Question

“The universe was a mechanical piece often likened to a clock whose mechanical arrangement … would run eternally in the same pre-established mechanical arrangement”. Does this remind you mainstream economics? Discuss.

Answer 1

                                    Mainstream economics refers to the orthodox or neoclassical tradition of economics wherein the market is being influenced always by the invisible hand of economic theory that was put forward by Adam Smith. Here, the assumption is that the market actors are all rational and the market forces would act in accordance with the rational responses of the consumers of the market. By invisible hand, Adam Smith referred to the influence of supply and demand and he stated that the supply in an economy is always influenced by the demand of the respective economy and both these factors would influence each other so as to maintain the balance of the economy.

                       

                                    The given statement refers the universe as a mechanical piece linked to a clock and states that the mechanical arrangement would run always in the pre-established manner. This has a lot of similarities to the mainstream or orthodox economic theories as suggested above. The rational choice that is specified in the theory suggests that the consumers would take only such decisions in an economy that would maximise their own utility and makes use of the available statistics and models to evaluate the economic development under such theory. The mainstream economics doesn’t consider external factors and hence it would not be able to identify all the aspects that would happen in an economy while making the analysis of the existing economy and its features. There are no moral concerns and scope for altruism in such an economic model and thus it has certain similarity to how the clock attached to a mechanical instrument would work. With the advent of many streams of economics like behavioural economics and others, there are rising concerns about this rational theory of thought and it states that the mainstream economics is a theoretical concept and thus there are many flaws associated with it when considered on a practical basis. The practical economic market is not ideal and efficient as stated by the rational school of thought and thus opposes this school of thought.

                                    Thus, from the given comparison to a clock that is being attached to a mechanised platform, it can be seen that there are lot of similarities that can be found of such an action in the mainstream economic school of thought that always has a focus on the rational behaviour of a market.