Paradigms and Novelty in Economics: The History of Economic Thought as a Source of Enlightenment

By Dolfsma, Wilfred; Welch, Patrick J. | The American Journal of Economics and Sociology, November 2009 | Go to article overview

Paradigms and Novelty in Economics: The History of Economic Thought as a Source of Enlightenment


Dolfsma, Wilfred, Welch, Patrick J., The American Journal of Economics and Sociology


The development of the discipline of economics might best be understood by using the concept of paradigm. Indeed, Richard Schmalensee (1991: 115-116) has done this when, building on Thomas Kuhn's ideas of normal science and paradigm shifts, he speculated on the future of economics:

   [M]any, if not most, of the problems on today's research agenda
   will be solved through "normal science." ... History also suggests,
   however, that some problems ... will be solved only by "paradigm
   shifts" and that these shifts will change both the tools economists
   use and the problems they study. Whatever the successes that will
   be achieved by natural extensions of current lines of research,
   these revolutions will dominate histories of 21st-century economic
   thought.

The paradigmatic development of knowledge, including that in economics, is inescapable. Indeed, the history of economics as a science has seen a number of paradigmatic shifts. One might think of the marginalist revolution, Keynesianism, monetarism, and new growth theory, to name just a few. Paradigm shifts are not to be relegated to the past, however. In our time there is talk of paradigm shifts: for example, that economics is turning into an information economics (Stiglitz 2002). Subfields are also said to show paradigm shifts. Geographical economics is thought to have gone through two in a very short period of time: one with the publication of Paul Krugman's 1995 book and, more recently, what Harald Bathelt and Johannes Gluckler (2003) call a "reflexive" shift.

While the need to study the history of economics has been argued for before (e.g., McCloskey 1976), we show that looking at the development of economics over time in terms of evolving paradigms adds useful insights for economists by opening the way to analyze the contents of thought patterns in terms of routines and rules as used in technology studies and evolutionary economics. We also employ concepts dealing with the impact of cultural perspective on the development of ideas that can be combined with the concept of a paradigm to deepen our understanding of economic thinking--be it current, previous, or upcoming--by studying the history of our discipline.

Our argument in this article is that paradigm shifts in economics are not like bolts from the sky. Elaborating mostly on parallels with developments in technology, we argue that precursors of a shift can always be found. This is significant for contemporary economists, and in this article are suggested ways we can be better prepared for possible paradigm shifts. In addition, being aware of paradigms in economics that have preceded the current paradigm allows us to better see the contours of the incumbent one, which can be extremely valuable since creative works "composed" when mindful of the rules of a paradigm but not slavishly following them will likely be better than works that neatly and rigidly fit into the paradigm. A utilitarian argument to study the history of economics such as the one developed here thus hinges crucially on the need for substantial understanding of the development of paradigms.

In this article, we start by discussing concepts from technology studies on the paradigmatic development of knowledge. Section II argues that economics develops paradigmatically too, and Section III offers ways to substantially, rather than simply procedurally, understand paradigms by discussing some concepts on rhetoric suggested by the historian/philosopher Hayden White. While the rhetoric in economics has been studied before (McCloskey 1985), and the argument that it affects the course of development of the discipline has been made (Klamer and Leonard 1994), it appears no proposal has been offered as to how to advance our awareness of the impact of language and culture on our understanding and acceptance of current and previous developments in economics. This article can thus be considered a first attempt to chart the route to increasing this awareness. …

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