The Microfoundations Delusion

The Microfoundations Delusion

Metaphor and Dogma in the History of Macroeconomics

J. E. King

In this challenging book, John King makes a sustained and comprehensive attack on the dogma that macroeconomic theory must have ‘rigorous microfoundations’. He draws on both the philosophy of science and the history of economic thought to demonstrate the dangers of foundational metaphors and the defects of micro-reduction as a methodological principle. Strong criticism of the microfoundations dogma is documented in great detail, from some mainstream and many heterodox economists and also from economic methodologists, social theorists and evolutionary biologists. The author argues for the relative autonomy of macroeconomics as a distinct ‘special science’, cooperating with but most definitely not reducible to microeconomics.

Chapter 5: ‘Microfoundations’ in the literature of economics, part I: 1936–1975

J. E. King

Subjects: economics and finance, history of economic thought, post-keynesian economics


5.1 INTRODUCTION In this chapter I trace the very chequered pre-history of the microfoundations dogma, down to 1975. It is a long and very complicated story, with many twists and turns. Part of it has been told by Teodoro Dario Togati (1998), in a sadly neglected book, and by Kevin Hoover (2010a); Hoover’s account is, as will be seen, not entirely satisfactory. The term ‘microfoundations’ was apparently invented by Sidney Weintraub in 1956, but the concept is somewhat older. My story begins in 1936, with the publication of the General Theory, and in Section 5.2 Keynes’s scattered and indirect remarks on this question are assessed. Then, in Sections 5.3 and 5.4, I deal with the period from 1933 (just before the appearance of Keynes’s great book) to the mid-1960s, proceeding chronologically and distinguishing three categories of authors: those who asserted the need for microfoundations, those who attempted to provide them without saying so, and those who did neither. In Section 5.5 I discuss the increasing use of the term in the macroeconomics literature of the late 1960s and early 1970s. The 1975 S’Agaro conference of the International Economic Association, which revealed continuing doubt and confusion on the question, is the subject of Section 5.6. The chapter concludes (in Section 5.7) by asking why the case for microfoundations had begun to resonate in the early 1970s (and not earlier), without yet achieving the canonical status that it would subsequently attain. 5.2 KEYNES AND MICROFOUNDATIONS Despite his deep, lifelong interest in questions...

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