What is Heterodox Economics?

Heterodox Economics is the comprehensive analysis of economic ideologies that differ from conventional or orthodox economic principles. It encompasses all ideas and schools of thinking that differ from traditional Keynesian and neoclassical perspectives.

Heterodox economics is crucial in the development of new ideas and challenging existing economic perceptions. It's mainly composed of a wide Range of competing and opposing economic schools of thought, any of which may ultimately find their way into the mainstream.

Types of Heterodox Economic Theories

It's hard to classify heterodox economics into a single theory since these views are always diverging and evolving. The following are some of the most well-known heterodox economic ideas:

Institutional Theories

Institutional economic theories emphasise the role of institutional structures in influencing human behaviour. In an institutional system, Market activity occurs as a result of interactions between multiple institutions, such as firms, states, people, and social norms.

Post-Keynesian Theories

Post-Keynesian ideas are based on John Maynard Keynes' original work. It concentrates on effective demand as a driving force of economic performance. Individual conduct is caused by institutional structures rather than a desire to maximise benefit.

Feminist Theories

Economic strategies that account for gender awareness and inclusion are the subject of feminist economic ideas. Feminist economics addresses problems that are often overlooked in the mainstream economic study, including domestic issues, partner abuse, and unpaid labour.

Socialist Theories

Economic theories that permit social ownership of the means of production, where things are created for use rather than profit, are the emphasis of socialist economics. Under this economic system, the market divides Capital and products among the populace according to their economic units rather than increasing production.

Importance of Heterodox Economics

Heterodox economists support ideas, assumptions, or methodologies that differ from or contradict orthodox economics. It is crucial in the development of new ideas, and it helps to face the challenges of existing economic schools of thought.

Heterodox Economics Vs. Orthodox Economics

Heterodox economics is a broad term for all different schools of thought that critique the neoclassical school's assumptions, ideas, and policy prescriptions. Heterodox schools of thought encompass a wide range of perspectives. A few of the examples are:

• Austrians
• Marxists
• Socialists
• Buddhists
• Anarchists
• Feminists
• Gandhians

The neoclassical school of economics is commonly referred to as orthodox economics. It is predicated on specific assumptions about:

• How society works
• How humans operate
• What the nature of politics is
• What is the ontology of the market and the state is
• How ethics work, and so on
• These assumptions are so widely accepted that it is difficult to envisage economics outside of this perception

The existence of heterodox economics offers a counterpoint to mainstream economics. They can aid in the explanation of economic events that are either unable to be fully described or are simply neglected by more traditional theories.

Heterodox economics is always challenging orthodox economics to demonstrate that it is superior in practice, not only in theory.

The Bottom Line

The criticism of the neoclassical paradigm that has been the cornerstone of mainstream economics is a common thread that runs through all heterodox economic theories. The denial of economic rationality is a common criticism shared by these theories. Heterodox theories challenge the notion of rationality, claiming that people don't always behave in the best interests of themselves. Individuals may be affected by other factors such as coercion, societal restraints, or insufficient knowledge.