Mainstream economics and technological change, a critical assessment


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Mainstream economics and technological change, a critical assessment

(Methodos VII)


Marc Jacquinet


If we consider how technology and technological change are treated in microeconomics, the first impression is the scant attention given to the problem; in recent parlance, we might just find two central concepts: production functions and production sets (or possibilities), as stipulated in the “bible” of introductory graduate microeconomics, the Mas-Collel´s opus: Microeconomic theory (Mas-Colell, Whinston and Green 1995).  A well-thought reference book on classical microeconomics that extends and substitutes the older ones by Malinvaud or Varian (Malinvaud 1978, Varian 1992).  But, here again, technology is not construed differently than the old advanced – or even introductory and intermediate- microeconomic textbooks.  There is just one entry for “production technology” (p. 736) and several, but few, on production sets (pp. 128,630 and 736).[1]  They treat technology in the models as an endogenously fixed input, exogenously determined by extraordinary circumstances and this position reveals a conception of technology closer to the metaphor of deadwood than to the one of a living creature. 

No free lunch, this is one of the central mottos of the economists.  But with technological and organizational change, there is a free lunch (Mokyr 1990), something that I  can call here emergence and that is not ascertainable at just the individual or the global or aggregate level, the two basic levels that are usually recognized – generally on an exclusive basis – as the foundation of economic research: methodological individualism and holism. 

More specifically, if the notion of emergence is, in a certain sense, integrating both the individual and the aggregated levels, two fallacies become obvious in economics and the social sciences: the holist fallacy and the individualistic fallacy, consisting in reducing the level of study either to the individual or to the linearly and plainly aggregated measures such as the one encountered in macroeconomics.  The fallacy resides in the fact that each reduction does not give a correct logical and empirical description of the socio-economic phenomena.

Emergence is here an intermediary concept between the individual level and the aggregated of global level that is not to be confused with any of the two.  This level complicates further the aggregation problem but offers a more genuine treatment of change and inertia in socio-economic system. 



            Innovation is at the heart of the capitalist economy, but not necessarily the heart because other factors matter beyond techniques and technological change.  This justifies the use of the concept of socio-economic system, which insists on the complexity of the economy as co-evolving with the society in general.  This point is not new, quite to the contrary, but it is important and often neglected in empirical studies, not to mention in economic theory.  Arguably, this brings us to the idea of the incompleteness of the complexity paradigm and the theories of complexity.  The economic system is incomplete and so are the theories and empirical works that describe it. 


[1] There are other entries on technology on pages 130, 101, and 133; but it does not say much about the treatment of technology.

For other textbooks, the situation is not different.  For example, Frank, Robert H. (1997): Microeconomics and behavior. Boston: McGraw-Hill contains just two entries for technology: a generic one and another for technological obsolescence.   This is a small step in the good direction but far from what is desirable.

For the entry on innovation the picture is similar.  Frank (1997), following a behavioural cost-benefit approach just refers to the cost-saving innovations and nothing about the role of innovations as conceived by Schumpeter.

Cite this article as: {Jacquinet, Marc}, Mainstream economics and technological change, a critical assessment,"{Management Critique}," in {}, 01/11/2019,

Marc Jacquinet

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