THE EXPLANATORY ROLE OF GENERAL EQUILIBRIUM THEORY: AN OUTLINE ONTO A CRITIQUE OF NEOCLASSICAL ECONOMICS

Year 2000, Volume: 18 Issue: 1, 257 - 285, 31.07.2000

Hüseyin Özel

Abstract

This paper is an attempt at exploring, and
criticizing, the underlying ontology of the neoclassical economics, in the
context of the general equilibrium theory, to be taken as the methodological
"hard core" of
this program. The reason for such an attempt is the conviction that the
controversies over the "correct" methodology of mainstream economics,
concentrating mainly on epistemological issues and accepting a form of "empirical
realism," function to justify actual practices of economists themselves,
rather than being prescriptive with respect to the correct "scientific"
methodology. Such a defensive strategy however, creates in general a lacunae in
the debates over methodological issues of economics. Based
upon this conviction, it is argued in the paper that the adopted ontology
of neoclassical economics, being an ontology of particulars implying
methodological individualism, is the main problematic aspect of the
whole approach, for it causes the analysis to fail to achieve what it promises
to achieve: the explanation of the operation of the market system.

Keywords

general equilibrium, positivism, instrumentalism, empirical realism, ontology, methodological individualism

References

• Arrow, Kenneth. "Values and Collective Decision-Making," in Hahn and Hollis (1979), pp. 110-126.