1. Heterodox economics approaches and economic development
Amitava Krishna Dutt
Department of Political Science
University of Notre Dame, IN, USA
FLACSO, Quito, Ecuador
Conference on Heterodox Economics, IAEN, Quito, Ecuador, 2017

2. 1. Introduction
The relevance of heterodox economics for economic development
What is heterodox economics?
What is orthodox economics?
Heterodox economics approaches and characteristics
Four approaches – issues and additions to them
Post Keynesian
Classical-Marxian-radical
Institutionalist-historical
Structuralist
Two other approaches and the South

3. 2. What is heterodox economics?
Three ways to characterize what heterodox economics is:
It is not orthodox, mainstream or neoclassical economics: what do these terms mean?
It has some specific characteristics, presumably from different approaches. What are these characteristics?
Collection of different approaches – more or less coherent – sociological groups – perhaps with divisions within them
The second way has proved to be elusive. Way to approach is using the first – to say what it is not – and the third – draw from different approaches, but attempt to find some analytical features as characteristics

4. 3. Orthodox, mainstream and neoclassical economics
Features of orthodox, mainstream and neoclassical economics
Differences between three?
What are the main characteristics? Organizing principles, methods, ontology, normative, prescriptive
Key characteristics 1 – neoclassical approach – organizing principle of individual optimization
methodological individualism
optimization/rationality
comment on behavioral economics
Not wrong; more or less useful; often less useful, both because of methodological individualism and optimization
Relation to market equilibrium, efficiency and free market policies
Key characteristics 2 – mainstream approach – individual optimization and/or formal methods
Mathematical approach
Econometrics
Not problematic, unless overdone, done for its own sake, and excludes other approaches
Many in the heterodox are overly suspicious of these - unfortunate

5. 4. Heterodox economics approaches
Many heterodox approaches have been discussed:
Lawson (2003): chapters on post Keynesianism; institutional economics; feminism
Lee (2009): Post-Keynesian-Sraffian; Marxian-radical, institutionalist-evolutionary; social; feminist; Austrian; ecological
Lavoie (2014): Post-Keynesians; Radicals, Marxists, Marxians; (old) institutionalists; Evolutionary political economy; feminist; social and humanistic economics; ecological economics, Green economics; development structuralists; Schumpeterian, innovation and evolutionary economics; French regulation school; Social structure of accumulation school; economics of conventions; monetary circuit school; old behavioral economics; Polanyi school; Gesselian economics; Ghandian (sic) economics; Georgian economics; neo-Austrian economics; Agent-based modeling; System dynamics (often related to Associations)

6. 4. Heterodox economics approaches, cont.
Some comments:
Dissenting economists – orthodox and heterodox: not just dissent
Some characteristics of heterodox approaches; Lavoie (2014)
Realism versus instrumentalism; focus on ontology (Lawson, 2003)
Environment-consistent rationality versus optimizing agent
Holism/organicism versus individualism/atomicism
Production, growth, abundance versus exchange, allocation scarcity
Regulated markets versus unfettered markets
Formalism (Lawson)
Different approaches within approaches
Example of post Keynesians
US PK, Kaleckians, Sraffians, others (Hamouda and Harcourt, 1988)
Fundamentalists, Kaleckians, Sraffians, institutionalists, Kaldorians (Lavoie, 2011)
Example of classical-Marxian
Fundamentalists, structuralists, analytical, Monthly review, Sraffians, humanist, etc.
Common features of approaches
Power
Institutions
Knowledge, uncertainty, pluralism
Holistic/systemic and different types of micro
Critical
Contexts matter

7. 4. Heterodox economics approaches, cont.
Problems and different dimensions

8. 4. Heterodox economics approaches, cont.
Use heterodox economics approaches for ideas
Use four schools as major examples, recognizing that the ideas are not exclusive to a particular school
Needs to be modified, adapted, built upon to make them suitable for studying development issues
Go beyond the four schools, mention two others, possibly major influences from low-income countries

9. 5. Post-Keynesian approaches
Some central issues:
Uncertainty and its implications for decision making and institutions
The role of aggregate demand in growth and development without taking the view that if aggregate demand is increased all will be well; initial neglect of aggregate demand because Keynes and Kalecki’s analysis seemed to apply to high-income capitalist economies; but uncertainty and fragmented markets makes aggregate demand issues very important for LDCs
Power in goods markets, labor markets, financial markets, government
Finance, uncertainty and possible instability
Effect of inequality on output and its growth
International financial issues
Issues to be addressed more fully:
Informal sector and underemployment
Poverty, ethnic and gender issues
Environmental issues – uncertainty, resources and aggregate demand
Money and macroeconomic policy is dollarized economies (for Ecuador)
Technical change and productivity growth; comment on Kaldor
Open economy issues and balance of payments considerations
Comment on balance of payments constrained growth
Foreign debt, primary exports
Importance of government institutions, social interactions and social movements
Importance of political economy

10. 6. Classical-Marxian-radical approaches
Some central issues
Classes, distribution and growth
Technical change, markets and productivity growth
Dialectical materialism as organizing principle
Class and production relations as organizing principle
Imperialism and global power
Issues to be addressed more fully
Beyond “capitalism”
Power not just based on social relations of production; ethnicity, gender, intermediate classes; sources of power: production, finance, organization, knowledge, violence, numbers
Role of aggregate demand
Environment – distribution, class, power and environment
Role of the state, power and democracy: beyond tool of capitalist, beyond socialist state
Social relations beyond class, communities, class and group formation
Going beyond imperialism pro and con – less dogmatic

11. 7. Institutional and historical approaches
Some central issues:
What are institutions and their central role: laws, rules; social norms; organizations
Relation to power
Importance of technical change and industrialization: Hamilton, List, Ranade, East Asian model
State institutions and industrialization
Issues to be addressed more fully
Questioning the meaning of development for some
Taking into account context and political economy for some
Taking into account global political economy
Taking into account state power and democracy, state-society relations for some
Taking into account social relations more broadly

12. 8. Structuralist approaches
Some central issues:
Holism versus atomicism:
connections with structuralist approaches in general
Mathematical formulations
Latin American structuralism – structures within economies (North-South differences) and in global economy
Industrialization and overcoming primary export dependence
Issues to be addressed more fully
Political economy: models and contextual political economy
Social economy, communities, individuals
Environmental issues
Questioning the meaning of development

13. 9. Other relevant heterodox approaches
Coming from the North and Eurocentrism?
Open to ideas, not imperialism of ideas – difficult, Northern domination, mimicry
Two other relevant examples with Southern roots
Social solidarity economics
Southern roots? Indigeneity and new socialism
A few remarks – many important and interest issues, but somewhat vague?
Questioning the meaning of development, community, nature
Diversity of issues: social relations, relationship with nature, social sectors
Relation between social solidarity, social capital, class divisions and power
Relation between social relations and markets
Relation between social relations and nature
Gandhian economics
Southern roots? Gandhi and Eastern philosophy
Questioning the meaning of economic development, economic growth, utility, capabilities and functions
Individual change and the search for truth and the self
Relationship between power, individuals, social relations, community, state

14. 10. Conclusion Heterodoxy has much to offer
But not be a slave to heterodox approaches – problematic because of intellectual imperialism, but check on orthodoxy’s imperialism
Problems of orthodoxy
What can be taken from heterodox approaches and what needs to be added
Some more “Southern” heterodox approaches