Heterodox economics

Heterodox economics is a broad, relative term referring to schools of economic thought which are not commonly perceived as belonging to mainstream economics. There is no absolute definition of what constitutes heterodox economic thought, as it is defined in contrast to the most prominent, influential or popular schools of thought in a given time and place.

Groups typically classed as heterodox in current discourse include the Austrian, ecological, Marxist-historical, post-Keynesian, and modern monetary (neo-chartalist) approaches.

Four frames of analysis have been highlighted for their importance to heterodox thought: history, natural systems, uncertainty, and power.

Economist Frederic S. Lee, in 2007 believed 5 to 10 percent of the American economists were heterodox, from both left and right-wing schools.

History

In the mid-19th century, such thinkers as Auguste Comte, Thomas Carlyle, John Ruskin and Karl Marx made early critiques of orthodox economy. A number of heterodox schools of economic thought challenged the dominance of neoclassical economics after the neoclassical revolution of the 1870s. In addition to socialist critics of capitalism, heterodox schools in this period included advocates of various forms of mercantilism, such as the American School dissenters from neoclassical methodology such as the historical school, and advocates of unorthodox monetary theories such as social credit.

Physical scientists and biologists were the first individuals to use energy flows to explain social and economic development. Joseph Henry, an American physicist and first secretary of the Smithsonian Institution, remarked that the "fundamental principle of political economy is that the physical labor of man can only be ameliorated by… the transformation of matter from a crude state to an artificial condition...by expending what is called power or energy."

The rise, and absorption into the mainstream of Keynesian economics, which appeared to provide a more coherent policy response to unemployment than unorthodox monetary or trade policies, contributed to the decline of interest in these schools.