Of course, it is possible to fold behavioural insights into the dominant methodology: the respect that
neoclassical economics accords individual choice is so great that preferences can include almost anything.
'But there is a missing 20 percent of human behavior about which
neoclassical economics can give only a poor account,' Fukuyama added, obviously referring to some mercantilists as the missing 20 percent in human behavior.
Knight's most interesting methodological tenets concern the relationship between
neoclassical economics and the broadly interpreted social science.
The text integrates perspectives of
neoclassical economics, interest group theory, social choice theory, and game theory, as well as concepts from Austrian economics, behavioral economics, and quantitative methods.
The newest addition to the 'Corporations, Globalisation and the Law' series from Edward Elgar Publishing, "Reframing Corporate Governance" by Javier Reyes (Faculty of Law, University of Helsinki, Finland) offers an articulate demystification of the scientific aspirations of
neoclassical economics as understood and used by legal scholars.
Thomas Robert Malthus, David Ricardo, James Mill, John Stuart Mill, and other liberals, radicals, and reformers had a hand in conceptual transformations that culminated in the advent of
neoclassical economics. The population problem, the declining importance of agriculture, the consequences of industrialization, the structural characteristics of civil society, the role of the state in economic affairs, and the possible limits to progress were questions that underwent significant readjustments.
But there was a catch-22 imbedded in his efforts; he found that economic growth was "exogenous" to the approaches of his still-dominant economic school of
neoclassical economics. The elements and variables behind innovation were simply too complex to fit within more simplistic, metrics-driven neoclassical theories.
In
neoclassical economics that dominated the late 20th century around the same time when pictorial warnings became popular the conventional view was that consumers are rational economic agents who act to further their individual self-interest.
It is important to note that while public choice can be pithily summarized as "economics applied to politics," public choice as Buchanan did it was not simply
neoclassical economics applied to politics.
The Idea of History in Constructing Economics is an ambitious book, making the case for the prosecution of
neoclassical economics, offering a few unexplored threads from the history of economics that might have set us on a better path, and then making an extended argument for economic theory to be derived inductively from historical experience.
Whilst a wide range of factors are involved, significant explanatory weight should be placed on the marginal revolution of the 1870s that established the core theoretical and ontological foundations of
neoclassical economics. Indeed, the reader will find that the analysis in this article continually goes back this particular intellectual fork in the road (4).