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 8: The dissenters, part I: the Post Keynesians

J. E. King

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


8.1 INTRODUCTION Of all the various schools of heterodox economics, the Post Keynesians might have been expected to take a clear and highly critical position on the microfoundations dogma. First and most obviously, their theoretical allegiance to Keynes and/or Kalecki, supplemented in many cases by Marx and Sraffa, should have rendered them immune to the doctrines of methodological individualism and micro-reduction and made them profoundly suspicious of any project that envisaged the elimination of macroeconomics as an autonomous scientific discipline. Second, Post Keynesians have always tended to take a much greater interest in questions of methodology than their mainstream opponents, many of them endorsing the Critical Realist position of Roy Bhaskar and Tony Lawson, which (as we shall see in Chapter 10) cannot be reconciled with any version of microfoundations. Finally, their systematic and sustained hostility to mainstream economic theory should have made them very suspicious of the (admittedly often tacit or poorly formulated) philosophical basis of the New Neoclassical Synthesis. However, as I shall demonstrate in this chapter, it has not worked out like this. The disagreements, uncertainties and ambiguities of the Post Keynesians on this fundamental issue testify again to the ability of the microfoundations metaphor to generate confusion and to mislead people who really should have known better. I have to include myself in this category. Several of the Post Keynesians with whom I had conversations in 1992–3 referred approvingly to microfoundations without being challenged, and I myself criticized the neoclassical nature of Keynes’s supposed...

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