The Dissenter

#1166 Alexander Rosenberg: Why Economic Theory Can't Get Any Better...Why We Need It Anyway

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Oct 23, 2025
Guest
Alexander Rosenberg
Dr. Alexander Rosenberg, a philosopher and distinguished professor at Duke University, dives into the complexities of economic theory. He argues that while economics may not meet the standards of predictive science, it remains a crucial tool for policymakers dealing with self-interested behavior. The discussion also explores the concept of homo economicus, game theory's role in market interaction, and the importance of economic structures in preventing exploitation. Rosenberg insists that despite limitations, economic theory is vital for designing effective institutions.
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INSIGHT

Why Homo Economicus Persists

  • Homo economicus isn't descriptively accurate per experiments, but remains central to proving welfare theorems.
  • Economists keep rational-choice assumptions because they enable proofs like the Pareto optimality of competitive markets.
INSIGHT

How Macroeconomics Became Micro-Based

  • Macroeconomics shifted toward micro-founded models after stagflation, assuming market clearing and rational agents.
  • That shift hollowed out Keynesian approaches and made macro into applied micro theory.
INSIGHT

Labor Market Failures Explained

  • Labor markets typically feature monopsony dynamics where employers can collude to depress wages.
  • Workers face collective-action problems, making exploitation likely without institutional fixes.
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