Is There Anything Worth Keeping In Neoclassical Microeconomics?

Bernard Guerrien has joined with Emmanuelle Benicourt in updating Guerrien's prior objections. Deirdre McCloskey chaired an URPE-sponsored session at the Allied Social Science Associations (ASSA) conference. Donald Katzner and Karl Case each defend, more or less, the textbooks.

Guerrin and Benicourt still find contradictions in the textbooks, arising from treatment of the question of how prices get changed. Examples are given from Stiglitz and Mankiw's textbooks. (Previously, Guerrin had used mistakes in McCloskey and David Friedman's textbooks.) Guerrin and Benicourt ask, "Does teaching elementary economics authorize elementary faults of logic?" The respondents put on good cases, too. I learn from Katzner that an auctioneer is not needed; all of the agents in the market can quote prices. Katzner, however, doesn't see how false trading - that is, transactions actually taking place at non-equilibrium prices - can be allowed for in the models.

A theory with logical contradictions is invalid. A theory with implications that are repeatedly falsified empirically is incorrect, no matter how useful it is empirically elsewhere. One cannot conclude, though, that a better theory is not some minor tweak of such a theory. The question of whether researchers should concentrate on such tweaks or look at radical alternatives is a matter of judgement. I think good teaching ought to point out flaws and alternatives.