Mises Wire

Neoclassical Economics = Marxism?

Neoclassical Economics = Marxism?
Mises Wire Angelo Mike

I had a enlightening exchange with an international economics professor recently about Marxist dogmas inserted into neoclassical economics. At least, her brand of them.

We had debated several times before in class to no effect. This professor has apparently never familiarized herself with or conceived of a praxeological notion of economics, absent the more orthodox neoclassical manipulation of figures and mutually independent models. So any time I contended a point, such as about measuring utility, measuring consumer or producer surplus, or using Ricardo's law of comparative advantage as a model to be applied through the passage of time (as opposed to a deduction that merely illustrates a causal force working in favor of trade), the professor would basically demand an explanation from the ground up of my views.

When I failed to completely explain the material necessary to understand in texts such as Human Action, Man Economy and State, and Theory and History, she would dismiss whatever notion of Austrian economics she felt incapable of conceiving of. Or, we would superficially come to the same Austrian insight, only for the professor to substantially reject it in the class' analysis without having realized such an implication was made.

Rather than go over points that most praxeologists have seen before about issues of measuring utility absent any extended measure of mere feelings (in which I was assured on one day that my professor agreed, no constants exist in human action (even though we had these timeless equations of action on the board), and later, told me that history is repeatable, in which case, there would have to be), I'll go over some Marxist implications of our curriculum and open admissions by my professor of believing in Marxist thought. When defining why people trade, my professor stated that it's because people's material well being is improved, implying that value only resides in material well being. That, and higher indifference curves.

While debating over whether it's material well being or simply an estimate of well being that drives us to trade, she said that economics is defined as how we enhance our material well being.

There are several implications of this. First, it is as if to say that economics has not progressed beyond about 1870 or so, when the classical economists focused almost exclusively on business and the satisfaction only of material wants.

Second, it is to imply that there is some discrete difference in origin between material wants and the wants aimed at by all human action. My professor can't conceive of this implication since, of course, she's never heard of it or understood why there would be one.

Third, given the second implication, it is to imply that material forces determine our wants. In other words, a variant of Karl Marx's material productive forces are the determining factors of history, and not our actions as guided by our ideas.

So far, I probably haven't surprised anyone. But here's where things get really strange. Understanding all this, I asked my professor if this is as if to say that Marx's material forces determine history. She said, "Yes."

Wanting to give her a chance to think this over, and in order to make clear that I'm talking about no Marx other than Karl, I asked if she believed that Karl Marx's material productive forces determine history, to which she gave an even more emphatic, "Yes!"

I suppose I should have stopped there, knowing that another tactic of Marx was to dismiss any analysis of his dogmas as unscientific (except his own) and that one could be dismissed on the basis of their class alone, which was roughly the treatment I was getting as being an Austrian.

I asked a third time just to make sure if she really believed in Marx's material determinism a few minutes later, and she finally said, "No". I'll have a heck of a time trying to figure out which to put on the test, though. She reiterated her explanation of consumer and producer surplus, and even illustrated it graphically. What exactly it was a measure of, I can never know.

Now, say what you want about neoclassicals—really, just take a free shot at them as supporting all kinds of illogical puzzles, measurements, and superstitions—but I never knew the charge of Marxist could have been substantiated about them.

Rob Murphy gave a talk about neoclassical economics in which he tries to explain it and refute some of its main tenets. He prefaces his definition of neoclassicalism by explaining that it's like pornography: Nobody knows how to define it, but everyone knows it when they see it. And, that the analogy stops there.

I'd say now that the analogy works a little further. Neoclassicalism, like Marxism or pornography, is crude, vulgar, and for little minds.

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