The Dangers of Economic Rationality and the Poverty of Neo-classical Economics

摘要

Contemporary economic orthodoxy starts from the assumption that agents are economically rational, that they act to maximise their own economic well-being. The theory then couples this with an assumption of perfect, or at least symmetric, knowledge and seeks to prove the optimality of unconstrained free markets. There has been compelling work to the effect that the assumption of economic rationality is not correct, and that it is not even a good approximation (behavioural economics; Akerlof and Shiller, 2015; Bowles, 2016). This article argues, in a complementary vein, that if the assumption of economic rationality were correct, unregulated free markets would lead to economic disaster.