The implausibility of the neoclassical model in the face of some of the most obvious features of capitalism has led to recurrent attempts within the mainstream to bolt extra elements onto it in an ad hoc way. None of these additions, however, alter the basic belief that the system will return to equilibrium-providing prices, and especially wages, adjust to market pressures without hindrance. Even John Maynard Keynes, who went further than anyone else in the mainstream in questioning the equilibrium model, still assumed it could be made to work with a degree of government intervention.
There were always challenges to such complacency. The Austrian economist Joseph Schumpeter derided any idea of equilibrium as incompatible with what he saw as the great positive virtue of capitalism, its dynamism. Some of Keynes's disciples went much further than he did in breaking with neoclassical orthodoxy. Cambridge economists tore apart the theoretical basis of the neoclassical school. Yet the orthodoxy is as strongly entrenched in the universities and schools as ever, pumping into the heads of each new generation a picture of the economic system that bears little relationship to reality. The pressure on students to study the books putting forward such views as if they were scientific texts has led to Paul Samuelson's Economics and Lipsey's An Introduction to Positive Economics selling millions of copies.
It is hardly surprising that the economics profession has difficulty coming to terms with those aspects of the capitalist system that have the greatest impact on the mass of people who live within it. The obtuse theorems that fill economic textbooks and academic journals, with their successive algebraic calculations and geometric figures, assume stability and equilibrium, and so have little to say to people worried by the system's propensity to crisis. One of the founders of the neoclassical school, Alfred Marshall, observed nearly a century ago that the economic theory he believed in was of little use in practice and that "a man is likely to be a better economist if he trusts his common sense and practical instincts" . 7
Yet what is involved is not just abstract academic scholasticism. The orthodoxy is an ideological product in the sense that it operates from the standpoint of those who profit from the market system. It presents their profiteering as the supreme way of contributing to the common good, while absolving them of anything that goes wrong. And it rules out any fundamental critique of the present system, in a way that suits those with commanding positions in educational structures, connected as they are to all the other structures of capitalism. The radical Keynesian Joan Robinson summed up the situation:
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Introduction