Criticisms of Neoclassical Economics.pptx

This PPT is all about disagreements against Neo-classical economic perspective.

1. Cri t ici s m s o f Neocl a ss ical E con o m ic s Cri t ici s m s o f Neocl a ss ical E con o m ic s Neocl a ss i c al economics is s ometim e s c r iticized f o r having a n o r mative bia s . I n this vie w , it does not f oc u s on explaining actual economi e s , but in s tead on de s c r ibing a theo r etical world in which Pareto optimality applies. A f amous an s wer to this c r itici s m is M ilton F r iedman's claim that the o r ies s hould be judged by their ability to p r edict even t s r ather t han by the r eali s m o f their a s s umption s . M at h ematical models al s o include tho s e in game theo r y , linear p r o g r amming, and econome t r i c s . Overdependence on theory: Neocl a ss i c al economics is al s o o f ten s een as r elying t oo heavily on complex mathematical model s , s uch as tho s e u s ed in gene r al equili b r ium theo r y , without enough r ega r d to whether the s e actually de s c r ibe the r eal econom y .

2. Cont--- M any s ee an attempt to model a s y s tem as complex as a mod e r n economy by a mathematical model as un r eali s tic and doomed to f a i lu r e. Potential contribution to inequality : The emphasis on profit maximization in neoclassical economics leads some to say putting its principles into practice leads to high degrees of wealth inequality. Critics assert this leads to runaway greed among corporations at the expense of the average person.

3. Cont--- I n gene r al, apparently ex a g geratedly u n r eal i s tic a ss umptions a r e one o f the mo s t common c r itici s ms towa r ds neocla s s ical economic s .