New Economics, paradigm shifts and the lack of philosophical foundations in economics or: is the future of economics heterodox?

Abstract

The article discusses the ongoing debate about a potential paradigm shift in eco-nomics. Institutions like the Institute for New Economic Thinking, the New Economics Foundation, and the Forum New Economy have been established to foster new approaches to understanding and transforming economies. While some main-stream economists see this as a significant and positive change, many heterodox economists remain sceptical, recalling past failed revolutions in economic thought, like the 'Keynesian revolution'. The article examines whether purported changes in economic policy indicate a true paradigm shift in the scientific sense (à la Kuhn) or just variations within the existing neoclassical framework. Despite some studies suggesting a paradigm shift is underway, it is argued that these shifts in policy do not necessarily stem from fundamental changes in economic theory. Instead, they represent swings within the dominant paradigm, such as the rise of behavioural or Schumpeterian economics, rather than a complete overhaul of the discipline. The article concludes that while mainstream economics may become more diverse, this should not be mistaken for a revolutionary change. Heterodox economists must continue to advocate for broader acceptance and genuine transformation in the discipline, rather than assuming that time alone will bring about such changes.