The Strange Non-Death of Mainstream Economics

Introduction: Is Economics in Crisis once again?

An article in the New York Times from early 2025 suggests that the political influence of mainstream economics is declining. While economists have been highly influential in supporting and shaping free-market policies in recent decades, their expertise has become less relevant during intensified economic crises that necessitate state interventions, such as the COVID-19 pandemic, energy price shocks, or geopolitical conflicts. The TINA principle ('There Is No Alternative'), which has dominated the political mainstream for decades by promoting economic liberalization, elevated mainstream economic theories whose models inherently prioritize free markets over state interventions.

Recent research suggests that the strong link between intellectual debates in the economics profession and developments in the realm of economic policy is weakening considerably. Stahl (2025), analysing these changes in a recent journal article, comes to the following, noteworthy conclusion:

The neoliberal era witnessed a broad depoliticisation of economic policy debates, a process in which economists played a crucial role. However, while major policy breaks in the twentieth century were tied to shifts in dominant economic theories, recent changes have occurred without corresponding transformations in economic thinking. Ideas once deemed heretical—such as tariffs, price controls, or industrial policy—have gained traction in policy circles, despite rejection from mainstream economics. This suggests that, unlike the neoliberal era, we are entering a period where economic policymaking is increasingly detached from academic economics.

The declining political relevance of mainstream economics is taking place against the backdrop of an already vulnerable discipline that has never fully digested the shock of the financial crisis of 2007/2008. At the time, mainstream economics not only failed to foresee the crisis but was also viewed by some as having contributed to its emergence (Ötsch and Kapeller 2012; Bertocco 2017; Chun 2017; Payson 2017; Courvisanos et al. 2016). This critique had sparked a broader debate about the state of the discipline, fuelled by an international student movement demanding pluralism in economics (e.g., ISIPE 2014). The crisis also prompted criticism from high-profile figures, including policy-makers (e.g. former German chancellor Angela Merkel, 2014), central bankers (e.g., A. Haldane of the Bank of England), and even prominent mainstream economists (e.g., Romer 2016), who questioned the mainstream's textbook culture and teaching practices (Decker et al., 2018).

But as the financial crisis of 2007/2008 approaches its 20th anniversary, the impact of these critiques appears limited. While some argue that mainstream economics has embraced greater pluralism in research, theory, and methodology (e.g. Cedrini and Fontana 2017), others note that this pluralism is largely confined to specialized, fragmented, and increasingly complex research, rather than influencing mainstream teaching and textbooks (e.g., Colander 2015; Elsner 2017; Decker et al., 2018, Decker et al., 2019, Heise 2023; Heise 2024). Despite some innovative teaching concepts, day-to-day economics education remains largely unchanged, failing to equip students, practitioners, or policy-makers with the tools to address today's complex and pressing challenges. This unwillingness and inability to change and adapt to new realities is slowly but inexorably pushing mainstream economics into a profound crisis of irrelevance—a crisis of which we are merely at the onset.

But wait: Heterodox Economics is in Crisis, too!

Does the decreasing political relevance of mainstream economics elevate critical, heterodox approaches that have for so long been marginalized in economics? Such as post-keynesian, ecological or even Marxist economics? Rather the opposite: Much like the emerging economic paradigm poised to succeed laissez-faire neoliberalism—a fractured landscape caught between reactive state intervention, militarized Keynesianism, renewed bloc rivalries, and unrelenting austerity for social spending—, the new economic ideas gaining traction today are far from constituting a coherent, progressive alternative. Rather than reflecting a heterodox-inspired new intellectual hegemony, they signal a fragmented ideological terrain where old orthodoxies persist, even as they falter.

Empirical studies suggest that heterodox economics has remained marginalized, with its "long fall" (Heise and Thieme 2016) continuing unabated even after the financial crisis of 2007/2008. Mainstream economics has retained its academic dominance – a puzzle we could coin the "strange non-death of mainstream economics" (paralleling Colin Crouch's "strange non-death of neoliberalism", 2013; see also Pühringer 2015). Despite calls for reform, alternative paradigms remain sidelined, even in self-acclaimed pleas for reform (Association for Heterodox Economics, 2014). Arne Heise, a veteran post-keynesian economics professor, came to a frustrating conclusion in an article from 2023:

All the dreams of a transformation of economics after the global financial crisis of 2007, and of a new golden age for heterodox paradigms – a scientific revolution in economics at long last—went up in smoke. Dominant mainstream economics has again proven its enormous resilience and we seem to be closer than ever to paradigmatic monism, despite a growing fragmentation of the dominant paradigm.

This is not to dismiss influential scholars like Isabella Weber, Mariana Mazzucato or Dani Rodrik, whose work challenges neoliberal dogma by advocating state-led innovation, redistributive policies, and problem-driven research. The Forum New Economy, in a 2023 report, even suggested an “emerging socio-economic paradigm shift” in economics and policy, referencing these progressive voices. Yet their impact remains limited. Mainstream economics curricula largely ignore them, while policymakers cherrypick ideas without taking up their broader progressive intention. Weber’s critique of “Bidenomics”—arguing that its failure to address inflation and inequality fueled Trump’s 2024 resurgence (Weber 2024)—demonstrates how even modest reforms face widespread ideological resistance. The dominant economic policy paradigm is definitely changing - but not necessarily in the right direction and the new modifications do not correspond with a widespread and systematic revaluation of heterodox approaches. The emerging new policy paradigm keeps being informed by mainstream economics in some areas, where the ‘scientific’ pro-market toy models can still fulfill their ideological functions, and at the same time becomes increasingly detached from mainstream economics in other areas, where state intervention is needed (however not necessarily for progressive purposes).

Heise (2024, 14), with a critical eye on the abovementioned report by the Forum New Economy, has underlined the issue that changes in the economic policy paradigm correspond only incompletely with positive changes in the economics discipline:

Even if the future reveals that the first decades of the 21st century have seen the end of neoliberalism and its market-oriented policy paradigm in favour of a more state-interventionist policy paradigm, this will not necessarily contribute to a revolutionary renewal of the economic discipline or, at the very least, its pluralisation.

So, why is mainstream economics not changing, despite the extensive criticism it received after the financial crisis, and despite its ever-increasing irrelevance for real-world economic developments and problems?  In the context of rapidly accelerating climate change and approaching ecological collapse, de-globalization and geopolitical turmoil, and surging far-right powers, the refusal of mainstream economics to open up new approaches, to contribute to greater economic and social stability, seems all the more perplexing.

The Three Meta-Axioms Mainstream Economics is trapped in

One explanation for this apparent contradiction has to do with the theoretical rigidity of mainstream economics—‘Mainstream economics can’t change, because it would need to overthrow its ontological core assumptions to realign with the real world’. This explanation doesn’t imply that mainstream economics has remained stagnant over the past two decades. As Arnsperger and Varoufakis have already noted in 2006, the “models gain in complexity, expand in scope, and move into areas hitherto untainted by the economist’ inquiring gaze.” Yet, beneath this surface diversity, these models share a set of unspoken foundational assumptions—meta-axioms—that remain largely unchallenged.  The three meta-axioms that Arnsperger and Varoufakis have already elaborated on in 2006 and which are also true for newer developments in the discipline, are:

• Methodological Individualism: This is the idea that socio-economic phenomena must be explained at the level of individual agents. Individuals are in turn studied in isolation from the broader social structures they collectively create. Even newer approaches like Agent-Based Modeling (ABM), which simulate economies as networks of interacting agents, still focus on individual behavior rather than the systemic, historical, and institutional forces that shape economies. Similarly, Empirical Machine Learning (ML) approaches, which rely on high-frequency micro-level data (e.g., firm behavior, consumer transactions), lack the theoretical framework to explain how macro-level instability emerges from systemic forces rather than just the aggregation of individual actions.
• Methodological Instrumentalism: This axiom posits that all behavior is driven by preferences and aims at maximizing utility. While neoclassical economists have moved away from the assumption of fixed, exogenous preferences—acknowledging that agents can adapt their preferences based on past outcomes—the core idea of instrumentalism remains intact. Even in ABM, where agents may be adaptive rather than fully rational, behavior as such is still seen as the primary driver of outcomes, neglecting the role of broader systemic and structural forces.
• Axiomatic imposition of equilibrium: It is presumed that agents’ behavior and macroeconomic processes hover around some analytically discovered equilibrium. Even though fundamentally flawed and “irreparably useless for macroeconomic policy analysis” (Storm 2021), macroeconomics still centrally focuses on Dynamic Stochastic General Equilibrium (DSGE) modelling as the gold standard of mainstream economics. Even critiques of mainstream macroeconomics and new approaches, such as the New Multiple-Equilibrium and Diverse (MEADE) paradigm for macroeconomics, or the Heterogeneous Agent New Keynesian (HANK) models, maintain core DSGE assumptions (ibid.).

The ”Utopia” of the Market

Mainstream economics cannot adapt to new economic and political realities, because it constructs economic phenomena as market phenomena and frames markets as self-regulating systems best left to operate without intervention. Methodological individualism reduces economic phenomena to the actions of agents, sidelining the role of social and non-social structures and emergent system dynamics. Methodological instrumentalism reinforces this by framing all behavior as preference-driven, reducing systemic interventions to distortions of "natural" market outcomes. Finally, the equilibrium axiom assumes that markets inherently tend toward stability, implying that deviations from equilibrium are temporary and self-correcting. Together, these axioms construct a worldview in which “the economy” and markets are synonymous and where markets are efficient, autonomous, and best left undisturbed.

This framework has profound implications for policy-making. For instance, mainstream approaches to environmental issues often prioritize market-based solutions, such as carbon trading or Pigouvian taxes, over direct regulation or systemic interventions. These solutions are framed as aligning individual incentives with social goals, preserving the market's self-regulating nature. Such approaches fail to address the structural and systemic roots of environmental degradation, such as commodification of nature, or systemic forces towards capital accumulation and growth. By prioritizing market mechanisms, mainstream economics perpetuates a paradigm that resists transformative interventions, even in the face of existential crises like climate change. Mainstream economics can be understood as a social construct that creates and naturalizes 'the economy' as a system of markets and also delivers the 'scientific' justification why markets are better left alone. It is a societal ideology that naturalizes market outcomes and marginalizes alternative approaches that challenge its foundational axioms.

The philosopher Joseph Vogl (2012) has argued that markets are not natural, self-regulating entities, as mainstream economic theory often suggests, but rather ideological constructs shaped by historical and political forces. He introduced the concept of the “utopia of the market” to describe how economic thought has elevated the market to a quasi-metaphysical principle—an autonomous, infallible system that promises efficiency, stability, and prosperity if left undisturbed. This utopia functions as a theoretical ideal that obscures the actual dependencies between economic, political, and social structures. Instead of being neutral mechanisms, markets are deeply embedded in power relations, shaped by government policies, financial institutions, and profit interests.

In a world characterized by increased rivalry between nation states and world regions, in the context of systemic economic slowdown, resource depletion and ecological breakdown, where political intervention plays a crucial role in shaping economic developments, the “utopia of the market” becomes an even less useful lens for understanding the economy. While the apolitical, deductive-mathematical models of mainstream economics, which naturalize the “economy” as an autonomous sphere strictly separated from history, politics and social issues, were always erroneous, their failure was less visible when states and political interventions seemed to withdraw in the neoliberal era.

Conclusion: The after all not so Strange Non-Death of Mainstream Economics

Apart from the theoretical rigidity that prohibits mainstream economics from adapting to new realities, there are also more practical, political reasons for the “strange non-death of mainstream economics”. Mainstream economics, following an outdated positivist epistemology, understands science as principally separated from its object. As a neutral (or ‘value-free’) observer, the scientist can and should develop accurate descriptions of reality without affecting reality or being affected by it. Trapped in its positivist world-view, mainstream economics overlooks its own political and ideological function, which lies in transmitting a pro-growth, pro-market, pro-capitalist, pro-extractivist bias and hiding it in a system of deductive-mathematical models that are detached from the real world and defy empirical testing (Freeman and Kliman 2005; Lawson 2013).

When assuming that economics is not and never has been a real-world- and solution-oriented social science, but an ideological construct designed to limit progressive political intervention and maintain the status quo, the persistence of mainstream economics becomes less surprising. Interpreting this persistence as “strange” may itself reflect an uncritical and apolitical view of science, one that overlooks its deep entanglement with powerful societal institutions that structurally reinforce mainstream economics—such as ownership and investment structures, international power dynamics, and dominant social narratives. From this perspective, the increasing irrelevance of abstract economic theory for concrete political and policy processes is not a puzzle but an intentional outcome shaped by these structural forces. A more reality-aligned economic science might be seen as unhelpful—or even undesirable—if the primary societal goal is to maintain the prevailing economic ownership structures under shifting conditions, rather than to critically analyze the deeply political nature of the economy and the possibilities to change it in a progressive manner.

To summarize, the argument is not that mainstream economics has remained static or unchanged over the past decades — it has indeed evolved and diversified significantly. However, these changes have largely occurred within the confines of its foundational meta-axioms: methodological individualism, instrumentalism, and equilibrium. A truly inductive, real-world-oriented, and interdisciplinary economic science — one that integrates institutions, history, class relations, and power structures, and is taught through diverse materials and methods — remains elusive. While comprehensive international empirical research on the overall state of the discipline is lacking, it is reasonable to estimate that heterodox economic approaches still constitute far less than 10% of economics curricula in Europe and the United States.

This raises critical questions: Why has it proven so difficult to establish a viable alternative to mainstream economics or significantly influence its trajectory, despite decades of extensive criticism? Why has heterodox economics not been more successful to make inroads to the mainstream—has heterodox economics even “lost its way” in the last decades, as Potts (2021) argues (see also Ghilarducci 2023, Hodgson 2021)?  Why has "pluralist economics," the most prominent alternative paradigm to mainstream economics, not been more successful in changing the curriculum? What are realistic pathways for curriculum reform in the future, and what would a new economic science that lives up to the challenges of the poly-crisis look like?  I address these questions in my related essays, “The Project of Pluralism” and “Towards a New Economics of Collapse and Construction”.

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