Formal neoclassical theorems undermine the very principles the theory claims to establish

Evidence

Neoclassical theory is itself the vector of its own self-abnegation. If one cites the canonical Arrow-Debreu model of general equilibrium, then one can pair it with the Sonnenschein-Mantel-Debreu theorems, which point out that the general Arrow-Debreu model places hardly any restrictions at all on the functions that one deems “basic economics,” such as excess demand functions. Or, alternatively, if one lights on the Nash equilibrium in game theory, you can pair that with the so-called folk theorem, which states that under generic conditions, almost anything can qualify as a Nash equilibrium. Keeping with the wonderful paradoxes of “strategic behavior,” the Milgrom-Stokey “No Trade theorem” suggests that if everyone really were as suspicious and untrusting as the Nash theory makes out, then no one would engage in any market exchange whatsoever in a neoclassical world. The Modigliani-Miller theorem states that the level of debt relative to equity in a bank’s balance sheet should not matter one whit for market purposes, even though finance theory is obsessed with debt. Arrow’s impossibility theorem states that, if one models the polity on the pattern of a neoclassical model, then democratic politics is essentially impotent to achieve political goals. Markets are now asserted to be marvelous information processors, but the Grossman-Stiglitz results suggest that there are no incentives for anyone to invest in the development and refinement of information in the first place. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 70

Categorization

• XREF: Connects to the reader’s broader theme of how orthodox economics retains authority despite its own internal incoherence — relates to critiques of economics’ scientific pretensions in the other works read on post-crisis thought. — connects to: The Samuelsonian synthesis is intellectually unstable because micro and macro rest on inconsistent assumptions — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 61; Neoclassical economics’ canonical theorems undercut each other’s core claims. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 70; Neoclassical economics as a whole is a zombie tradition resistant to refutation — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 66 (+2 more)
• corroborated: 3 independent passages support this claim — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 70

Broader Connections

• Neoclassical economics’ canonical theorems undercut each other’s core claims. #corroborates (1.00) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 70
• Fundamental critique of a system cannot arise from within that system #expands (0.75) — Wael Hallaq, Restating Orientalism, 133
• Neoclassical economics as a whole is a zombie tradition resistant to refutation #qualifies (0.70) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 66
• Circular theory that only restates known conclusions produces no genuine knowledge #qualifies (0.70) — Hall, Stuart, Essential Essays, Volume 1, 266