Contemporary Schools of Economic Thought

The currently dominant school of economic thought among Euro-American academics is neoclassical economics, which is centered on an image of rational agents borrowed from classical liberal philosophy. Other contemporary schools of economics—such as post-Keynesian, Austrian, institutionalist, feminist, critical realist, radical, ecological and humanistic economics—offer critiques of neoclassical economics. The alternatives proposed often, in part, move in directions that are somewhat more in line with Whiteheadian process thought. In no case, however, has a Whiteheadian ontology been fully adopted and applied. This article points out actual and potential connections between process thought and economics, taking a feminist-process perspective.

1. Neoclassical Economics

Mainstream neoclassical economics is very much based on a radically reductionist, individualist, substance-and-attribute ontology. This ontology presumes the pre-existence of discrete, well-defined, rational, self-interested, and autonomous agents, but pays very little attention to the formation of these agents. In particular, it takes their preferences for goods and services as a given. Not only individuals, but also multi-person groups such as households and firms are treated in the core model as though they were individual agents. This allows neoclassical economics to sidestep any consideration of relationships that might involve the least degree of interconnection or interdependence. In the core model, the agents interact with each other only at arm’s length, communicating only through impersonal, mechanically-functioning, and perfectly competitive markets.

The preferred tools of the neoclassical economist are logic and mathematics. The economist, it is assumed, sits apart from the object he (“he,” since, historically, the vast majority of economists were male) studies. Like a Newtonian physicist, he is assumed to need only know the universal, unchanging rules and principles that undergird the economic system in order to make assertions and predictions about it. Among these rules is the proposition that agents make their choices so as to maximize utility (if they are consumers) or profits (if they are firms).

The most common definitions of economics hold that it deals with the behavior of markets, or that it explores the ways rational individuals make decisions in the face of scarcity. In either case, it is assumed that the discipline is a “science”—i.e. objective and value-neutral. Aspiring to a narrow and rigid ideal of objectivity, mainstream economics accepts only efficiency as a normative goal. Here, an action or system is efficient if there exists no change which would increase one agent’s utility without lowering the utility of another. Efficiency is assumed to be a universally accepted good, and one that therefore can be adopted as the sole normative standard: by referring all considerations to it, neoclassical economists hope to avoid making subjective and controversial value-judgments.

Much study and research in economics is devoted to the elaboration of mathematically-formulated rules and discussion about whether efficiency is or is not achieved, under various modifications of the basic scenario. The concept of human need is—surprisingly, to any who might argue that economics should have something to do with human survival and flourishing—banished from the discipline, as too ill-defined for an allegedly objective science. Even the recognition that high unemployment is bad has been sidestepped in recent decades by a focus on the theoretical “micro-foundations” (that is, explanations by means of rational choice and markets) of macroeconomic phenomena. All of these assumptions, of course, are rarely made explicit. The student of economics is very rarely taught anything about the history or philosophy of the discipline, or encouraged to pay attention to real-world problems like poverty, injustice, or the destruction of the natural environment. Instead, the student is plunged immediately into abstract graphs and equations.

2. Contrasts with Whiteheadian Thought

The contrast with a Whiteheadian process ontology could hardly be more dramatic. Neoclassical economics regards agents as pre-existing and radically separate from each other. Process thought regards all agents as continually coming into being and creating the basis for the next moment as an aspect of a deeply interconnected whole. Neoclassical economists regard economies and markets as preexisting, mechanical, closed systems, with predictable behaviors that that they can aspire to model in elegant, abstract detail. In process thought the world—including, presumably, markets and other economic institutions—evolves as an organismic open system, with novelty as an integral feature. In neoclassical economics questions of value are equated with individual, subjective utility. More pressing for Whitehead are questions about “ultimate values” (SMW 203).

Neoclassical economic theory was not yet as deeply entrenched in Whitehead’s creative period as it is now, and Whitehead did not engage at great length with this form of economic thought.[1] However, he did write at considerable length about Cartesian thought and how during the eighteenth century “the notion of the mechanical explanation of all the processes of nature finally hardened into a dogma of science” (SMW 60). Since these influences strongly shaped the development of neoclassical economics, much of his critique is apropos.[2]

Whitehead also wrote about the world of commerce and industry. While such writings are not about economic thought per se, they do give us some clues about what he might have said, if pressed. For example,

in the nineteenth century, when society was undergoing transformation into the manufacturing system, the bad effects of [Cartesian] doctrines have been very fatal. The doctrine of minds, as independent substances, leads directly not merely to private worlds of experience, but also to private worlds of morals. The moral intuitions can be held to apply only to the strictly private world of psychological experience. Accordingly, self-respect, and the making the most of your own individual opportunities, together constituted the efficient morality of the leaders among the industrialists of that period. The western world is now suffering from the limited moral outlook of three previous generations (SMW 195-6).

It is neoclassical economic thought that provides the academic imprimatur to the current dogma that individual utility (“the strictly private world of psychological experience”) and self-interest (“the making the most of your own individual opportunities”) are intrinsic and central to economic life. As neoclassical economics takes the abstract concepts of Cartesian thought and translates them to the practical world of “industrialists” of Whitehead’s time and our own, it can clearly be brought under the Whiteheadian critique.

3. Feminism, Process, and Economics

Neoclassical thought fails to recognize the importance of relationships and interdependencies among people, and between people and the larger environment. One of the ways this is most dramatically manifested is in its neglect of those parts of life that have traditionally been associated more with women than with men. Feminist economists have brought to light many gender-related biases in mainstream economics which can be seen as closely related to its rejection of a Whiteheadian ontology of connection and organicism.

Note that the agent of neoclassical economic theory has no childhood or old age, and thus no periods of dependence and no need for the sorts of care traditionally provided by women. The rational agent has no emotions, no bodily needs, no intuitions, and not much use for sensitivity, receptivity, or thoughts about ethical behavior in relation to others and the natural world.

In traditional Western thought, women have long been associated with the natural, presumably pre-rational world, and treated as merely part of the passive, exploitable environment that (invisibly) supports the activities of rational “man.” Considerable innovative feminist research during the 1980s (e.g. Harding 1986; E.F. Keller 1985) explored the historical, philosophical, and psychological ramifications of this highly gendered way of viewing the world within the development of science. From the early days of the scientific revolution, notions of reality and its exploration have been highly colored by an association of masculine-identified characteristics of autonomy and rationality with superiority and true knowledge. Resistance by mainstream philosophers to Whiteheadian concepts of feeling, connection, vagueness and value take some of their force, a feminist analysis would imply, from the psychological habit of perceiving these aspects of life as soft and feminine, and therefore inferior, compared with masculine-associated rationality, distance, precision, and neutrality (Nelson, 2003a).

Feminist scholars have struggled to come up with more adequate ways of thinking about men, women, gender, and knowledge. One strain of feminist thought, sometimes referred to as “liberal feminism,” tends to argue, in essence, that women as well as men are (or can be) rational agents. This approach retains classical liberal values of individuality and rationality, but extends them to women. Another strain, sometimes referred to as “cultural feminism,” questions the primacy of those values, and argues for a revaluation of cooperation, emotion, and other-interest as important dimensions of human life. Sometimes this line of thought falls into the trap of essentialism, reinforcing a hard-and-fast dualism by asserting that women are “by nature” more relation-oriented than men. At other times, it makes the mistake of seeking merely to flip the tables, rejecting all masculine-associated characteristics and elevating only feminine-associated ones.

A third option, derived from feminist process thought, offers a way past the Scylla and Charybdis presented by liberal and cultural feminisms. Feminist process theologian Catherine Keller in From a Broken Web (1986) examines the mythical image that she calls the “separative” self. The separative self is an autonomous, self-possessing, independent, rational individual, imagined as over and against society, the world, and even his own body. Intimately paired with the separative self is the “soluble self.” The soluble self is self-negating, dissolved in others, and absorbed in all the emotional and bodily activities that invisibly support the separative self in his illusions of autonomy.[3] What these mythical images serve to hide is exactly Whitehead’s insight that we are all individually valuable yet at the same time intrinsically made up of our relations in community—that each of us is both individual and related. Traditional masculine roles emphasize the individual side, while traditional feminine roles emphasize the related side. This dualism serves to drive people of both sexes into rigid, substantivist identities and away from a realization of our authentic, organic becoming.

What is needed, instead, is a more dynamic understanding of ourselves as both/and—both individual and related, both rational and emotional, both competitive and cooperative, and so on. Overcoming sexist bias, in this case, is not a matter of rejecting the separative self in favor of the soluble self, but rejecting the dualism itself in favor of a more complex and truly relational understanding. Feminist economists have begun to apply such analysis to the economics of households and of other groups (Ferber and Nelson, 1993, 2003).

An understanding of human behavior as dynamic, evolving, and highly interdependent and laden with value, of course, also requires a rethinking of the methodology of economics. The abstract, deductive approach of neoclassical theorizing is intimately linked with its assumption of the primacy of the separative self. The positing of discrete units whose behavior follows universal “laws” facilitates an analysis based on logic and mathematics. Consideration of the existence of fundamental interdependence makes us face the fact that the world is much richer and more complex than is generally acknowledged in neoclassical thought, and that much of reality lies beyond the reach of its conceptual tools. Many feminist economists have raised questions about the narrowness of mainstream methodology, and encouraged more use of concrete experiential data, qualitative studies, and the like. The response of mainstream economics to such critiques has been largely dismissive. One paradigm tends to dominate economic thought in most universities in the U.S., Europe and elsewhere. Anyone who challenges that paradigm is simply dismissed as “not doing economics.”

My own work, which takes a feminist-process approach (informed both by Whiteheadian thought and by related insights from American pragmatist and Buddhist philosophies) diverges not only from mainstream economics (in which I was trained) but also from that of many other feminist economists. While critiques of “economic man” and of the one-sided hegemony of abstract mathematical analysis now seem quite obvious to the majority of feminist economists, fewer are drawn to engage in discussions of ontology and value. Many see such discussions as too philosophical to be relevant to their practical work, or (rightly) fear that their work will seem even less “objective” to their economics colleagues if they engage in discussions of value and purpose. So it is in engagement with the smaller and often somewhat more self-reflective heterodox schools of economics that discussions of ontology and Whiteheadian thought may sometimes arise.

4. Whitehead and Heterodox Economics

While neoclassical economics has a hegemonic hold over economics teaching and research in many countries, other schools of economics exist at the margins. In one case, there is evidence of a possible direct connection to Whitehead: the British economist John Maynard Keynes was influenced by Whitehead when they were both in Cambridge during the first years of the twentieth century (Hodgson 1993, 11).[4] Keynes’ famous The General Theory of Employment, Interest and Money (1935-36) presented a major challenge to the market-oriented thought dominant in the 1930s. Developing Keynes’ insights further, the current school of post-Keynesian economics considers capitalist market economies to be evolving and inherently unstable. Some post-Keynesian economists have suggested that Keynes used a distinctly organicist ontology (Chick and Dow, 2001).[5]

A number of other heterodox schools share the idea that economies are open systems that are fundamentally complex, dynamic, and unpredictable, rather than (as assumed in mainstream thought) closed systems, amenable to distillation into mathematical formulae. Austrian economics, for example, founded in Vienna by Joseph Schumpeter and Friedrich Hayek and others in the early 20th century, emphasizes activity, dynamic processes, creativity, and innovation. Schumpeter’s famous theory of “creative destruction” would never fit within a mechanical neoclassical model. Austrian economics is, however, notably non-Whiteheadian in its extreme individualism and its libertarian political stance.

A more promising school is institutionalist (or evolutionary) economics, which developed in the early decades of the twentieth century in the United States (see Hodgson, 1993). Its early leaders included Thorstein Veblen and John R. Commons. Although this school’s founders seem to have had no connection with Whitehead, I find the basic directions of this school quite Whitehead-friendly. At its best, institutional economics sees the world as being continually in creation, and gives a balanced ontological importance to both stability, order, habit and the past on the one hand, and flux, chaos, novelty and the future on the other. The best institutionalist economists also direct their work explicitly towards the promotion of valuable ends. In part influenced by American pragmatist philosophy, institutional economists tend to reject dogmatic theories in favor of investigating how businesses, governments, and other social institutions can best be adapted to meet pressing economic problems.[6] The “critical realism” approach defended by contemporary British economist Tony Lawson also advocates an open-system approach. Unfortunately, it is based on an ontology of “structures, powers, and generative mechanisms” (Lawson 1999, 31) that provides inadequate support for its claims of philosophical sophistication and liberatory intent (Nelson, 2003a).

The work of process theologian John B. Cobb, Jr. has made the ideas of humanistic and ecological economics familiar to many process thinkers. Contemporary humanistic (or socio-) economics tends to emphasize ethical dimensions of economic behavior within human communities, while ecological economics views human activities within the broader context of a complex and fragile planetary ecosystem. Cobb’s work with ecological economist Herman Daly, most notably For the Common Good (1989, 1994), has been very influential in contemporary humanistic and ecological economics circles. Many of Daly’s and Cobb’s critiques of neoclassical theory and present global economic trends are right on target. But, in more subtle ways, their prescriptions for change reflect some habits of thinking against which Whitehead himself warned us.

In Cobb’s view, market systems inexorably lead to concentration of wealth, and transnational corporations are, more or less, demonic powers bent on destroying value and community (see e.g. Cobb 2002, 5, 8). Such views borrow subtly from older radical or Marxist economic beliefs about the presumed inherent dynamics of capitalist systems. While radical economics has generally presented itself as the main alternative to neoclassical economics, it, ironically, shares the same ontological base. The sort of Marxian thought that posits inexorable capitalist dynamics is essentially a variant of classical economics, which grew from the eighteenth-century work of Adam Smith. Smith’s idea that the economy is a large machine whose behavior is driven by physics-like “laws” provides the ontological basis for both neoclassical “laws” of optimization and the Marxian “law” of capital accumulation. And this perspective was, of course, an outgrowth of the particular scientific worldview of Smith’s time. In both neoclassical and (much) Marxian thought, the idea that economies might be evolving human-made creations is rejected in favor of an image of an abstract economy driven by universal principles and rules. What we see in real-world patterns of production and exchange, these schools imply, is merely a somewhat imperfect manifestation of the abstract ideal with its behind-the-scenes forces and principles.

In rejecting the observed, evolving world in favor of idealized principles as our touchstone for knowledge, these views demonstrate what Whitehead called the “fallacy of misplaced concreteness.” For instance, in one passage Whitehead writes:

A factory, with its machinery, its community of operatives, its social service to the general population, its dependence upon organizing and designing genius, its potentialities as a source of wealth to the holders of its stock is an organism exhibiting a variety of vivid values. What we want to train is the habit of apprehending such an organism in its completeness. It is very arguable that the science of political economy, as studied in its first period after the death of Adam Smith (1790), did more harm than good. It destroyed many economic fallacies, and taught how to think about the economic revolution then in progress. But it riveted on men a certain set of abstractions which were disastrous in their influence on modern mentality. It dehumanized industry (SMW, 200, emphasis added).

One possible reading of this passage might interpret it as saying that classical political economy converted some sort of earlier, humane, organic industrial system (that is, the sorts of factories referred to early in the passage) into an inhuman economic machine. But this ignores history and mixes up abstractions and reality. The factories that Whitehead refers to as organisms must be contemporary factories, since history contradicts the notion of an early industrial Eden. The correct way to understand this passage, I claim, is to see Whitehead as stating that even present-day global market systems and transnational corporations are process-based, human-made organisms. Whitehead was arguing, I believe, that the abstractions of classical (and later neoclassical) thought have created a belief that economies are something other than human organizations, and that this belief has been used to justify inhumane actions. Corporate leaders dehumanize workers when they treat them merely as inputs. But progressive thinkers also “dehumanize industry” when they portray corporate leaders as mere personifications of greed, or imagine corporations to be non-human entities inexorably driven by unseen forces.

There are good empirical reasons to believe, instead, that markets and corporations are evolving human organizations, and that the strength of the “laws” that supposedly drive them have been very much overstated (Nelson, 2006). This realization can have subtle but important effects on prescriptions for (much-needed) economic transformation. Instead of envisioning economic transformation as a battle between ethical human communities and demonic inhuman corporations, one is challenged to identify and support the value-enhancing processes within human organizations of any kind, and to resist the value-destroying tendencies within human organizations of any kind.

Cobb’s and Daly’s prescriptions for change tend to have a devolutionary, retrenching, and negative tone to them. They prescribe the breaking up of large corporations, the withdrawal of international ties, and the halting of economic growth. These are perfectly understandable reactions if one perceives the problem as a battle between human values and an inexorable global economic machine that has gone out of control. In a similar way, Life Abundant: Rethinking Theology and Economy for a Planet in Peril (2001) by feminist process theologian Sallie Mcfague contains many insights, but ends on a negative note, with its advocacy of sacrifice and self-denial. While the sorts of ecological and human suffering that Cobb, Daly, and Mcfague describe are as important and pressing as these writers claim, a fully process-oriented understanding points towards more positive and creative solutions.

The goal should not be to try to defeat a presumed global economic machine, but, first, to recognize that the machine image is, in fact, a product of an eighteenth-century view of the world and our habits of abstraction. Rather than retreating, we need to realize that the real world of human economic endeavor is living, evolving and alive with, as Whitehead wrote, “vivid values.” In practical terms this would entail, for example, dropping the idea that corporations cannot be socially and ecological responsible because economic “law” dictates that they must maximize profits. Instead, it means starting to seriously demand that they—and we, as workers, consumers, and in all our other roles—act with the social and ecological responsibility, creativity, and respect for inherent value that we are called to realize from our locations within the organic whole. It does not mean retreating, but rather plunging forward with all the creativity we can muster to “grow” our economies in ways that serve life rather than defeat it.[7]

5. Conclusion

Whiteheadian thought on economics challenges the common belief that economies are lifeless systems, driven by rules and laws that lie beyond human control. It provides an adequate ontology for the notion that economies are creative, evolving, and value-laden. As such, it also provides an adequate intellectual explanation for why taking action in the economic world in line with ultimate values not only makes sense, but is the most important thing we can do.


[1] See Johnston in this volume for a review of Whitehead’s writings on economics.

[2] See Nelson (1993) for more on the Cartesian roots of neoclassical economics.

[3] Sociologist Paula England and I, in the early 1990s, recognized in this analysis a key to understanding the creation of the image of separative “economic man” and the denigration women and relationships. In 1993 England wrote “The Separative Self: Androcentric Bias in Neoclassical Assumptions” for a collection I co-edited, and from that time the term separative self has become part of the discourse of feminist economics.

[4] Whitehead also refers to Keynes work on probability theory (PR 206).

[5] Two notes of caution are in order. First, there exist sub-fields within mainstream economics that share its basic ontology and methodology, but which have names similar to the heterodox schools discussed here. “Keynesian” economics is a subfield of the mainstream, while post-Keynesian economics has an open-system ontology. Similarly, “new institutionalist” and “environmental” economics are essentially mainstream, while (“old”) institutionalism, and ecological economics break the mould. Secondly, many heterodox scholars, even when they claim to have a more open and processual ontology, fail to extend this to thinking about gender. As a result, when it comes to gender, heterodox economists are frequently as rigid or ignorant as their mainstream peers.

[6] For more on the relation of institutionalism, pragmatism, and process thought see Nelson (2003b).

[7] See Nelson (2006) for more on this point in general, and, more specifically, Nelson (2003c) on the work of Mcfague.

Works Cited and Further Readings

Chick, Victoria and Dow, Sheila C. 2001. “Formalism, Logic and Reality: A Keynesian Analysis,” Cambridge Journal of Economics, 25, 705-721.

Ferber, Marianne A. and Julie A. Nelson (eds.). 2003. Feminist Economics Today (Chicago: University of Chicago Press).

Harding, Sandra. 1986. The Science Question in Feminism (Ithaca, Cornell University Press.)

Hodgson, Geoffrey M. 1993. Economics and Evolution: Bringing Life Back into Economics (Ann Arbor, University of Michigan Press).

Keller, Catherine. 1986. From A Broken Web: Separation, Sexism, and Self (Boston, Beacon Press.)

Keller, Evelyn Fox. 1985. Reflections on Gender and Science (New Haven, Yale University Press).

Mcfague, Sallie. 2001. Life Abundant: Rethinking Theology and Economy for a Planet in Peril (Minneapolis: Fortress, 2001).

Nelson, Julie A. 1993. “The Study of Choice or the Study of Provisioning? Gender and the Definition of Economics,” in Beyond Economic Man: Feminist Theory and Economics, edited by Marianne A. Ferber and Julie A. Nelson (Chicago, University of Chicago Press), 23-36.

Nelson, Julie A. 2003a. “Once More, With Feeling: Feminist Economics and the Ontological Question.” Feminist Economics 9, 1, 109-118.

Nelson, Julie A. 2003b. “Confronting the Science/Value Split: Notes on Feminist Economics, Institutionalism, Pragmatism and Process Thought,” Cambridge Journal of Economics 27, 1, 49-64.

Nelson, Julie A. 2003c. “Breaking the Dynamic of Control: A Feminist/Process Approach to Economic Ethics,” Journal of Feminist Studies in Religion 19, 1, 27-45.

Nelson, Julie A. 2006. Economics for Humans (Chicago, University of Chicago Press).

Author Information

Julie Nelson
Global Development and Environment Institute
Tufts University, Medford MA 02155 USA

How to Cite this Article

Nelson, Julie, “Contemporary Schools of Economic Thought”, last modified 2008, The Whitehead Encyclopedia, Brian G. Henning and Joseph Petek (eds.), originally edited by Michel Weber and Will Desmond, URL = <>.