Concerning the ortho-heterodox debate

August 2014

In today’s debates about economics, a divide is often described between orthodox and heterodox economics. But how accurate is this distinction? In using it, the aim is to characterise the situation in which, out of a wide range of perspectives, only one dominates – the neo-classical approach with its static rather than dynamic analysis. This approach is then called ‘orthodox’ and the others are said to be ‘heterodox’.

The image of a divide is crucial. But does it mean that the two sides should become one? Or that the current othodoxy should give way to some other? Or should we confine ourselves to two parallel universes?

Beyond dualism

It seems to be classic Anglo-Saxon analysis to divide the world in two, and then, rather than conceive of a continuum with two contrasting ends that would give rise to resolution at a higher level, to maintain the dualism and reinforce it with an adversarial concept, whereby one view prevails, leaving others on the benches opposite, as it were. It is this readiness to accept dualism that is considered here. 

Let us begin with the three key words, all of them from Greek – dox, ortho and hetero, meaning respectively doctrine, straight and different. It seems straightforward enough, therefore, to speak of the straight or true teaching and those that differ. But that is not the same image as one doctrine predominating and crowding out other perspectives. In that case one view among several claims to be the true one. This also changes the meaning of hetero from ‘different’ to ‘excluded’, even systematically so if one considers the difficulty some heterodox economists have in getting published.

In that case, the distinction between orthodox and heterodox would be more accurately described as a distinction between a predominant school of thought and alternatives to it. The question would then be whether it is right for economics to be so myopic. Should it not be a pluralist discipline? Why should one of several approaches take centre-stage? To change the metaphor, can it not occupy one of the seats in the circle? Why seize the throne?

To use yet a different image – that of the ‘mainstream’ – should the mainstream have only one source or comprise but one current? Or should it be fed by several tributaries and comprise several currents? Or should a new river course be cut alongside?

The fact is that, even if one approach clearly predominates at the moment, economics as a whole is not a single doctrine. To suggest otherwise is preposterous because many people have contributed to this body of knowledge. We should be careful, therefore, how we frame this discussion and when choosing the words to describe it

The real question

The real question would seem to be whether orthodox economics should be pluralist or one-sided. Especially when being taught to young people, should the camera focus immediately on one point of view or begin wide and panoramic, thus providing a neutral survey of all schools of thought? This would be a true history of economics and would have the merit of enabling the student to see the range of views possible, and how they came about, and then to choose his own path.

But the likelihood is that it would also make evident a deeper feature of modern economics, namely, the cross-platform nature of otherwise contrasting views. For example, much of the so-called orthodox-heterodox divide is in fact a form of capitalism vs. socialism, or monetarism vs. Keynesianism. It is a debate about profit distribution, about whether one favours the individual or the community. What is not debated, however, is the principle of competition, the negative presumption about monopoly (whence competition derives the force of its argument), the inherent and often explicit social Darwinism, or the belief that the market is the only, let alone the best, construct for operating a globalised economy.

In these more deep-seated and more far-reaching regards, the orthodox–heterodox divide is misleading. In fact, the orthodox view is that of a marketised economy, in which competition via low prices counters monopoly, the state is supposed to remedy ‘market failure’ – failing which, the devil will take the hindmost.

The next orthodoxy

From this point of view, a truly heterodox approach would set out to displace the existing orthodoxy with another. To be specific, this new understanding would give a role to the market but not see it as a universal modality (neither in space nor time). Nor would it baulk at monopoly and seek forever to prevent it arising, but ask how the benefits that arise within can flow out and be experienced as benefits for all. And the new orthodoxy would entail policies in regard to prices and credit that did not have income and investment impoverishment as their effects, albeit unintended.

This, in outline, is what is meant by an associative approach to economic life, of which the writer is a proponent. It amounts to a view on economic life that, while recognising and relying on the individual as the main element, regards humanity’s economic life as a whole as a shared cooperative endeavour. It does not split the world into self-centred acts and their aggregate, but looks at the economy from the point of view of what one could call both narrow and enlarged egoism. In this regard, the image is not that of orthodox vs. heterodox, but of changing from an economics predicated on narrow egoism - in which strong individualism, profit maximisation and static equilibrium reign supreme and the worst excesses are remedied by external means - to an economics that expands to the global economy as a whole. That means an economics that counters the effects of narrow egoism (by outlawing externalities, for example) because it begins with the modified motivation and thus ideas and behaviour that awareness of such effects engenders.