Mainstream economics

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Mainstream economics is a loose term used to refer to the non-heterodox economics taught in prominent universities, notably the University of Chicago, MIT, and Ivy League schools. Mainstream economists is not generally separated into schools, but two major contemporary orthodox economic schools of thought are the Saltwater school of the US coastal universities, notably including MIT, Berkeley, and Harvard, and the Freshwater school of the University of Chicago, which is associated with the Chicago school of economics. The Saltwater school is associated with Keynesian ideas of government intervention into the free market, while the Freshwater schools are skeptical of the benefits of the government.^[1] Mainstream economists do not, in general, identify themselves as members of a particular school; they may, however, be associated with approaches within a field such as the rational-expectations approach to macroeconomics. Currently mainstream economics is dominated by the neoclassical synthesis, which combines neoclassical approach to microeconomics with Keynesian approach to macroeconomics.^[2] Some economists believe that the neoclassical "holy trinity" of rationality, greed, and equilibrium, is being replaced by the holy trinity of purposeful behavior, enlightened self-interest, and sustainability, considerably broadening the scope of what is mainstream.^[3]

Mainstream economics has also been defined as work which mainstream economists are willing to engage, which requires conforming to the mainstream language of mathematical models.^[3] Under this definition, schools which are typically thought of as heterodox because they do not work under the typical neoclassical assumptions, including econophysics, behavioral economics, and evolutionary economics, can be considered mainstream when they are engaged in the mainstream.^[3] Geoffrey Hodgson has stated that he believes that evolutionary economics and institutional economics are entering into the new mainstream.^[4]

The term came into common use in the late 20th century. It appears in the influential textbook by Samuelson and Nordhaus,^[5] on the inside back cover in the "Family Tree of Economics," which depicts arrows into it from J.M. Keynes (1936) and neoclassical economics (1860-1910). The term neoclassical synthesis itself also appears in Samuelson's influencial 1955 textbook.^[6] Mainstream economics includes theories of market and government failure and private and public goods. These developments suggest a range of views on the desirability or otherwise of government intervention.

Some fields may be described as being partly within mainstream economics, partly within heterodox economics. Some of them are Austrian economics,^[7] institutional economics, neuroeconomics and non-linear complexity theory.^[8] 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."^[9]

A countervailing trend is the expansion of mainstream methods to such seemingly distant fields as crime^[10] the family, law, politics, and religion.^[11] The latter phenomenon is sometimes referred to as economic imperialism.^[12]

References

1. ^ Kilborn PT. (1988). 'Fresh water' Economists Gain. New York Times.
2. ^ Clark, B. (1998). Political-economy: A comparative approach. Westport, CT: Praeger.
3. ^ ^{a b c} Colander, D. C.; Holt, R. P. F.; Rosser, J. B. (2004), The Changing Face of Economics, University of Michigan Press, <http://books.google.co.uk/books?id=NNfv3fzamYsC> 
4. ^ Hodgson, G.M (200). "Evolutionary and Institutional Economics as the New Mainstream". Evolutionary and Institutional Economics Review 4 (1): 7-25. Retrieved on 2008-06-0. 
5. ^ Paul A. Samuelson and William D Nordhaus (2001), 17th ed.,Economics
6. ^ Olivier Jean Blanchard (1987), "neoclassical synthesis," The New Palgrave: A Dictionary of Economics, v. 3, pp. 634-36.
7. ^ A Companion to the History of Economic Thought (2003). Blackwell Publishing. ISBN 0631225730 p. 452
8. ^ David Colander, Richard P. F. Holt, and Barkley J. Rosser, Jr. (2004), "The Changing Face of Mainstream Economics," Review of Political Economy, 16(4), pp.485-499. (abstract)
9. ^ John B. Davis (2006), "The Turn in Economics: Neoclassical Dominance to Mainstream Pluralism?", Journal of Institutional Economics, 2(1), pp. 1-20. (PDF article link)
10. ^ David D. Friedman (2002), "Crime," The Concise Encyclopedia of Economics,[1]
11. ^ Laurence R. Iannaccone (1998), "Introduction to the Economics of Religion," Journal of Economic Literature, 36(3), pp. 1465-1496. [[2]
12. ^ Edward Lazear (2000), "Economic Imperialism" . The Quarterly Journal of Economics. , 115(1), pp. 99-146.[3]