'Old School Thinking’ - these are the tenets of the neoclassical mainstream, which, with its various varieties, still dominates the economic science community globally almost monopoly-like, even if its teachings are theoretically and practically outdated.
Over the past four decades, the neoclassical mainstream, with its various varieties, has become the world’s dominant doctrine in economics and has pushed all other doctrines to the sidelines. Sometimes he has even managed to make other views even suspect. This is not first and foremost due to his (only apparent) scientific brilliance, but above all due to the political support of influential circles, which in turn benefited from the economic policy implications of teaching.
The teachings of neoclassicism are based on assumptions that are far removed from reality. These assumptions are not merely simplifications (as claimed) that are unimportant for the derived results. Rather, the assumptions are so fundamental that if they are violated, the results will no longer apply.
That this doctrine has also practically lost its - already theoretically unjustified - trustworthiness and that nothing fundamentally helpful can be expected from this direction, becomes obvious for each observer with a clear mind from three facts:
- The scholars of neoclassicism propagate growth as the universal cure for all kinds of economic problems (whether unemployment, financing of social systems, unequal distribution of wealth or sovereign debt). And they believe that growth is also possible in the coming years and decades (and even necessary for us to be able ‘to afford environmental protection at all').
- On the other hand, every reasonable non-economist is aware that there can be no infinite growth on our finite planet - rather, many ecosystems are obviously even close to collapse due to the catastrophic environmental destruction, which is collateral damage to previous growth.
- None of the neoclassical mainstream economists have seen the severe financial crisis of 2008 coming - rather, until shortly before the collapse of Lehman Brothers, there was great optimism that the prospects for the next few years would be great. The greatest optimists even went so far as to consider recessions and financial crises to be definitively abolished.
- Actually there were about a dozen economists ‚who saw it coming‘, thanks to their better, reality-based theories.
- The neoclassical mainstream economists are rather optimistic about the economic impact of climate change, because they believe the impact on prosperity (measured by gross national product) is small: only about 1% loss per 1 degree of global warming. This means that even if the restriction of global warming to below 2 degrees is not successful, this does not matter much, because even with 5 degrees global warming, the loss of prosperity is only 5% (So it is almost in the fluctuation range of an economic cycle, and is not as large as experienced in the corona pandemic).
In 2018, such forecasts were even awarded the (so-called) Nobel Prize in Economics. And these assessments are decisive for the economic assessment of climate change in the reports of the Intergovernmental Panel on Climate Change, which represent one of the most important foundations for political decision-makers worldwide.
- A person with a clear mind (perhaps one of our political decision-makers) who has experienced successive years of heat and drought with large crop losses among farmers and devastating forest fires today and continues this development mentally into the future, is incredulous - but is nevertheless inclined to (economic)scientific elites, as to trust his feeling and the few economic dissenters.