From Economics to Political Economy: Contradictions, Challenge, and Change

• Published date: 01 January 2019
• Date: 01 January 2019
• DOI: http://doi.org/10.1111/ajes.12259

From Economics to Political Economy:

Contradictions, Challenge, and Change

By Frank Stilwell*

abStract. The nature of the challenge to mainstream economics needs

to be carefully considered. This article presents an overview of the

challenge, emphasizing that it is not just a matter of heterodox

economists developing non-neoclassical economic theories. The

embrace of a pluralist method and pedagogy is equally significant.

The development of a transdisciplinary approach adds further to the

breadth of the challenge. Weaving these elements together as political

economy provides an alternative paradigm to mainstream economics.

Extending its influence requires focus on adult education, the media,

and public policy, as well as sustained efforts within universities.

Introduct ion

Criticisms of mainstream economics have been numerous, trenchant,

and persistent. They emphasize its constricted analytical method, unre-

alistic assumptions, poor explanatory power, and political bias. As a

toolkit for understanding, steering, or improving the real world, main-

stream economics is demonstrably deficient. The global financial crisis

brought these concerns out from the academic realm into the broader

public domain: even the Queen of England publicly asked why econ-

omists had got it so wrong (Dow et al. 2009). However, 10 years later,

it is clear that the storm was weathered without fundamental change

to mainstream thought and practices. There is more public skepticism

about the economics profession, but there has been no fundamen-

tal change in what economists do. Mainstream economics has also

been resistant to growing social and environmental concerns, such as

increased wealth inequalities and the awesome prospect of climate

change. Economic growth measured by GDP per capita remains the

principal yardstick for assessing economic performance. Meanwhile,

American Jour nal of Economics and Sociology, Vol. 78, No. 1 (January, 2019).

DOI: 10 .1111/ajes.1225 9

© 2019 American Journa l of Economics and Sociology, Inc

*Professor Emeritus in Political Economy, University of Sydney.

Email: frank.stilwell@sydney.edu.au

36 The American Journal of Economics and Sociology

government programs of privatization, deregulation, and business tax

cuts, now sometimes combined with the politics of austerity and/

or resurgent nationalism, form a policy mix whose sole element of

coherence is the maintenance of capitalism at all costs.

Academic economics seems largely untroubled. The core courses

in university economics departments continue to emphasize basic

training—which some might call indoctrination—in neoclassical eco-

nomic principles. This inculcates a particular way of seeing economic

issues that its proponents sometimes describe as “thinking like an

economist” (Mankiw 2015: Ch. 2). To effectively challenge such an

entrenched orthodoxy requires critics to carefully consider the op-

tions. This article seeks to make a modest contribution to this process

by discussing how progress may be made. It builds on some previous

writing by the author (Stilwell 1988, 2006a, 2009, 2011, 2012, 2016b,

2017) and extends the arguments to consider how heterodoxy, plu-

ralism, and an interdisciplinary approach can be fused into a new

political economy paradigm. The article is structured in six sections,

dealing with (1) the case for heterodoxy, (2) the case for pluralism, (3)

the case for transdisciplinarity, (4) the case for political economy, (5)

the common themes in political economy, and (6) the avenues along

which progress may be made by political economists challenging the

orthodoxy both in theory and practice.

Heterodoxy Cha llenging Or thodoxy

It is always healthy for orthodoxies to be subjected to critique, partic-

ularly when a public interest is at stake. Throughout its history, main-

stream economics has been subject to such challenges. Nearly half a

century ago, J. K. Galbraith (1973: 1) noted:

For a new and notably articulate generation of economi sts a reference to

neoclassical economics has become ma rkedly pejorative. … I would judge

as well as hope that the present attack wi ll be decisive.

Although his prediction was wrong, the critical momentum contin-

ues. During the last couple of decades, the dissidents have become

better organized: worldwide associations like the World Economics

Association (WEA) and the Intern ational Initiative for Promoting