Neoclassical and Institutional Approaches to Development and the Environment
Author(s)
Soderbaum, Peter
Abstract
Differences between neoclassical and institutional economists cannot be described in terms of black and white. Rather, we must address their divergent approaches, i.e., the reductionist-mechanistic tendencies of neoclassical economists, and the holistic-evolutionary tendencies of the institutionalists. Neoclassical economists tend to believe in very clear boundaries between economics and other disciplines, and between the various fields of economics. For example, environmental economists are expected to take care of environmental problems and policies, while other economists can continue in their detached fields of study. In addition, an example of neoclassical reductionism is the rendering of all practical economic analysis in monetary terms. Mainstream neoclassical economics was not developed to deal with environmental problems. It therefore seems reasonable to consider alternatives to the neoclassical paradigm when facing a new category of problems.
