— Ch. 1 · Defining The Heterodox Umbrella —
Heterodox economics.
~4 min read · Ch. 1 of 6
In 2007, economist Frederic S. Lee estimated that only five to ten percent of American economists identified with heterodox schools of thought. This small minority operates under a broad, relative term rather than an absolute definition. There is no single rulebook for what constitutes heterodox economic thought because the label exists solely in contrast to the most prominent or popular schools at any given time and place. Groups typically classed as heterodox include the Austrian, ecological, Marxist-historical, post-Keynesian, and modern monetary approaches. These diverse traditions share a common stance against mainstream economics but lack a unified methodology. Four frames of analysis have been highlighted for their importance to this collective: history, natural systems, uncertainty, and power. The field remains fluid, adapting its boundaries as the dominant paradigm shifts.
Historical Roots And Rejections
Mid-19th century thinkers like Auguste Comte, Thomas Carlyle, John Ruskin, and Karl Marx launched early critiques of orthodox economy. A number of heterodox schools challenged the dominance of neoclassical economics after the neoclassical revolution of the 1870s. Socialist critics of capitalism stood alongside advocates of various forms of mercantilism during this turbulent period. Dissenters from neoclassical methodology formed the historical school, while others advocated unorthodox monetary theories such as social credit. Physical scientists and biologists were the first individuals to use energy flows to explain social and economic development. Joseph Henry, an American physicist and first secretary of the Smithsonian Institution, remarked that the fundamental principle of political economy is that physical labor can only be ameliorated by transforming matter from a crude state to an artificial condition through expending power or energy. The rise and absorption into the mainstream of Keynesian economics contributed to the decline of interest in these earlier schools.