Dilemmas in Economic Theory: Persisting Foundational Problems of Microeconomics (review)

Dilemmas in Economic Theory: Persisting Foundational Problems of Microeconomics. By Michael Mandler. Oxford: Oxford University Press, 1999. ix; 211 pp. Cloth $35.00; paper $19.00.

This volume examines several problems in neoclassical economics and traces the resolution, and associated difficulties, of those problems to the particular stabilization of neoclassical economics that occurred at roughly the end of the first half of the twentieth century. Michael Mandler's basic premise is that “the transition to contemporary economics has been misunderstood, and that, as a consequence, some current theories are misguided” (13). The historians' interests are potentially engaged, as Mandler argues that “economic theory explores the logic of assumptions and models that seem natural. These constructs are not invented anew with each article and monograph, but are partly conventional; they derive their plausibility from the past practices, or perceived practices, of the discipline” (13). That is, Mandler wants to argue that recent economics, what he terms “postwar neoclassical economic theory,” selected out a number of positions from the contentious arguments earlier in the twentieth century about marginal productivity, cardinalism versus ordinal preference theory, Paretian welfare economics, and the positivity of the rate of interest.

Mandler argues that current discomfitures about these subjects can be traced to the particular theoretical moves made in the post–World War II and immediate prewar period, moves that effectively buried under the weight of eloquent analysis the complexities and contingencies of earlier positions. It is Mandler's argument that the ills and heterodoxies that beset current economic theory can be traced historically to the failure of the disputes to be properly closed.

The audience for this book then would consist of those economists for whom economic theory appears troubled and who seek the source of those troubles. Because the book is analytically fair, the book will also appeal to those economists who, in the twenty-first century, seek in their theory courses and readings to trace back their concerns to an earlier period. What Mandler has performed then is a rational reconstruction of some topics in contemporary microeconomic theory, a reconstruction based quite explicitly on the author's recognition that “this book is an internal commentary on economic theory, not a history. Historical figures and their ideas are mined opportunistically as the needs of the valuations dictate. Widely held interpretations and judgements of plausibility, including those occurring in the past, are germane to assessment of contemporary theory, but the exact attitude of past thinkers to their own creations—which contributions were most important, how models should be understood—is not . . . . Ideals are evaluated from this stance, not from the standpoint of earlier conceptual systems or of hypothetical neutrality” (15).

A historian of economics, concerned with historical reconstructions of economics, cannot reasonably endorse this approach. Nevertheless economists, as is true of scientists more generally, who have little patience for historical reconstructions (or obviously for historians of economics) ask only that the past cast light on the present. Consequently, although the author is to be commended for the breadth of his reading and his willingness to undertake the project of looking backwards, Ted Porter's well-known comment applies in full: “Unfortunately, many historians of economics are so completely socialized as economists, and so little as historians, that the genre of historical study is not fully distinct from that of the review essay. The review essay surveys a field and assigns credit, almost always on the assumption that knowledge is steadily progressing. Far too much history of economics, still, aims to extend the review back twenty or fifty years by presenting the ideas of a great economist on some modern question. The ‘precursor,' long dismissed as a category mistake in [the] history of science, is still alive and well in economics, and this is almost inevitable so long as [the] history of economics is written to meet the standards and presuppositions of ahistorical economists” (1992, 235).

Moreover, I would urge readers of...