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The nature of heterodox economics revisited

by Yannick Slade-Caffarel on December 11, 2018

In 2006, Tony Lawson proposed a conception of the nature of heterodox economics. He argued that what unites the otherwise ostensibly disparate collection of schools of thought that come under the banner of heterodoxy is a desire to study economic phenomena in accordance with our best understanding of how social phenomena exist. In other words, his assessment was that what unites heterodox economists is a commitment to a conception of social ontology—a theory of how social reality exists—such as that which has been elaborated and defended in Cambridge.

That conception broadly holds that social reality is in some sense brought into existence by, and depends on, human beings. It emerges from, and is reproduced and transformed by, our interactions. Social structures are the transformed and/or reproduced results of socio-historically specific social relations between human beings. And concurrently these social structures have a power of conditioning over the actions of human beings who, in turn, transform and reproduce them. It is a never-ending dynamic back and forth.

I consider that the description above is relatively uncontentious. Therefore, if I was to summarise the argument to its simplest form, it would be that what is defining of heterodox economics is a concern with being realistic. This assessment, to me, is also seemingly uncontentious and very much in line with what I was taught during my undergraduate degree in Political Economy at the University of Sydney. Heterodox economics cared about being realistic in a way that the mainstream did not. This was a common refrain from ECOP1001 onwards.

Why, then, was Lawson’s 2006 assessment so disputed and why have so few heterodox economists adopted it? The answer I provide in my recently published paper in the Cambridge Journal of Economics is that this is largely due to misunderstanding the implications of Lawson’s conception for determining who is and isn’t a heterodox economist. And this misunderstanding, I argue, is built on a more general misunderstanding of Lawson’s views with regard to mathematical modelling. So, let’s start there.

Lawson argues that the problem with, and the defining characteristic of, mainstream economics is an insistence on mathematical modelling. What unites an otherwise, and increasingly, diverse economic mainstream is a methodological dogma of model first, ask questions later. Lawson’s important contribution was then to turn to ontology—the study of existence—to fully explain why this was problematic. Instead of simply claiming that the assumptions required for the models to function were unrealistic, he sought to draw out what exactly about them was unrealistic and, perhaps most crucially, to explain what exactly he meant by reality. It is all well and good to claim that something is unrealistic, but what kind of reality are we talking about?

Lawson has shown that mathematical models of the sort used by mainstream economists presuppose a world of isolated atoms in which event regularities hold. In other words, for the mathematical models used by mainstream economists to function, what they model must be conceived of as isolated atoms inside a closed system. Then, the reason why Lawson claims that this type of method is largely inappropriate in social science is that, given the fact that society seems to exist in a manner similar to what I describe above, those conditions do not seem to arise very often.

What I understand to be the general interpretation of Lawson’s above argument is that he is against the use of mathematics in economics. The problem with simplifying his argument in this way is that it misses the most important part of the argument. Mathematical modelling, just like any method, is appropriate under certain conditions. What Lawson does is to outline the conditions under which its use is appropriate, and to argue that these conditions do not seem to arise very often in the social realm. As Lawson often states, the argument is not anti-maths, it is anti-mismatch.

The anti-maths interpretation, however, persists and seemingly influenced the manner in which Lawson’s conception of heterodox economics was received. Due to the ingrained idea that Lawson believes if we are trying to be realistic, we cannot use mathematics, it was generally understood that the implication of Lawson’s conception of heterodox economics was that anyone who used mathematics could not be considered a heterodox economist. It was, therefore, claimed that as many heterodox economists do, indeed, use mathematical modelling, that Lawson’s conception could not be right.

But Lawson’s conception of heterodox economics does not define heterodoxy as those who succeed in being realistic but, rather, simply by the pursuit. While the mainstream is defined by an insistence on method, the heterodoxy is defined by a concern with reality. What is so powerful about the conception, and what seems to have been almost entirely ignored, is what comes next.

The implication of Lawson’s conception is that heterodox economics encompasses all those researchers that desire to study economic phenomena in accordance with our best understanding of how social phenomena exist. What method they decide to use is not a factor in determining whether or not a researcher is heterodox. However, Lawson’s assessment also identifies what specific methodological issues might be impeding heterodox economists from achieving that goal. For Lawson is arguing that in most instances, mathematical modelling of the sort used in economics is inappropriate for studying social phenomena. And he is imploring those heterodox economists who use such methods to pay attention to that probable mismatch.

Lawson’s conception of heterodox economics includes, in the simplest terms, all those economists who are trying to be realistic. This seems relatively uncontentious. However, the conception also shows that methods of mathematical modelling that seem to be used increasingly by heterodox economists are not going to get them any closer to that goal. Indeed, this assessment, while providing a useful definition, also serves, perhaps most importantly, to identify why heterodox economics is not in good shape.

Yannick Slade-Caffarel
Yannick Slade-Caffarel is a PhD Candidate at King’s College London and an active member of the Cambridge Social Ontology Group. His doctoral thesis is focussed on the conception of social ontology – a theory of the nature and basic structure of social reality – developed in Cambridge over the last three decades.

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