Bad ideas often linger, especially in economics. Why they endure and how they influence the discipline is a central interest of Francisco Nunes-Pereira (THEOMET).
In a contribution with Mário Graça Moura (THEOMET), Francisco examines the persistent use of aggregate, homogeneous capital in mainstream economics. There is a logical circularity in the neoclassical concept of capital, particularly the dependence of the quantity of capital on the interest rate, which the theory is supposed to determine. This circularity was exposed in the Cambridge Capital Controversies of the 1950s and 60s, which pitted heterodox economists from Cambridge (UK) against mainstream economists at MIT. Despite acknowledging the logical shortcomings of the notion, mainstream economists dug their heels in. Ignoring sounder alternatives, they have continued to use production functions with aggregate capital due to their empirical tractability and convenience for modeling economic growth and fluctuations. Francisco argues that this reflects an instrumentalist view of science, prioritizing practical utility over intellectual rigor.
Still, the persistence of flawed ideas is often fueled by largely unexamined preconceptions. In another article with the same co-author, Francisco explores how ideology is an unavoidable yet often overlooked aspect of economic analysis. They argue that ideology extends beyond mere normative ideals, drawing from the works of Marx, Schumpeter, and Lawson to illustrate how initial visions, embedded with ideological assumptions, shape economic analysis. These assumptions influence the questions economists ask, the methods they deem legitimate, and the insights they can offer. Francisco points to the widespread use of mathematical methods in economics as an example, reflecting a deeply ingrained belief in their necessity for scientific legitimacy—a belief that often overlooks the complex, context-dependent nature of social reality. Francisco also highlights the common treatment of knowledge as objective and given, as well as the disregard for the role of institutions in much of economic theory, as additional examples drawn from the history of economic thought.
In both contributions, Francisco underscores how a critical awareness of the nature of social reality (ontology) and a more tolerant and plural discipline are an indispensable prerequisite for sound economic theory.
