RE: RE: re: What is wrong with the mainstream economics?

[Forstater, Mathew]

Title: RE: [PEN-L:34696] re: What is wrong with the mainstream economics?

Perhaps one of the most easily expressed and understandable critiques of mainstream economics is that so many of its results rely on the full employment assumption (trade theory again is a great example). As Shaikh put it long ago, “full employment is just the hidden dual of the concept of opportunity cost” because “this concept of cost as opportunities foregone cannot be used if there are unemployed resources.”   It strikes me that one could do a nice, brief, powerful critique of mainstream economics, employing external, internal, and empirical criticisms using the example of trade theory, emphasizing that the criticisms apply to other areas as well.  The capital critiques have been shown to be devastating for HOS theory (Steedman, etc.); the external critiques can be made nicely simply by looking at the assumptions of HOS theory (perfect competition, full employment, identical technologies, perfect info, etc.), and Leontief’s 1950s empirical test of HOS for the empirical relevance.   mat