the faux-tolerance of the “End of Neoclassical Economics” movement in the new millennium actually has made the response to the crisis by economists even more addled than it might have been otherwise.
However, there is one concise explanation of this history that no PhD economist would deign to entertain, although we shall insist it be kept on the table for the duration of this book. It is the proposition that Quiggin turned out to be half-right: it is not just that a few component models found in economics are zombiefied; rather, it is the neoclassical tradition as a whole that is approximating the walking undead, and has been lurching around that way for a while. Patently, this begins to get at why no amount of heterodox brickbats (or incisive reasoning) can halt its inexorable march. Before my audience dismisses this notion out of hand as too draconian, consider the following.
Let us provisionally take the proponents of the dissolution of the neoclassical program at face value. First off, it seems we have arrived at the historical epoch where academic neoclassical economics no longer strives to explain “the economy,” because for sophisticated economists, there is no such thing. Critics who prattle on about “real-world economics” merely flaunt their naïveté to the quiet disdain of the gatekeepers of expertise. Rather, card-carrying neoclassical economists come convinced they possess a Theory of Everything at the End of History, and apply their so-called economic approach to everything great and small under the sun: life and death, sex, neurons, nations, language, knowledge, science itself, personal identity, evolution, aesthetics, global environmental disruption, even human virtues such as dignity.33 Through prestidigitation, a theory of trade has morphed into a “theory of choice”; and choice is everywhere. After all, isn’t that the central message of Freakonomics, the best-selling book of the Great Moderation: that wicked rebel (yet safely orthodox) economists can explain sumo wrestlers, teen homeboys, girls’ first names, and crime statistics? Yet explanatory hubris brings its own special tragedy: it is a philosophical commonplace that a doctrine that nominally explains “everything” in fact explains nothing at all. Everything can potentially be portrayed by neoclassical economists as the orderly product of disembodied “self-interest” as long as the “interest” is defined in a sufficiently post hoc manner, order is conflated with the status quo, and the ontology of the “self” changes from one application to the next. As with all good zombies, there is something missing where a brain should be. Neoclassical economics resembles a catechism for the undead who have palsied difficulty counting to ten.
The unbearable lightness of the economy within neoclassicism is only the tip of the iceberg. Let us look more closely at the practical mechanics of orthodox contemporary “economics imperialism.” While gleefully encroaching upon the spheres of interest of other disciplines, orthodox economics has also freely appropriated formalisms and methods from those other disciplines: think of the advent of “experimental economics” or the embrace of magnetic resonance imaging, or attempts to absorb chaos theory or nonstandard analysis or Brownian motion through the Ito calculus. Indeed, if there has been any conceptual constant throughout the history of neoclassical theory since the 1870s, it has been slavish attempts to slake its physics envy through gorging on half-digested imitations of physical models. A social science so promiscuous in its avidity to mimic the tools and techniques of other disciplines has no principled discrimination about what constitutes just and proper argumentation within its own sphere; and this has only become aggravated in the decades since 1980. Economics, seemingly so powerful because so ubiquitous, parlously teeters on the edge of fragmenting into a pointless succession of whatever turns out to be fashionable in other scientific disciplines, which at least possess the virtue of having intellectual agendas that spawn novel practices and techniques.
Third, it would appear that the corporeal solidity of a live intellectual discipline would be indicated by consensus reference texts that help define what it means to be an advocate of that discipline. Here, I would insist that undergraduate textbooks should not count, since they merely project the etiolated public face of the discipline to the world. But if we look at contemporary orthodox economics, where is the John Stuart Mill, the Alfred Marshall, the Paul Samuelson, the Tjalling Koopmans, or the David Kreps of the early twenty-first century? The answer is that, in macroeconomics, there is none. And in microeconomics, the supposed gold standard is Andrew Mas-Collel, Michael Whinston, and Jerry Green (Microeconomic Theory), at its birth a baggy compendium lacking clear organizing principles, but now slipping out of date and growing a bit long in the tooth. Although often forced to take econometrics as part of the core, there is no longer any consensus that econometrics is situated at the heart of economic empiricism in the modern world. Beyond the graduate textbooks, the profession is held together by little more than a few journals that are designated indispensable by some rather circular bibliometric measures, and the dominance of a few highly ranked departments, rather than any clear intellectual standards. Indeed, graduates are socialized and indoctrinated by forcing them to read articles from those journals with a half-life of five years: and so the disciplinary center of gravity wanders aimlessly, without vision or intentionality. The orthodoxy, so violently quarantined and demarcated from outside pretenders, harbors a vacuum within its perimeter.
Fourth, and finally, should one identify specific models as paradigmatic for neoclassical economics, then they are accompanied by formal proofs of impeccable logic which demonstrate that the model does not underwrite the seeming stolidity of the textbooks. Neoclassical theory is itself the vector of its own self-abnegation. If one cites the canonical Arrow-Debreu model of general equilibrium, then one can pair it with the Sonnenschein-Mantel-Debreu theorems, which point out that the general Arrow-Debreu model places hardly any restrictions at all on the functions that one deems “basic economics,” such as excess demand functions. Or, alternatively, if one lights on the Nash equilibrium in game theory, you can pair that with the so-called folk theorem, which states that under generic conditions, almost anything can qualify as a Nash equilibrium. Keeping with the wonderful paradoxes of “strategic behavior,” the Milgrom-Stokey “No Trade theorem” suggests that if everyone really were as suspicious and untrusting as the Nash theory makes out, then no one would engage in any market exchange whatsoever in a neoclassical world. The Modigliani-Miller theorem states that the level of debt relative to equity in a bank’s balance sheet should not matter one whit for market purposes, even though finance theory is obsessed with debt. Arrow’s impossibility theorem states that, if one models the polity on the pattern of a neoclassical model, then democratic politics is essentially impotent to achieve political goals. Markets are now asserted to be marvelous information processors, but the Grossman-Stiglitz results suggest that there are no incentives for anyone to invest in the development and refinement of information in the first place. The list just goes on and on. It is the fate of Delphic oracles to deal in obscurity.
Returning to our point of departure in this section, it really will turn out to be of paramount importance to keep the thought collectives of “neoclassical economics” and neoliberalism separate and distinct, for analytical purposes of understanding the nightmare of the current crisis.34 Neoclassical economics as a theory long predated the Neoliberal Thought Collective; it is only lately that it has shown signs of morbidity. As we shall argue, it has fallen to neoclassical economists to swarm over and incapacitate most serious attempts to isolate and diagnose why the crisis came as a shock and an enigma to those tasked with its understanding. The economists have haunted our dreams with their half-coherent struggles to describe and analyze the creeping dread. Yet it has been the neoliberals who have served as the advance shock troops for the zombie hordes, reconnaissance parties deploying their shock doctrines and shock therapies that rally the walking dead in their wake.
Once summoned, lurching across the landscape, scaring the populace with their bad haircuts, dull, staring eyes, and adamantine cries, neoclassical economists became the major enablers of the Neoliberal Resurgence across the land. As Quiggin confessed, “I underestimated the speed and power of Zombie ideas.”35 We need to see why.
