Frontiers of economics in the post-neoclassical era

It must be noted that we have barely scratched the surface of areas of current research at the cutting edge of economics. However, most of what has been cited here in terms of research since the turn of the century has moved beyond the orthodox neoclassical approach, even if much of it has been done by mainstream economists, although the econophysicists are clearly an exception to that. We have seen that although they are mostly separate and parallel, our two main streams of experimental/behavioral economics and complexity economics do have some common roots and also have recently seemed to intersect and interpenetrate with each other more frequently. Complexity and bounded rationality are deeply connected with each other.

A final question raises itself that we are not going to attempt to answer in any depth. This involves the nature of the relationship between this newer research and the older heterodox schools of thought. I shall only note here in conclusion that this period of post-neoclassical upheaval opens many doors, and there are arguably chances for some ideas from some of these schools to enter into the current discourse, just as there is also the chance for some of these ideas to enter into and stimulate work in these schools. Thus, I would note Chiarella et al. (2005) as an example of Post Keynesian work that has been strongly influenced by the currents coming from research in nonlinear complex dynamics, just as older Post Keynesian models were sources of inspiration for some of the earlier complex dynamics models (Rosser, 2006). Also, certainly the ideas of Keynes are clearly more in tune with the newer behavioral economics than with the idea of fully rational and well-informed agents that have underpinned neoclassical economics.

Finally, just as one can find roots of modern approaches in Keynes, likewise Hayek (1978) foresaw the complexity approach, and the Austrians have long disavowed standard equilibrium analysis, emphasizing the distinctive nature of individual economic agents, even as their interactions may bring about a spontaneous order. In this new environment there may even be possibilities of cross-fertilization of ideas between these older schools of heterodox thought as they open to providing and receiving influences from the newer post-neoclassical approaches (Koppl and Rosser, 2002).

Agliari, Anna, Gian-Italo Bischi, and Laura Gardini. 2002. “Some Methods for the Global Analysis of Dynamic Games Represented by Iterated Noninvertible Maps.” In Tönu Puu and Irina Sushko, eds., Oligopoly Dynamics: Models and Tools. Heidelberg: Springer, pp. 31-83.

Fehr, Ernst and Klaus M. Schmidt. 1999. “A Theory of Fairness, Competition, and Cooperation.” Quarterly Journal of Economics 114, 817-868.