[ From Bill Williams UMKC 27 September 2001 3:30 CST ]
John F. Henry in a recent article 1999 "Property Rights, Markets and Economic
Theory: Keynes versus Neoclassicism-- again." Review of Political Economy,
volume 11, number 2 pp. 151-70. provides an exceptionaly well stated exposition
of the difference between contemporary orthodox economic theory and the view
which is typical of today's heterodox
Orthodox economists have made extensive use of control theory under the
caption of the Bellman equations. However, they have done so only after
supposing that rational economic behavior consists of the maximization of
utility. So control theory plays the role of powering an archaic conception of
economic behavior.
However, if control theory is employed to fundamentally reconstruct economic
theory from the ground up, utility theory, maximization and the rest of
orthodoxy can be discarded. The role of the Giffen paradox may be crucial in
this transition because it simultaneously demonstrates that the orthodox
conception of behavior is defective, while at the same time providing a model of
how economic decisions are actually made by living creatures.
Henry is a visiting lecturer here at the University of Missouri Kansas City. I
recomend the article as an exceptionally well written, and I think accessible,
introduction to contemporary issues in economics that might be of interest to
CSGnet readers.
Best
Bill Williams
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