Definition
Heterodox Economics refers to a collection of economic theories and approaches that differ from mainstream or orthodox economics. They typically challenge the dominance of neoclassical economics and include different schools of economic thought such as institutional, Marxist, feminist, social, ecological, and post-Keynesian economics. Heterodox economics focuses on issues like inequality, market power, and instability, proposing solutions that largely contradict traditional economic views.
Key Takeaways
- Heterodox Economics refers to the economic theories and methodologies that differ from mainstream or orthodox economic theories, in this context, neo-classical economics.
- It is a diverse field that comprises several economic theories including feminist economics, Marxian economics, institutional economics and more. These theories challenge the mainstream concepts with different views about economic factors like the value, competition, and scarcity.
- Heterodox Economics often emphasizes the crucial role of social institutions and power structures in influencing economic outcomes, rather than relying solely on individualistic or market-based decisions.
Importance
Heterodox Economics is important because it challenges and broadens the conventional or mainstream economic theories that tend to dominate our understanding of economic principles.
This particular field of economics provides alternative perspectives and includes theories and methodologies that are often ignored or undervalued by mainstream economics.
It fosters the discourse around issues such as income disparity, market instability, and environmental sustainability.
The importance of heterodox economics lies in its ability to offer diverse, inclusive and multidisciplinary approaches to examining economic issues in a broader social context.
This can lead to innovative solutions and policies that better address real-world challenges and economic complexities.
Explanation
Heterodox Economics serves an important purpose of challenging and complementing mainstream economic theories. It functions as a platform for economic analyses that seek to offer wider perspectives beyond the confines of conventional thoughts in the field of economics.
Heterodox economics hold an inclusive approach by integrating several different economic theories which mainstream economics tend not to pay attention to. This methodology works towards developing approaches to economic problems from a pluralistic and culturally inclusive perspective.
The diverse range of ideas and methods within Heterodox Economics is used for creating more comprehensive and effective economic strategies. In order to tackle real-world economic issues such as income and wealth inequality, sustainability, or the interconnections of different economic systems, it employs theories and practices often not considered by traditional economics.
For instance, the impact of social, historical, political, and environmental variables on economics which conventional economic models may discard. In essence, Heterodox Economics is used to question, review and expand normative understandings to ensure multifaceted solutions in economics.
Examples of Heterodox Economics
Heterodox Economics refers to a variety of economic theories and approaches that deviate from mainstream or orthodox economics (like Neoclassical and Keynesian economics). These include various schools of thought such as Marxian economics, feminist economics, institutional economics, and others.
Marxian Economics Example: The Government of Cuba runs on a socialist system, heavily influenced by Marxian economics. The state owns and controls the means of production, and income is distributed among the population according to the principle of “each according to his work”. In this system, the government is fundamentally involved in the economy, challenging the mainstream economic belief in free markets.
Post-Keynesian Economics Example: During the Great Recession, the U.S. government, under President Obama, implemented a stimulus package of approximately $800 billion to boost the economy. A move considered heterodox, it relied on the principle of Post-Keynesian economics, emphasizing government intervention in demand to stabilize economic downturns. This opposed the orthodox view that markets self-correct efficiently without intervention.
Feminist Economics Example: Iceland can be seen as putting feminist economics principles into practice. They actively close gender gaps and encourage joint responsibility in domestic work and childcare. Within feminist economics, the unpaid work typically done by women is also considered as an economic contributing factor, which contrasts with mainstream economic theory that overlooks this non-market economic activity.
Heterodox Economics FAQ
1. What is Heterodox Economics?
Heterodox Economics is a collection of economic theories and approaches that are considered different from the mainstream theories. These include Marxist, socialist, feminist, post-Keynesian, and ecological economic theories among others. Unlike neoclassical economics, heterodox economics emphasizes the influence of social, historical, and cultural factors in economic analysis.
2. How does Heterodox Economics differ from Orthodox Economics?
Orthodox or mainstream economics relies on mathematical and statistical methods to explain economic behavior and predict economic patterns. On the other hand, heterodox economics considers economic behavior within a broader social and institutional context, often using qualitative research methods to understand economic phenomena.
3. Why is Heterodox Economics important?
Heterodox economics offers an alternative perspective to the orthodox point of view. It allows for a more thorough consideration of complexity, uncertainty, and the role of institutions in economic life. It also highlights the importance of factors such as power, culture, and gender in the functioning of the economy.
4. What are some examples of Heterodox Economic theories?
Some examples of heterodox theories include Marxist Economics, Post-Keynesian Economics, Behavioral Economics, and Austrian Economics. Each of these approaches challenges the assumptions of neoclassical economics and offers alternative explanations for economic phenomena.
5. What careers are available for those studying Heterodox Economics?
Studying Heterodox Economics can lead to careers in academia, government, international organizations, and the non-profit sector. Heterodox economists can contribute to policy discussions, research and analysis, and the design of social and economic interventions. They can also work as consultants or advisors for organizations that value their distinct perspective.
Related Entrepreneurship Terms
- Post Keynesian Economics
- Institutional Economics
- Marxian Economics
- Evolutionary Economics
- Social Economics
Sources for More Information
- Association for Heterodox Economics: The Association for Heterodox Economics represents economists who are interested in applying and developing the expanses of heterodox economic philosophy.
- Institute for New Economic Thinking: This institute aims to inspire and enable a new generation of economists and business leaders, through innovative education and pioneering thought leadership, to challenge the outdated orthodoxies in global economics.
- Journal of Economic Behavior & Organization: Here, you can find numerous articles discussing heterodox economics. The journal explores theoretical and empirical research that explores the collective behaviors that drive micro and macroeconomic systems.
- Journal of Institutional Economics: This journal provides a dedicated outlet for investigation of the interface between institutional economics and the changing nature and variety of institutions for economic activity.
