I have been working (in my head) on a wonkish, fully cited, post on the fundamental fallacy embedded at the basis of neo-classical econ. But I am still engaged on reading the ur-texts (hint Karl Polanyi and a revisit to E.P. Thompson) so instead will just throw out my thesis and let the thoughtful critics (and jackals) gnaw on it.
It is simple really. If you ignore the complexities. Neo-Classical Economics following Adam Smith, Ricardo and Malthus assumes that Man is a free actor, autonomous and engaged in transparent market actions ultimately derived from a barter economy. As such his freedom is only (or should be) constrained only by freely entered contractual obligations, which obligations ultimately comprise society held large. As such we hear talk about the ‘social contract’ which restrains us collectively from a previous existence of ‘nature red in tooth and claw’. Moreover this free man is motivated by a desire to maximize his own self-interest, which desire is only mediated by those contractual obligations, but which is itself virtuous. Hence such works as motivate the American version of this which include Friedman’s “Capitalism and Freedom” and Ayn Rand’s “The Virtue of Selfishness”.
A lot follows upon adoption of this view as Man as “Home Oeconomicus” including the validity of the so-called Iron Law of Wages and critiques of the Modern Welfare State and even Benthamite Utilitarianism (like I said I am doing some reading). But a lot falls apart if you reject the idea that primitive society was ever really based on barter and maximizing self-interest by free and autonomous actors. If instead you adopt the proposition that Man has always been a social animal and more intent on maximizing approbation by others in the family, clan, tribe, Executive Suite, Ski Slope and Country Club than actual accumulation and consumption then whole quarters of the foundation underlying Neo-Classical Econ fail and the superstructure crumbles.
And yes this is a pretty far cry from the kind of stuff Ed and Steve have been publishing here recently. “Unleash the Hyenas!”