Neoclassical Economics

00:29:30
https://www.youtube.com/watch?v=rC0PEnpyqmQ

Zusammenfassung

TLDRLa presentación explora la economía neoclásica como la perspectiva dominante en muchos departamentos de economía, destacando el marginalismo y el monetarismo como tendencias clave. Estas teorías han influido en políticas económicas a nivel global durante décadas, centrándose en la maximización de la utilidad y la minimización de la intervención gubernamental en mercados. A pesar de su predominio, la economía neoclásica ha enfrentado críticas por su incapacidad para prever y abordar crisis económicas, como la de 2008. Se argumenta que se ha basado en suposiciones cuestionables, como la racionalidad del individuo y el valor subjetivo de los bienes. También se aborda el impacto político del neoclasicismo, siendo una respuesta al socialismo y el marxismo, y cómo sus postulados han comenzado a decaer a medida que se reconsideran enfoques económicos heterodoxos.

Mitbringsel

  • 📈 La economía neoclásica es la perspectiva predominante en muchos departamentos económicos.
  • 📉 Critica la intervención gubernamental y favorece mercados libres.
  • 📘 Estudia el marginalismo y el monetarismo como clave en su estructura.
  • 🤔 Cuestiona la racionalidad del individuo y el valor subjetivo de los bienes.
  • 📉 No pudo prever ni abordar efectivamente la crisis de 2008.
  • 📊 Considera a los mercados como autosuficientes y busca el equilibrio.
  • 👐 La política neoclásica ha sido una respuesta al marxismo y socialismo.
  • 🌍 Las crisis económicas han puesto en tela de juicio la doctrina neoclásica.
  • 📚 Hay un resurgimiento del interés en teorías heterodoxas como el keynesianismo.
  • 🔍 Las fallas del neoclasicismo han impulsado una reevaluación de las políticas económicas.
  • 🗣️ Se discute el impacto político y económico de estas doctrinas.

Zeitleiste

  • 00:00:00 - 00:05:00

    La economía neoclásica es dominante en la enseñanza económica global y se centra en el marginalismo y el monetarismo. Asume que las preferencias humanas son racionales, las empresas maximizan beneficios y las decisiones son tomadas con información completa. Este enfoque se basa en la teoría subjetiva del valor, donde el mercado dicta el valor según el deseo de pago de las personas y se analiza principalmente bajo la oferta y demanda.

  • 00:05:00 - 00:10:00

    Los marginalistas sugieren que la utilidad marginal decreciente motiva el comportamiento humano. Ponen ejemplos como el agua y los diamantes para explicar por qué ciertos bienes tienen más valor que otros según la utilidad marginal. Sin embargo, critican que no consideran el proceso de producción ni las implicaciones sociales del sistema económico.

  • 00:10:00 - 00:15:00

    Neoclasismo se opone a las influencias gubernamentales, argumentando que estos interfieren con el equilibrio mercantil natural. Defensores como Hayek advierten contra el control gubernamental proponiendo un mínimo rol estatal. Pero en su tiempo, pocos consideraron estas ideas por las crisis previas provocadas por defectos en mercados libres.

  • 00:15:00 - 00:20:00

    El monetarismo de Friedman critica el gasto impulsado por el gobierno en tiempos de crisis, abogando por controlar la inflación y un mínimo estado de bienestar. Esto ignora situaciones como el desempleo, que argumenta solo ocurre debido a interferencias con el mercado y no reconoce el valor trabajo por placer o motivaciones no económicas.

  • 00:20:00 - 00:29:30

    La economía neoclásica enfrenta críticas por no prever crisis como la de 2008 y por no integrar adecuadamente nuevas eventualidades o conocimientos de otras disciplinas. Gobiernos han comenzado a dejar estas ideas, volviendo a enfoques heterodoxos, y cuestionando principios neoclásicos por su falta de adaptación al mundo real.

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Mind Map

Mind Map

Häufig gestellte Fragen

  • ¿Cuáles son las principales ideas detrás de la economía neoclásica?

    Las principales ideas son el marginalismo y el monetarismo, que se centran en maximización de la utilidad y equilibrio de mercado.

  • ¿Quiénes son algunos de los principales pensadores de la economía neoclásica mencionados?

    William Stanley Jevons, Friedrich Hayek y Milton Friedman.

  • ¿Qué es el marginalismo?

    Es una teoría que explica el comportamiento económico basándose en la utilidad marginal y cómo influye en los precios de mercado.

  • ¿Qué critica la economía neoclásica?

    Critica el intervencionismo gubernamental y favorece el funcionamiento libre del mercado.

  • ¿Cómo ve la teoría neoclásica al mercado?

    Lo ve como un sistema autosuficiente que debe funcionar sin interferencias externas para alcanzar el equilibrio óptimo.

  • ¿Qué sucedió con la aplicación de políticas económicas neoclásicas?

    Durante los años 70 a 90, muchos países aplicaron estas ideas, pero resultaron ser inadecuadas al enfrentar varias crisis económicas.

  • ¿Cuál es la relación entre la economía neoclásica y la crisis financiera de 2008?

    La economía neoclásica no pudo predecir ni ofrecer soluciones efectivas para la crisis de 2008.

  • ¿Qué teoría se volvió a considerar después de las fallas del neoclasicismo?

    Después de las fallas del neoclasicismo, se reconsideró el keynesianismo y otras perspectivas económicas heterodoxas.

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Automatisches Blättern:
  • 00:00:02
    hello everyone so this time we're going
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    to talk about
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    neoclassical economics and in a lot of
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    ways we can understand neoclassical
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    economics as the
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    main the dominant the hegemonic
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    perspective
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    um today so if you study economics as a
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    major
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    uh in many places i won't say all um
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    you will get taught this set of ideas
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    the ideas we're talking about today as
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    opposed to any other discussion
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    about the economy and you'll be taught
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    this in such a way that it's the single
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    correct way to look at the economy and
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    this is the case in
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    almost every economics department in the
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    world i say almost there are definitely
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    exceptions but
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    what we'll see today is that so-called
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    neoclassical economics is
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    really just the combination of a couple
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    of ideas that we're going to look at
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    so we're going to focus on marginalism
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    and monetarism
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    as being two major trends within this
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    perspective
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    that have big policy implications um and
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    that have sort of
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    very much shaped the way the world has
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    worked at least for the last
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    40 or so years although as we'll see
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    that's starting to
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    decline now so here's some of the
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    fundamental assumptions behind
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    neoclassical economics
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    there's three so firstly this
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    perspective assumes people's professor
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    preferences are rational
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    um and we can identify these preferences
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    with the values that things have
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    right so that's a complicated way of
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    what we call the subjective theory of
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    value
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    subjective meaning the things that we
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    individually like
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    um that it's just a matter of taste or
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    preference not
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    not an objective theory of value which
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    says there's a way of measuring
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    something independent of our tastes and
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    preferences
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    okay point two um this theory assumes
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    that firms maximize profits
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    and people maximize utility or at least
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    try they do their best to maximize
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    utility
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    finally that people have free will and
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    that we use this free will to make
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    decisions
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    and in order to make these decisions we
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    need full and relevant
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    information to make those decisions
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    about the economy
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    in our own little way so based on all of
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    these things
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    neoclassical economics is trying to
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    explain how
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    scarce resources get allocated and it'll
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    mostly rely on these principles of
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    supply and demand so that's why supply
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    and demand are
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    two of the most well-known economic
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    concepts
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    mostly because of the you know the
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    dominant position that this way of
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    thinking has occupied in the last little
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    while
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    so william stanley evans is one of the
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    people we'll study today
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    he's one of the people who founded this
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    tradition
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    and he says that well given a certain
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    population with various needs and powers
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    of production
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    in possession of certain lands and other
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    sources of material
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    required the mode of employing their
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    labor which will maximize
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    the utility of their produce and it kind
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    of sums up all of those different points
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    right
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    people need to make stuff so they do
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    they employ their labor in a way that
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    maximizes their utility
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    right everybody's trying to make as much
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    profit as possible at all times
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    here's jevins um and more or less i mean
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    it's kind of reductionist to say this
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    but
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    more or less he's famous because he
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    brought mathematical and statistical
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    methods
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    into what used to be political economy
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    and uh so
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    in the book a general mathematical
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    theory of political economy
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    okay he's also famous for inventing
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    what's known as the marginal utility
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    theory of value
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    which you know sort of is a slightly
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    different
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    take on this than the subjective theory
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    of value but not quite
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    so utility is basically the satisfaction
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    or benefit we get from consuming a thing
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    and so the assumption behind this is
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    obviously if we put together the
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    mathematical statistical side
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    and the utility side what we're seeing
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    here is that well
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    utility is kind of meaningless unless we
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    can measure and quantify
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    utility we've got to be able to decide
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    what utility is you know when are people
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    making these decisions
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    about what they get satisfaction for or
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    get benefit from
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    so that leads us to this principle
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    called diminishing
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    marginality and how it influences sorry
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    marginal utility and how it
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    influences market prices so diminishing
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    marginal utility suggests that
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    uh if we've got something and the
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    marginal utility of that thing for us is
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    less than what somebody else has
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    we're going to try and trade those
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    things we're going to try and convince
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    the person that you know
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    they should exchange something for um
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    for what we've got
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    um and we're going to attempt to trade
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    what we've got so
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    this could be anything it can be our
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    time it can be our money
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    it can be our ability to do work it
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    could be any possession we own
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    and basically we're going to think of
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    trading that
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    if we think what we've got is less
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    valuable than what we can get
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    okay so the argument here is that if we
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    have more of something
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    that's going to lower the utility of any
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    additional unit of that thing so the
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    more we have
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    something the less precious every
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    additional bit of that thing is
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    okay and the so-called marginalists are
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    going to use this to explain
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    a lot of things like a lot of aspects of
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    human behavior
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    right we ask complicated questions like
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    why do people work or why do people not
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    work
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    you know marginalists will say well
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    people work when the marginal utility of
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    their time
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    is less valuable than what they're going
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    to get paid for their time people don't
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    work
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    when the marginal utility of their time
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    is more valuable
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    than what they would get paid otherwise
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    you know
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    it's as simple as that so we don't work
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    for pleasure we don't work
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    because we're good at something we don't
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    work because we have to
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    necessarily um these aren't necessarily
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    great explanations
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    um we only work when there's a marginal
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    utility versus um
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    that's being traded in some way the same
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    with why people trade
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    any type of behavior like this they're
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    going to try and explain it using my
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    using this marginal utility theory
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    so one of the points they make is in
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    relation to diamonds and water
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    this is a comparison that quite a lot of
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    economic theorists make because
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    uh water seems like a very useful thing
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    right um diamonds seem far less useful
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    okay so why do diamonds cost more than
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    water well
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    um it seems like diamonds provide people
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    with a higher level of satisfaction
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    you know at least at the moment so in
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    other words
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    the argument here is that diamonds have
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    greater marginal utility
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    right even though water is a more useful
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    commodity
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    it's not marginally more useful um it's
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    not providing the same
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    amount of satisfaction um because the
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    you know there's so much water and it's
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    so abundant that
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    every additional drop of water is
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    probably not giving us much more value
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    according to this perspective however
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    every additional little diamond
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    is probably giving us much more value
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    so neoclassical economics as i've said
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    is based on a subjective theory of value
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    we've studied other theories of values
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    so far
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    in this course such as the labor theory
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    of value or the physiocrats
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    theory of value now according to this
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    perspective the subjective perspective
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    goods don't have an inherent value labor
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    doesn't determine determine what the
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    value of something is
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    if we want to know what the value of
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    something is we have to ask a simple
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    question
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    how much does a person want to pay for
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    it based on their individual goals
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    that's it
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    that's all so there is no objective
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    measure of value
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    the market will tell us what the
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    objective measure of value is because
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    the market is a way of summarizing and
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    collecting together
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    everybody's individual decisions which
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    then tells us how much
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    things are worth
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    so marginalism and neoclassical
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    economics in general
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    basically says if we want to understand
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    prices
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    they're only determined by this
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    interaction between
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    supply and demand it's a simple
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    quantitative measure
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    and that's it you know and that kind of
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    means they're not asking a lot of the
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    big questions that we've been asking
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    in the last few weeks so for instance
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    um they're not interested in how the
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    production process works
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    like say marx was they're not interested
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    in why
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    people like the certain things that they
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    do you know why certain commodities are
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    seen as
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    status symbols and why certain
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    commodities are not
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    you know like vaplan for example they're
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    not even interested in the consequences
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    of the economic system for say
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    social stability like keynes was in the
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    previous
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    topic you know so more or less there is
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    a fundamental assumption here that
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    if we let individuals make free
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    decisions equilibrium markets will be
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    created so there will be an equilibrium
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    market
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    and everything will be as good as it can
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    be
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    so we need to understand that
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    marginalism as an idea
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    um arose in response to a certain
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    political context
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    right so in a lot of ways we can see it
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    as a response to
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    the popularity of socialism in the 20th
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    century
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    and marxism in in many places became the
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    dominant economic thinking of workers
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    movements of revolutionary movements
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    anti-colonial movements labor movements
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    and that sort of thing
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    marginalism gives economic thinkers a
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    way to
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    attack this perspective and say actually
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    if things aren't going so well if
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    there's some economic problems
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    it's the workers fault let's blame them
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    because
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    their types of politics we'll see
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    get in the way of the normal functioning
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    of the market so it's a way of saying
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    well
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    you workers might be asking for a better
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    life but it's the type of politics
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    you're following
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    that prevents you from getting a better
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    life okay so
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    the basis of this argument is workers or
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    if they get into
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    power somewhere if they become the
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    government the government
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    is interfering with market equilibrium
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    is making things
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    worse so another important thinker in
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    this perspective is friedrich hayek who
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    wrote the book the road to serfdom
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    and in the road to serfdom hayek is
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    arguing that government control over the
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    economy
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    would basically lead to us being slaves
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    we would get enslaved over time
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    and hayek's criticism um is a criticism
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    that's being made
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    in response to two big success stories
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    at the time
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    firstly the economic success of the
  • 00:10:43
    soviet union and its central planning
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    model
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    um the soviet union industrialized
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    faster than any other country
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    in the world up to that point and that
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    was one of the critical
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    things that allowed them to you know win
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    the second world war
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    they were probably the most important
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    definitely the most important
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    country in terms of deciding who won the
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    first the second world war
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    um and economic foundations of that were
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    central planning
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    and then on top of that we have keynes
  • 00:11:10
    who we've already studied and kane's
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    ideas of economic management
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    were becoming ascendant in the countries
  • 00:11:16
    that didn't follow socialism
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    so the capitalist countries were still
  • 00:11:20
    turning towards government
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    as a way of managing the economy you
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    know so hayek is going to critique this
  • 00:11:27
    and say actually i think government
  • 00:11:29
    should do only a very small number of
  • 00:11:31
    things
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    firstly we could protect the environment
  • 00:11:35
    and regulate special chemicals
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    so hayek realizes okay some things are
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    just super dangerous
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    and we've got to be really careful about
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    those things radioactive stuff or
  • 00:11:44
    highly poisonous chemicals or things
  • 00:11:46
    like that and we've got to protect the
  • 00:11:48
    environment because without the
  • 00:11:49
    environment capitalism can't exist right
  • 00:11:52
    next we need confidence in markets and
  • 00:11:54
    because we need confidence
  • 00:11:56
    in markets we need to prevent fraud
  • 00:11:58
    people need to have confidence that what
  • 00:12:00
    they buy is what they buy and they're
  • 00:12:02
    not being treated uh
  • 00:12:03
    tricked or cheated or anything like that
  • 00:12:05
    right lastly
  • 00:12:06
    hayek wanted some kind of social safety
  • 00:12:08
    net uh to take care of people
  • 00:12:10
    who fell into extremely unlucky
  • 00:12:12
    circumstances
  • 00:12:14
    uh like poverty and stuff
  • 00:12:17
    but not a sufficient safety net to
  • 00:12:19
    create a disincentive for people to work
  • 00:12:21
    and we'll talk about that
  • 00:12:22
    in a minute so one thing about hayek is
  • 00:12:26
    that everybody who lived at the same
  • 00:12:28
    time i see him thought he was pretty
  • 00:12:29
    crazy
  • 00:12:30
    right um almost no government paid
  • 00:12:33
    attention to hayek
  • 00:12:34
    when he wrote this book right or indeed
  • 00:12:37
    nobody paid attention to any of the
  • 00:12:39
    other neoclassical thinkers
  • 00:12:41
    because this idea of free markets was
  • 00:12:44
    completely discredited at this point
  • 00:12:46
    you know there were huge economic crises
  • 00:12:48
    uh complete depression collapses in the
  • 00:12:50
    1980-90 and 1928
  • 00:12:52
    um and the result of both of these
  • 00:12:54
    events um
  • 00:12:56
    was massive war just too soon
  • 00:12:59
    very soon after them right so nobody was
  • 00:13:02
    really sprouting the gospel of free
  • 00:13:04
    markets at this point
  • 00:13:06
    as we discussed in keynes last week
  • 00:13:08
    these type of thinkers
  • 00:13:10
    needed to wait until the oil crisis of
  • 00:13:12
    the 1970s
  • 00:13:13
    and the early 1980s when everybody was
  • 00:13:16
    looking for new economic thinking
  • 00:13:18
    and a lot of people turn towards high x
  • 00:13:21
    policy ideas
  • 00:13:24
    so one of the concept that's uh
  • 00:13:25
    interesting one in this way of thinking
  • 00:13:27
    is what's called pareto optimality
  • 00:13:29
    um you'll see it in a lot of arguments
  • 00:13:32
    about neoclassical economics it comes
  • 00:13:34
    from filfredo parito who's
  • 00:13:36
    both an engineer and an economist from
  • 00:13:38
    italy now this is a situation where
  • 00:13:41
    nobody can be made better off without
  • 00:13:43
    anyone being made
  • 00:13:44
    worse off enough for pareto this is the
  • 00:13:46
    best
  • 00:13:47
    type of situation right so any any
  • 00:13:50
    situation where
  • 00:13:51
    nobody can be made better off without
  • 00:13:53
    somebody being made worse off
  • 00:13:56
    we shouldn't try and alter that
  • 00:13:57
    situation now
  • 00:13:59
    the problem with this is that you know
  • 00:14:01
    we've probably achieved this state
  • 00:14:03
    many times but not necessarily been
  • 00:14:06
    happy for it let's give some examples
  • 00:14:08
    so if one person holds all the land and
  • 00:14:11
    all the wealth
  • 00:14:12
    and everybody else is enslaved it is
  • 00:14:14
    true that nobody can be made better off
  • 00:14:17
    without anybody else being made worse
  • 00:14:19
    off right so
  • 00:14:21
    it's interesting that hayek um in his
  • 00:14:23
    previous
  • 00:14:24
    suggestion was saying oh well the end
  • 00:14:26
    result of government is apparently
  • 00:14:28
    slavery but
  • 00:14:30
    uh pareto optimality does not
  • 00:14:32
    necessarily attack slavery either does
  • 00:14:35
    it
  • 00:14:36
    okay next in a perfectly equal society
  • 00:14:38
    it's also
  • 00:14:39
    true that nobody can be made better off
  • 00:14:41
    without making anyone else worse off so
  • 00:14:43
    let's imagine we live in a
  • 00:14:44
    you know a completely equal society
  • 00:14:47
    where everybody has the same amount of
  • 00:14:48
    money
  • 00:14:50
    everybody has the same wealth and income
  • 00:14:52
    now in this society
  • 00:14:54
    nobody can be better a better offer than
  • 00:14:56
    anybody made worse off
  • 00:14:58
    so even though pareto is often cited in
  • 00:15:01
    favor of
  • 00:15:03
    the existing form of capitalism
  • 00:15:06
    it is true that his theory could be used
  • 00:15:08
    to support
  • 00:15:09
    anything from a highly communistic
  • 00:15:11
    society
  • 00:15:13
    all the way to a completely unequal
  • 00:15:15
    society where one person has everything
  • 00:15:17
    and everybody else has nothing
  • 00:15:20
    and what this really shows is that
  • 00:15:22
    there's a big problem
  • 00:15:23
    inherent in the neoclassical perspective
  • 00:15:27
    distribution is treated as if it's
  • 00:15:29
    irrelevant
  • 00:15:30
    as if it doesn't matter who has what in
  • 00:15:32
    the economy
  • 00:15:33
    right so politics and distributional
  • 00:15:35
    politics in particular
  • 00:15:37
    is seen as unimportant because these
  • 00:15:40
    people are basically thinking of the
  • 00:15:41
    world
  • 00:15:42
    like an engineer thinks of the world
  • 00:15:43
    these people thinking of the economy
  • 00:15:46
    not as an interaction of human
  • 00:15:47
    decision-making processes not as
  • 00:15:49
    something embedded in the society
  • 00:15:51
    not as something government helps to
  • 00:15:53
    operate they're thinking of the economy
  • 00:15:55
    like
  • 00:15:55
    a machine that works by itself
  • 00:16:00
    so monetarism is the last big component
  • 00:16:03
    that we'll talk about that's in
  • 00:16:04
    neoclassical economics and
  • 00:16:07
    milton friedman gets the credit for
  • 00:16:09
    monetarism he's a nobel prize winning
  • 00:16:11
    economist
  • 00:16:12
    um and this perspective is partly a
  • 00:16:14
    criticism of keynes
  • 00:16:15
    and in particular a criticism of kane's
  • 00:16:18
    counter cyclical spending theory
  • 00:16:20
    now what we need to remember from keynes
  • 00:16:22
    is that he suggested if there's an
  • 00:16:23
    economic crisis
  • 00:16:25
    it's a good idea for government to spend
  • 00:16:27
    money to counter the worst effects of
  • 00:16:29
    the economic crisis
  • 00:16:30
    okay and freedom is going to respond to
  • 00:16:32
    this argument by saying
  • 00:16:34
    if we change the total supply of money
  • 00:16:36
    if we do anything to change the total
  • 00:16:38
    supply of money
  • 00:16:39
    we're going to create inflation okay and
  • 00:16:41
    that's going to be worse than anything
  • 00:16:43
    we do
  • 00:16:43
    to resolve the crisis so
  • 00:16:46
    if we remember keynes was prepared to
  • 00:16:48
    tolerate some inflation
  • 00:16:51
    but the trade-off for this is to
  • 00:16:53
    eliminate unemployment he saw
  • 00:16:55
    unemployment as being a far
  • 00:16:56
    worse problem friedman doesn't believe
  • 00:16:59
    unemployment can exist okay that makes
  • 00:17:02
    him a unique person right
  • 00:17:04
    in an equilibrium state so what he's
  • 00:17:07
    saying is the only reason unemployment
  • 00:17:09
    exists is because we've prevented this
  • 00:17:11
    equilibrium state from occurring
  • 00:17:13
    we've done things like introduce minimum
  • 00:17:15
    wage laws or allow workers to have
  • 00:17:17
    unions or things like that
  • 00:17:19
    and if we get all these things out the
  • 00:17:20
    way there will be an equilibrium state
  • 00:17:22
    there won't be unemployment
  • 00:17:25
    and then everything will be fine so
  • 00:17:26
    therefore it's much better to control
  • 00:17:28
    inflation and do things like removing
  • 00:17:31
    factors
  • 00:17:32
    that create a disincentive for people to
  • 00:17:34
    work
  • 00:17:35
    right so why do we work is an
  • 00:17:37
    interesting question
  • 00:17:38
    and marginalism has a not very
  • 00:17:40
    interesting answer
  • 00:17:41
    okay um we work because the marginal
  • 00:17:44
    incentive to work
  • 00:17:45
    outweighs the marginal incentive for
  • 00:17:47
    leisure right
  • 00:17:48
    we work because we feel like it's we're
  • 00:17:50
    going to get more out of working
  • 00:17:52
    than just being lazy and staying at home
  • 00:17:55
    okay
  • 00:17:55
    so this basically says well all this
  • 00:17:58
    theory that maybe you could work just
  • 00:18:00
    for personal fulfillment
  • 00:18:02
    or ideological reasons you know maybe
  • 00:18:04
    you work to serve the nation
  • 00:18:05
    or maybe you work to serve the working
  • 00:18:07
    class or maybe you work to serve your
  • 00:18:09
    fellow citizens
  • 00:18:10
    these aren't reasons to work okay
  • 00:18:13
    friedman looks at everybody who's ever
  • 00:18:15
    done work
  • 00:18:16
    um for for reasons that are not you know
  • 00:18:20
    profit maximizing reasons and thinks
  • 00:18:22
    they're a bit crazy
  • 00:18:23
    okay he says the standard assumption in
  • 00:18:25
    marginalism is that we're going to be
  • 00:18:27
    lazy
  • 00:18:28
    unless we're forced to work by
  • 00:18:29
    circumstances right unless we have we're
  • 00:18:32
    scared of the consequences of not
  • 00:18:33
    working
  • 00:18:34
    and that's why he's going to say things
  • 00:18:36
    like minimum wage laws or income
  • 00:18:38
    support or price support or stuff like
  • 00:18:40
    that things that make our life cheaper
  • 00:18:42
    and easier
  • 00:18:43
    things that make us less dependent on
  • 00:18:44
    work they're all terrible because they
  • 00:18:46
    prevent an equilibrium state
  • 00:18:50
    so the policy implications of
  • 00:18:52
    neoclassical economics
  • 00:18:54
    now lots of governments followed this
  • 00:18:56
    perspective in particular from the late
  • 00:18:58
    1970s to the early 1990s
  • 00:19:01
    and even after this in many countries
  • 00:19:03
    not in all countries
  • 00:19:04
    especially not anymore but in many
  • 00:19:06
    countries neoclassical economics is
  • 00:19:09
    influential in both academic and policy
  • 00:19:11
    circles
  • 00:19:12
    right if you're a believer in this
  • 00:19:14
    perspective you generally see the
  • 00:19:15
    following arguments people believe that
  • 00:19:17
    free markets and free trade
  • 00:19:19
    are good without question they believe
  • 00:19:22
    in removing regulation that controls the
  • 00:19:24
    activities of investors and business
  • 00:19:26
    people
  • 00:19:26
    right people with money according to
  • 00:19:29
    this perspective
  • 00:19:30
    need to be free to allocate their money
  • 00:19:33
    however they think is going to be most
  • 00:19:34
    profitable
  • 00:19:35
    that's how we generate an equilibrium
  • 00:19:37
    they believe in removing regulations
  • 00:19:39
    that try to give rights to workers
  • 00:19:41
    so things like minimum wages limits to
  • 00:19:43
    working hours
  • 00:19:45
    even in some cases you'll see
  • 00:19:47
    neoclassical economists arguing against
  • 00:19:49
    child labor laws because it distorts the
  • 00:19:51
    labor market
  • 00:19:52
    you know the argument is uh if if
  • 00:19:55
    children are poor they should be allowed
  • 00:19:56
    to work
  • 00:19:57
    nobody should stop them that sort of
  • 00:19:59
    thing right
  • 00:20:01
    they also believe in minimum taxation
  • 00:20:03
    and social spending so the lowest impact
  • 00:20:05
    of government possible
  • 00:20:06
    again to defend this equilibrium
  • 00:20:08
    position
  • 00:20:11
    but um there's some problems with the
  • 00:20:13
    theory okay so
  • 00:20:14
    obviously i talked a little bit about
  • 00:20:16
    the issues with mainstream economics in
  • 00:20:18
    the opening lecture in the
  • 00:20:20
    introduction to political economy but
  • 00:20:22
    specifically when it comes to monetarism
  • 00:20:25
    it's been unable to explain a lot of
  • 00:20:27
    things ever since it became popular
  • 00:20:29
    right so the most important one is there
  • 00:20:32
    have been many cases where
  • 00:20:33
    inflation occurs however the supply of
  • 00:20:36
    money has not changed in the place that
  • 00:20:38
    inflation has occurred
  • 00:20:39
    right now their theory is completely
  • 00:20:41
    based on the money supply if the
  • 00:20:43
    money supply grows that's what's going
  • 00:20:45
    to cause inflation
  • 00:20:46
    so how does inflation ever exist in a
  • 00:20:48
    place where the money supply doesn't
  • 00:20:50
    grow
  • 00:20:51
    you know there's also cases of places
  • 00:20:52
    where there's no interest rate at all so
  • 00:20:55
    japan is a good
  • 00:20:56
    a good example because it's either had a
  • 00:20:58
    zero or a negative interest rate at
  • 00:20:59
    times
  • 00:21:00
    now this should never ever happen in
  • 00:21:02
    monetarism right
  • 00:21:04
    uh according to the precepts of their
  • 00:21:05
    theory um
  • 00:21:07
    an equilibrium state if allowed you know
  • 00:21:09
    should never ever
  • 00:21:10
    lead to zero or negative interest rates
  • 00:21:13
    okay so
  • 00:21:14
    this view that markets are inherently
  • 00:21:16
    stable
  • 00:21:17
    seems really hard to defend now you know
  • 00:21:20
    it's not like they didn't have their
  • 00:21:21
    chance
  • 00:21:22
    everybody was listening to neoclassical
  • 00:21:24
    economists for about
  • 00:21:25
    you know 30 years and everybody did
  • 00:21:27
    exactly what they wanted
  • 00:21:29
    you know most countries adopted this
  • 00:21:31
    policy framework
  • 00:21:32
    and the thing that people started to
  • 00:21:33
    notice is the countries
  • 00:21:35
    who most adopted this way of thinking
  • 00:21:38
    were the
  • 00:21:38
    worst affected whenever there was an
  • 00:21:40
    economic crisis
  • 00:21:42
    right so the countries that opened their
  • 00:21:44
    economy the most
  • 00:21:45
    were the ones affected the most you know
  • 00:21:47
    whenever things went bad
  • 00:21:51
    so one point about science and economics
  • 00:21:54
    does claim to be a science
  • 00:21:56
    you know is science is supposed to
  • 00:21:58
    explain
  • 00:21:59
    the actually existing world right
  • 00:22:02
    we're supposed to be able to make
  • 00:22:04
    predictions on it you know now one major
  • 00:22:06
    criticism of neoclassical economics is
  • 00:22:08
    that it's not
  • 00:22:09
    actually based on the real world right
  • 00:22:12
    these arguments that have faith in free
  • 00:22:14
    markets
  • 00:22:15
    is based on a world that isn't quite
  • 00:22:17
    with us right so
  • 00:22:18
    here's a critique by nelson he says the
  • 00:22:20
    priesthood of a modern secular religion
  • 00:22:22
    of economic progress
  • 00:22:24
    this type of language shows us that
  • 00:22:26
    there is an increasing number of people
  • 00:22:28
    who compare economics to a religion and
  • 00:22:30
    say
  • 00:22:31
    well it seems like you just believe in
  • 00:22:33
    free markets and their success story
  • 00:22:35
    you don't actually feel the need to test
  • 00:22:37
    your beliefs okay
  • 00:22:38
    and then the other problem was with this
  • 00:22:40
    rationality assumption um in the last
  • 00:22:42
    couple of weeks we've studied
  • 00:22:44
    authors like maybelline and keynes and
  • 00:22:46
    if you paid attention
  • 00:22:47
    um you should know that there's all
  • 00:22:49
    kinds of reasons to question this idea
  • 00:22:51
    of the rational individual
  • 00:22:52
    you know we've seen people do things
  • 00:22:54
    because they're scared they feel
  • 00:22:55
    confident for no reason they do some
  • 00:22:57
    other stuff
  • 00:22:58
    um they're chasing status so they're
  • 00:23:00
    trying to copy the upper classes
  • 00:23:02
    why because they feel social pressure
  • 00:23:03
    from their friends these are not
  • 00:23:05
    rational individuals
  • 00:23:07
    right so even if people can be rational
  • 00:23:09
    the economic rationality
  • 00:23:11
    is not necessarily good for society at
  • 00:23:13
    all you know what we've seen is that the
  • 00:23:15
    goal of corporate profits being
  • 00:23:16
    maximized
  • 00:23:18
    does not have to be good for the rest of
  • 00:23:19
    society you know it is possible for a
  • 00:23:22
    small number of people to get most of
  • 00:23:23
    the economic development
  • 00:23:25
    there is no necessary reason this is
  • 00:23:27
    going to be good for everybody else
  • 00:23:31
    the other problem with neoclassical
  • 00:23:32
    economics is its failure to anticipate
  • 00:23:35
    or deal with crisis so most recently in
  • 00:23:37
    2008
  • 00:23:38
    there were no academic and professional
  • 00:23:41
    economists who really anticipated the
  • 00:23:42
    financial crisis
  • 00:23:44
    and also academic and professional
  • 00:23:46
    economists did not provide any solutions
  • 00:23:48
    to it right neoclassical economics
  • 00:23:50
    did not have a solution to this crisis
  • 00:23:53
    you know
  • 00:23:53
    the only people who came up with a
  • 00:23:55
    solution to it were the people who
  • 00:23:56
    turned back to keynes and said okay
  • 00:23:58
    let's do some stimulus spending again we
  • 00:24:00
    forgot about that
  • 00:24:01
    we can still do that we're going to do
  • 00:24:03
    that because we don't want to just watch
  • 00:24:05
    ourselves get destroyed
  • 00:24:06
    right neoclassical economics also does
  • 00:24:09
    not deal well with the inclusion of new
  • 00:24:11
    information
  • 00:24:12
    uh galbraith who we'll study next says
  • 00:24:14
    that economists obsess over market
  • 00:24:16
    transactions and maths
  • 00:24:18
    and it's this mathematics section that
  • 00:24:20
    makes them look a lot like a science
  • 00:24:23
    but this is not the only type of
  • 00:24:25
    knowledge you know last week
  • 00:24:27
    when we were talking about babylon and
  • 00:24:29
    keynes i mentioned that
  • 00:24:31
    these are heavily psychological theories
  • 00:24:33
    it's an example of
  • 00:24:34
    you're taking from one branch of
  • 00:24:35
    knowledge psychology and you're
  • 00:24:37
    introducing it into the way we think
  • 00:24:38
    about the economy
  • 00:24:40
    so we're borrowing knowledge from lots
  • 00:24:41
    of different places the biggest problem
  • 00:24:43
    with neoclassical economics
  • 00:24:45
    is it says we can't do that there's no
  • 00:24:47
    borrowing of knowledge for anywhere
  • 00:24:49
    there's just maps and stats and a bunch
  • 00:24:51
    of assumptions
  • 00:24:52
    and that's how we understand the economy
  • 00:24:54
    right so
  • 00:24:55
    um galbraith says is there anything
  • 00:24:57
    missing even from the hotly contested
  • 00:24:59
    domains of modern
  • 00:25:01
    mainstream economics and you know some
  • 00:25:03
    of the things he thinks it's bad that
  • 00:25:05
    modern economics programs don't teach
  • 00:25:07
    but perhaps should
  • 00:25:08
    the history of economic ideas okay
  • 00:25:11
    what we've discussed somewhat in this
  • 00:25:13
    course is one thing that's left out
  • 00:25:16
    macroeconomic policy is the type of
  • 00:25:19
    politics and policy that keynes was
  • 00:25:21
    talking about where government manages
  • 00:25:23
    the economy
  • 00:25:24
    manages trade flows manages that sort of
  • 00:25:26
    thing manages the big picture
  • 00:25:28
    of the economy um and then the role of
  • 00:25:31
    institutional context so political and
  • 00:25:33
    national international structures and
  • 00:25:34
    policy histories
  • 00:25:36
    things like what vader was talking about
  • 00:25:38
    you know
  • 00:25:39
    things like what keynes was talking
  • 00:25:41
    about you know these things remain
  • 00:25:43
    important in understanding the way that
  • 00:25:45
    the economy works but you won't find
  • 00:25:47
    them in most modern economic programs
  • 00:25:51
    so this leads neoclassical economics to
  • 00:25:53
    find itself in a position where it's
  • 00:25:55
    increasingly being discredited again
  • 00:25:57
    you know the policy ideas behind
  • 00:26:00
    neoclassical economics are seen as the
  • 00:26:02
    reason that the asian financial crisis
  • 00:26:04
    of 97 98 happened
  • 00:26:06
    and then the 2008 financial crisis and
  • 00:26:09
    the perspective
  • 00:26:10
    also failed to predict both of these
  • 00:26:11
    crises so
  • 00:26:13
    there's clear evidence in this in terms
  • 00:26:15
    of the behavior of many governments
  • 00:26:17
    after the crisis happened and this is
  • 00:26:19
    how we measure
  • 00:26:20
    the extent to which these ideas are
  • 00:26:22
    falling out of favor so
  • 00:26:24
    when the 2008 crisis happened the very
  • 00:26:27
    most notable thing
  • 00:26:28
    is that many governments but you know
  • 00:26:30
    the two biggest governments i guess the
  • 00:26:32
    united states and china
  • 00:26:33
    uh spent a ton of money on stimulus
  • 00:26:36
    packages
  • 00:26:37
    i picked up kane's book read it again
  • 00:26:40
    learned that stimulus was a real thing
  • 00:26:42
    i probably already knew right and spent
  • 00:26:44
    a lot of money on stimulus packages
  • 00:26:46
    and china for example showed that it
  • 00:26:48
    sort of responded from the crisis
  • 00:26:50
    the best what defined the chinese
  • 00:26:53
    economy
  • 00:26:53
    compared to many other economies well
  • 00:26:56
    it's the amount of stake control over
  • 00:26:58
    the economy so it's not that china is a
  • 00:27:00
    completely stair-controlled economy but
  • 00:27:03
    the influence of state-owned enterprises
  • 00:27:05
    and the chinese state in planning and
  • 00:27:07
    shaping the economy
  • 00:27:09
    was very big compared to most other
  • 00:27:11
    economies
  • 00:27:12
    and so it seems like the opposite of
  • 00:27:15
    what neoclassical economics suggested
  • 00:27:18
    is good you know uh big government is
  • 00:27:21
    good
  • 00:27:21
    planning is good um state ownership
  • 00:27:24
    is good um this seems like they've lost
  • 00:27:28
    the ideological battle here you know
  • 00:27:30
    the evidence was proving them wrong and
  • 00:27:32
    the result of this is a lot of people
  • 00:27:34
    began to get interested again
  • 00:27:36
    in what we call heterodox economic
  • 00:27:38
    perspectives right so they're picking up
  • 00:27:40
    canes they're picking up marks they're
  • 00:27:41
    picking up people like vaplan
  • 00:27:43
    and they're saying well we need to go
  • 00:27:45
    back to look at this stuff and apply it
  • 00:27:46
    to the modern context because there's a
  • 00:27:48
    lot of information and a lot of
  • 00:27:50
    knowledge that they have
  • 00:27:51
    that everybody forgot about but it's
  • 00:27:53
    potentially still very useful
  • 00:27:56
    so i'm going to finish this talk with a
  • 00:27:58
    quote from schumpeter
  • 00:27:59
    who's another economist who says that
  • 00:28:01
    the assumption that conduct is prompt
  • 00:28:03
    and rational is in all cases a fiction
  • 00:28:06
    but it proves to be sufficiently neater
  • 00:28:07
    reality if things have had time to
  • 00:28:09
    hammer logic into men
  • 00:28:11
    where this has happened and within the
  • 00:28:13
    limits in which it has happened
  • 00:28:14
    one may rest content with this fiction
  • 00:28:17
    and build theories upon it
  • 00:28:18
    right and schumpeter here is warning us
  • 00:28:21
    if we build our theories
  • 00:28:23
    on questionable assumptions you know we
  • 00:28:26
    can convince a lot of people
  • 00:28:28
    but that doesn't make the theories
  • 00:28:30
    correct right that doesn't make them
  • 00:28:31
    good theories
  • 00:28:32
    okay so what he's suggesting here i
  • 00:28:35
    guess if we apply this quote
  • 00:28:37
    and think about neoclassical economics
  • 00:28:39
    the only reason it's been so successful
  • 00:28:41
    as a perspective
  • 00:28:42
    is because lots of people agreed with it
  • 00:28:44
    for a certain period of time
  • 00:28:46
    not because it's a good theory right
  • 00:28:48
    it's popular
  • 00:28:49
    not necessarily good it serves certain
  • 00:28:51
    people's interests
  • 00:28:52
    but it's not necessarily good right
  • 00:28:56
    and such is it's not necessarily
  • 00:28:58
    goodness
  • 00:28:59
    that at the moment um it's now facing
  • 00:29:02
    attacks from lots of different
  • 00:29:04
    directions and governments are
  • 00:29:05
    mostly ditching these ideas um that
  • 00:29:08
    neoclassical economics
  • 00:29:10
    advocated successfully you know for the
  • 00:29:13
    last 30 or 40 years
  • 00:29:14
    those ideas are on the way out now um
  • 00:29:17
    and it's you know
  • 00:29:18
    not completely clear which perspective
  • 00:29:20
    is going to replace it
  • 00:29:21
    so thanks for listening everybody um i
  • 00:29:24
    hope you enjoyed that talk on
  • 00:29:25
    neoclassical economics
Tags
  • economía neoclásica
  • marginalismo
  • monetarismo
  • equilibrio de mercado
  • Friedrich Hayek
  • Milton Friedman
  • crisis financiera
  • keynesianismo