underconsumptionist school. During the Great Depression and the following
Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a global war A world war is "a war War is an intense armed conflict between states State may refer to: Arts, entertainment, and media Literatur ...
, the school of
Keynesian economics Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946) was an English economist, whose ideas fundamentally changed the t ...
gained attention, which built on the work of the underconsumptionist school, and gained prominence as part of the
neoclassical synthesis The neoclassical synthesis (NCS), neoclassical–Keynesian synthesis, or just neo-Keynesianism was a post-World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a World war, global war that lasted from ...
, which was the post–World War II merger of Keynesian macroeconomics and neoclassical microeconomics that prevailed from the 1950s until the 1970s.Clark, B. (1998). ''Political-economy: A comparative approach''. Westport, CT: Preager. In the 1970s, the consensus in macroeconomics collapsed as a result of the failure of the neoclassical synthesis to explain the phenomenon of
stagflation In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
: subsequent to this, two schools of thought in the field emerged:
New Keynesianism New Keynesian economics is a school of macroeconomics Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics Economics () is the social science that studies how people interact with va ...
and
New classical macroeconomics New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical economics, neoclassical framework. Specifically, it emphasizes the importan ...
. Both sought to rebuild macroeconomics using
microfoundations In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods an ...
- to explain macroeconomic phenomenon using microeconomics. Over the course of the 1980s and the 1990s, macroeconomists coalesced around a paradigm known as the
new neoclassical synthesis The new neoclassical synthesis (NNS) or new synthesis is the fusion of the major, modern macroeconomic schools of thought, new classical and New-Keynesianism, into a consensus on the best way to explain short-run fluctuations in the economy. Thi ...
, which combines elements of both New Keynesian and New classical macroeconomics, and forms the basis for the current consensus, which covers previously disputed areas of macroeconomics. The consensus built around this synthesis is characterised by an unprecedented agreement on methodological questions (such as the need to validate models econometrically); such agreement had, until the new synthesis, historically eluded macroeconomics, even during the
neoclassical synthesis The neoclassical synthesis (NCS), neoclassical–Keynesian synthesis, or just neo-Keynesianism was a post-World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a World war, global war that lasted from ...
.


Term

The term "mainstream economics" came into use in the late 20th century. It appeared in 2001 edition of the seminal textbook ''
Economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interact ...
'' by
Samuelson Samuelson is an English-language patronymic surname meaning "son of Samuel (name), Samuel". There are alternative spellings such as the Scandinavian language, Scandinavian-origin Samuelsson and Samuelsen. It is uncommon as a given name. Samuelson ma ...

Samuelson
and Nordhaus on the inside back cover in the "Family Tree of Economics," which depicts arrows into "Modern Mainstream Economics" from J.M. Keynes (1936) and
neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are driven by the supply and demand In microeconomics, supply and demand is an economic model In econo ...
(1860–1910). The term "
neoclassical synthesis The neoclassical synthesis (NCS), neoclassical–Keynesian synthesis, or just neo-Keynesianism was a post-World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a World war, global war that lasted from ...
" itself also first appears in the 1955 edition of Samuelson's textbook. From this (descriptive) theoretical framework, neoclassical economists like
Alfred Marshall Alfred Marshall (26 July 1842 – 13 July 1924) was an English economist, who was one of the most influential economists of his time. His book, '' Principles of Economics'' (1890), was the dominant economic textbook in England for many years. ...

Alfred Marshall
often derived - although not systematically - the political prescription that political action should not be used to solve the problems of the economic system. Instead, the solution ought to derive from an intervention on the above-mentioned maximisation objectives and constraints. It is in this context that economic
capitalism Capitalism is an economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea o ...

capitalism
finds its justification. Yet, mainstream economics now includes descriptive theories of
market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entertainment, and media Films *Market (1965 film), ''Market'' (1965 ...
and
government failure Government failure, in the context of public economics Public economics (or economics of the public sector) is the study of government policy through the lens of economic efficiencyIn microeconomics, economic efficiency is, roughly speaking, a sit ...
and private and public goods. These developments suggest a range of views on the desirability or otherwise of government intervention, from a more normative perspective.https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2535453


Methods

Additionally, some economic fields include elements of both mainstream economics and
heterodox economics #REDIRECT Heterodox economics#REDIRECT Heterodox economics Heterodox economics is any economic thought or theory that contrasts with orthodox schools of economic thought, or that may be beyond neoclassical economics.Frederic S. Lee, 2008. "heterodo ...
: for example,
Austrian economics The Austrian School is a heterodox In religion, heterodoxy (from Ancient Greek Ancient Greek includes the forms of the Greek language used in ancient Greece and the classical antiquity, ancient world from around 1500 BC to 300 BC. It ...
,
institutional economics Institutional economics focuses on understanding the role of the evolutionary Evolution is change in the Heredity, heritable Phenotypic trait, characteristics of biological populations over successive generations. These characteristics are ...
,
neuroeconomics Neuroeconomics is an interdisciplinary Interdisciplinarity or interdisciplinary studies involves the combination of two or more academic disciplines into one activity (e.g., a research project). It draws knowledge from several other fields lik ...
and non-linear complexity theory. They may use neoclassical economics as a point of departure. At least one institutionalist has argued that "neoclassical economics no longer dominates a mainstream economics."


Topics

Economics has been initially shaped as a discipline concerned with a range of issues revolving around money and wealth. However, in the 1930s, mainstream economics began to mutate into a science of human decision. In 1931, Lionel Robbins famously wrote "Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses". This drew a line of demarcation between mainstream economics and other disciplines and schools studying the economy. The mainstream approach of economics as a science of decision-making contributed to enlarge the scope of the discipline. Economists like
Gary Becker Gary Stanley Becker (; December 2, 1930 – May 3, 2014) was an American economist who received the 1992 Nobel Memorial Prize in Economic Sciences The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Econo ...
began to study seemingly distant fields as crime, the
family In human society A society is a Social group, group of individuals involved in persistent Social relation, social interaction, or a large social group sharing the same spatial or social territory, typically subject to the same Politic ...
,
law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environment, is described by its bounda ...
,
politics Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and political), power relations between individuals, such as the distribution of res ...
, and
religion Religion is a social Social organisms, including humans, live collectively in interacting populations. This interaction is considered social whether they are aware of it or not, and whether the exchange is voluntary/involuntary. Etymology ...
. This expansion is sometimes referred to as economic imperialism.


References

{{Macroeconomics ^ ^