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Journal of Economic Issues
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The Future of Heterodox Economics: An Institutional
Perspective
David Dequech
To cite this article: David Dequech (2021) The�Future�of�Heterodox�Economics:�An�Institutional
Perspective, Journal of Economic Issues, 55:3, 578-583, DOI: 10.1080/00213624.2021.1940039
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© 2021, Journal of Economic Issues /Association for Evolutionary Economics
578
The Future of Heterodox Economics: An Institutional Perspective
David Dequech
JOURNAL OF ECONOMIC ISSUES
Volume LV No. 3 September 2021
DOI 10.1080/00213624.2021.1940039
What lies ahead for heterodox economics? This is the main question addressed by Geoffrey
Hodgson’s (2019) important book. The present article looks at this question from an
institutional perspective. It defends many of Hodgson’s main arguments and adds others,
while showing some differences in emphasis and some disagreements.
What is Heterodox Economics?
At first, one is inclined to refer to heterodox economics in contrast with orthodox economics,
but many people have also referred to it in contrast with mainstream economics. When
orthodox and mainstream are taken to mean the same thing, the meaning of heterodox
economics is easier to discuss. However, some economists, including me, have distinguished
between orthodox and mainstream economics. Heterodox economics then becomes a more
ambiguous term, since it can mean either nonorthodox or nonmainstream economics.
As defined in Dequech (2007, 281), “mainstream economics is that which is taught
in the most prestigious universities and colleges, gets published in the most prestigious
journals, receives funds from the most important research foundations, and wins the most
prestigious awards.” This is a concept based on prestige and influence within academia and
can be applied to different places and times. In the United States, mainstream economics
in the last three or four decades has included not only neoclassical economics, but also a
few other approaches. I take neoclassical economics, a school of thought based on the ideas
of utility maximization and equilibrium, to be the orthodoxy of the last several decades. If
heterodox economics is defined as nonorthodox, then contemporary heterodox economics
is non-neoclassical and therefore includes some approaches that have been accepted into the
David Dequech is a professor of economics, University of Campinas, São Paulo, Brazil. Support from the Brazilian
National Research Council (CNPq), grant 311458/2018-1, and the São Paulo State Research Foundation
(FAPESP), grant 2015/11822-7, is gratefully acknowledged.
Abstract: This article looks at the future of heterodox economics from an institutional
perspective, while commenting on Geoffrey Hodgson's 2019 book on this issue. It contrasts
heterodox and mainstream economics, identifies some problems facing the former and
discusses what should be done.
Keywords: heterodox economics, mainstream economics, institutions, interdisciplinarity
JEL Classication Codes: A12, A14, B50, B52
579
The Future of Heterodox Economics: An Institutional Perspective
mainstream. In contrast, if heterodox economics is defined as nonmainstream, it includes
only those approaches that lack prestige and influence in academia.
Hodgson (2019, 14, italics in original) approvingly quoted my 2007 definition of
mainstream economics and agreed that “orthodox and mainstream may not be identical.”
Moreover, although he preferred not to use the term “neoclassical” for this purpose,
Hodgson agreed that (current) orthodox economics is characterized by “the core ideas of
utility maximization and equilibrium” (86). While Hodgson acknowledged my point that
the difference between orthodox and mainstream makes it possible to define heterodox
economics either as nonmainstream or as nonorthodox economics (49n), he maintained
that the best definition of heterodoxy is an economics that rejects the combination of utility
maximization and equilibrium (80). This means nonorthodox economics.
From the institutional perspective adopted here, it seems better to adopt the sociological/
institutional definition of heterodox economics as non-mainstream, as explained below. In
any case, although Hodgson defends the intellectual definition of heterodox as nonorthodox,
our perspectives converge to a considerable degree. Indeed, Hodgson (2019, 3) stated that his
book “is about the institutions, culture and habits of thought that can enable and disable
the forces of change within economics. It addresses the institutional context and drivers of
scientific development in economics as an organized discipline. This book is about academic
power and powerlessness.” This implies that Hodgson is also interested in the nonmainstream
character of most nonorthodox economics. Moreover, he often did not stick to his definition
and implicitly treated heterodox as synonymous with nonmainstream.
The Problems Facing Heterodox Economics
Hodgson’s implicit adoption of the definition of heterodox economics as nonmainstream
occurred in some parts of his discussion of the problems that impair the heterodoxy. For
example, Hodgson (2019, 149) wrote that “heterodox economics is in a difficult position.
Precisely because it opposes the mainstream, its access to power and resources is limited.”
Similarly, on the several occasions in which Hodgson referred to the declining influence of
heterodox economics or to its dim prospects, surely he was not thinking of the nonorthodox
approaches that have been admitted into the mainstream club.
I suggest that the problems of the heterodoxy be divided into two interrelated categories:
intellectual and institutional. Hodgson’s book illuminatingly points out many of them, in
both categories.
Intellectually, the lack of agreement on a theoretical core (Hodgson 2019, 4, 12) is the
main trouble. In my opinion, apart from that to which they are opposed and possibly from
a generic defense of pluralism (mentioned by Hodgson 2019, 2), there are no (theoretical,
methodological or political) ideas that unify all the several approaches that belong to the
set of heterodox economics. In theoretical terms, this problem has been unsolvable and
will remain so, as long as there is at least one heterodox approach whose main ideas are
incompatible with those of at least one other. There is not much to be gained by discussing
the intellectual future of heterodox economics as a whole, be it defined as nonorthodox or
as nonmainstream.
This view of heterodox economics as a whole does not prevent me from believing
that some heterodox approaches are, at least in part, compatible with and complementary
to other approaches, both in economics and in other disciples. Moreover, it is desirable
580 David Dequech
to combine their contributions.1 The challenge is to do so in a way that is both internally
consistent and relevant. Intellectually, these are the cases in which one should focus the
discussion of future prospects and strategies. Both intellectually and institutionally, there is
no reason to exclude from this debate potential contributions of approaches in mainstream
economics, as long as internal consistency is preserved.
Another serious intellectual problem with the heterodoxy, courageously stressed by
Hodgson (2019, 3), is “inadequate quality control,” which “has created severe reputational
problems for heterodox scholarship” and “has cumulative effects. As well as lowering the
bar for additional entrants, it diminishes reputation-based incentives to cite work or to
take it seriously. In turn, this weakens mechanisms for cumulative advance on previous
scholarship.. . .Bad quality demeans and drives out the good. Quality is also worsened
by over-politicization of economics research” (see also 2019, 151–153). This is self-inflicted
harm, which reinforces the sanctions imposed by the mainstream on the heterodoxy.
Intellectual and institutional issues are interconnected. Intellectual characteristics, be
they good or bad, can become institutionalized and thus have institutional effects (such as
those of quality control). In addition, intellectual progress in any of the heterodox approaches
or combinations thereof also depends on institutional conditions.
From an institutional perspective, it is nonmainstream economics that faces the biggest
problems, exactly because of its lack of prestige and influence (in contrast, the nonorthodox
approaches within mainstream economics have much better chances of survival and progress
than those in nonmainstream economics).
As argued in Dequech (2017, 1638), the rules of contemporary mainstream economics
work as social norms.
Those who systematically disobey these rules are often barred from the
mainstream club: they are excluded from the most prestigious journals,
universities and awards, do not usually get funding from the main research
foundations and suffer reputational sanctions, if they are not simply
ignored. All these sanctions are inflicted on nonmainstream economists,
by definition.
Hodgson pointed out the limited access of nonmainstream economics to power and
resources (149), as mentioned above, and other problems that can be seen as consequences
of non-mainstreamness. Heterodox economics
has been caught in vicious circles of cumulative decline. Exclusion
from high-ranking journals reduces the chances of promotion, lowers
influence, confines academics to lesser-ranking universities, awards less
time for research, reduces research-grant possibilities, and leads to further
exclusion from power. (Hodgson 2019, 5)
As part of this process, Hodgson (2019, 150) discussed
the individual incentives to do research in heterodox economics. Of
course, the intrinsic attraction of a particular heterodox theory, or a
critical repulsion from a mainstream approach, may prompt heterodox
curiosity. But intrinsic motivational factors are insufficient to sustain
1 In fact, this is something that I have done in my own work.
581
The Future of Heterodox Economics: An Institutional Perspective
a specific community. . . . Whatever the reasons, any decline in the
influence of heterodox economics, at least in departments of economics,
obviously diminishes incentives—including career progression, status or
remuneration—for researchers to devote their careers to this path. This
affects the recruitment of younger economists to the area: heterodoxy
then comes with manifest high career risks and apparently limited chances
of success.
I would add that the motivational problem is not only that, as Hodgson argued, intrinsic
motivational factors are insufficient and incentives matter. Non-mainstreamness also affects
those “intrinsic motivational factors,” as part of what I call the profound motivational
influence of the institutions of mainstream economics. Lack of academic prestige and
influence tends to make it more difficult for nonmainstream economics to be seen by
many as more epistemically legitimate than the mainstream. This has two different types of
motivational consequences. First, to the extent that nonmainstream economics is perceived
as less legitimate in the eyes of others, its proponents are more subject to social sanctions.
This provides the incentives already discussed above—so that the legitimating influence of
institutions overlaps with the incentivizing variety of their motivational influence. Second,
non-mainstreamness makes it harder for marginalized ideas to be seen as legitimate in
someone’s own eyes, that is, to gain new advocates. In this regard, the legitimating influence
overlaps with the profound variety of the motivational one.
In addition to this double motivational problem, there is the following cognitive one.
Sometimes, rather than being seen as less legitimate than the prevailing rules of thought,
an alternative is not perceived at all. Like most of their professors, most undergraduate
and graduate students of economics in most universities in the United States and in other
countries are simply unaware of the existence of any of the several schools of nonmainstream
economic thought. This naturalization of the institutions of mainstream economics is an
extreme example of their profound cognitive influence and contributes to making them
conventions (Dequech 2017, 1642–1643). This lack of awareness is particularly severe in the
most prestigious universities.
To make matters worse, a very serious problem for the heterodoxy appears before
students are exposed to any kind of economics. High-ranking universities, in whose
departments of economics nonmainstream economists are inconspicuously scarce, are very
attractive to many of the best high-school students, as well as to graduate students coming to
economics from other disciplines.
As Hodgson (2019, 4) put it, “the heterodox community” has failed “to develop
alternative positions of power within academia.” This is true in most countries, with Brazil
having noteworthy exceptions, and has serious consequences, but there is more. While the
achievement of such positions by heterodox economists, with adequate support from other
members of their organization, is important, it is not only insufficient, but also sometimes
accompanied by harmful effects. What exactly heterodox economists do when occupying
administrative positions in academia and in research foundations is extremely relevant.
One must distinguish between ways of thinking about the economy, on the
one hand, and ways of thinking about academia, on the other. Academic
excellence can be pursued by the proponents of many different approaches
in economics (or any other discipline), but this depends on the prevailing
582 David Dequech
academic culture in their environment, among other things. (Dequech,
2018, 916)
This is illustrated by the case of Brazil, where heterodox economists have achieved positions
of power in some of the most prestigious universities.
At least so far, none of the more dissenting graduate schools of economics
in Brazil has managed, as a whole (despite the positive contribution of
some of its members), to develop an internal culture and achieve a level of
academic excellence on a par with the best graduate schools that are closer
to the American mainstream. (Dequech, 916–917)
In turn, “[b]oth within those more dissenting schools and within the other departments
where many of their alumni get jobs, this has had significant consequences on the training
of dissenting economists and on their visions of academia” (917).
More broadly, just like the institutions of mainstream economics have negative impacts
on the nonmainstream (Dequech 2017), so can some institutions of at least some subsets of
mainstream economics. Institutions exert various kinds of influence on the members of the
corresponding social group: cognitive, motivational, legitimating, enabling, and restrictive.
This is also true of the institutions of economics (Dequech 2014, 525–526), be it within or
outside the mainstream. All this in turn helps to explain the institutional situation of the
nonmainstream and its intellectual consequences.
What Should be Done?
The final chapter in Hodgson (2019) examines eight possible strategies for heterodox
economics. At least some strategies are complementary, rather than mutually exclusive.
Hodgson often evaluates them in terms of their possible consequences for heterodox
economics as a whole, but, in my opinion, this should not be a major concern. I cannot
envisage a sufficient reduction in heterogeneity that would allow an identity, a positive raison
d’être and a research focus for heterodox economics as a whole.
From an institutional viewpoint, as argued above, being nonmainstream has very
negative consequences. I am not suggesting that heterodox economists abandon their
ideas and convert to the current mainstream, but, if currently marginalized ideas became
mainstream, this would improve their development and the situation of their proponents.
Strategies that involve a general reform of economics from inside seem doomed to fail,
and there are no signs of strong pressure from outside. Engaging with mainstream economics
is necessary for those who remain in the discipline, but will result in the mainstream
acceptance of only a few isolated ideas, at best.
What about becoming mainstream outside economics? The ideal scenario would
involve the creation of new academic units in prestigious universities, such as a unified
school of social sciences or a multidisciplinary department of economic studies, assuming
they would include advocates of heterodox economics. This would be the best way for
university administrators to promote the development of ideas about economic phenomena.
However, non-economists who belong to the mainstream of their own disciplines may
lack the incentives to support this reform of university structures. The likely scenario is
the permanence of the present departmental boundaries. As Hodgson (2019, 156, 165)
notes, heterodox economists have found jobs in non-economics departments. If they need to
583
The Future of Heterodox Economics: An Institutional Perspective
demonstrate their excellence according to the criteria of mainstream economics, they are in
trouble indeed, but some of them have published in top non-economics journals, kept their
jobs in prestigious universities, etc. Thinking of strictly individual strategies, this may work,
but I would generally recommend bright students who plan to become academics and who
like nonmainstream economics to migrate from economics to other disciplines/departments
at an earlier stage and to pursue a non-economics PhD.
In any case, Hodgson is right that heterodox economics must change. The strategies
that he prefers are worth trying. In addition to “unifying the social sciences,” they include
“specialist regroupment,” “developing alternatives to” utility maximization and equilibrium,
and “focusing on economic institutions from multiple disciplines” (Hodgson 2019, 175). At
the very least, his last chapter is excellent “to start a wider conversation about possibilities”
(155).
References
Dequech, David. 2007. “Neoclassical, Mainstream, Orthodox, and Heterodox Economics.” Journal of Post
Keynesian Economics 30 (2): 279–302.
Dequech, David. 2014. “The Institutions of Economics: A First Approximation.” Journal of Economic Issues 48 (2):
523–531.
Dequech, David. 2017. “Some Institutions (Social Norms and Conventions) of Contemporary Mainstream
Economics, Macroeconomics, and Financial Economics.” Cambridge Journal of Economics 41 (6): 1627–1652.
Dequech, David. 2018. “Applying the Concept of Mainstream Economics outside the United States: General
Remarks and the Case of Brazil as an Example of the Institutionalization of Pluralism.” Journal of Economic
Issues 52 (4): 904–924.
Hodgson, Geoffrey. 2019. Is There a Future for Heterodox Economics? Cheltenham: Elgar.
