The Ideology That Called Itself Science

How neoclassical theory fused with ideology—and why the future depends on realism and pluralism

At its core, science aspires to a simple principle: follow the evidence, wherever it leads. In practice, scientists are human—prone to authority, groupthink, and gatekeeping—but the ideal remains clear. Ideas are not judged by how well they align with an ideology, but by how reliably they describe, predict, and explain the world—in short, by whether they work.

Economics is not unique in falling short of science’s ideals, but mainstream practice—particularly in neoclassical economics—has diverged from them in especially stark ways. Since around 1980, neoclassical economics has become so dominant that its adherents often refer to it simply as “economics”. While nominally acknowledging that their field is a social science, many proponents present it as having achieved a level of rigor approaching that of theoretical physics—transforming what began as a mix of philosophy and policy into a self-styled “hard” science.

Physics Envy

In reality, the resemblance between neoclassical economics and physics is superficial. Economics borrows the visual language of physics—equations, calculus, differential equations, intersecting curves—but lacks the empirical backbone that defines physics as a science. Mathematics, by contrast, is concerned with internally consistent formal systems, whether or not they correspond to the real world. Physics borrows from those formal systems and subjects models built on them to relentless testing against empirical reality. That crucial step—rigorous confrontation with the world at every layer—is largely absent in neoclassical economics.

Physics—perhaps more than any other science—has historically achieved extraordinary success through deductive reasoning. Starting from a few highly mathematized principles, physicists have constructed theories that predict a vast range of phenomena with remarkable accuracy. This success has inspired a kind of mystical reverence among those who’ve glimpsed its elegance.

But this approach doesn’t translate well to most other sciences. Chemistry, for instance, looks nothing like physics. Its foundations are not a small set of equations, but a web of complex relationships among countless distinct, recombinable elements. Its progress has relied not on deduction from first principles, but on constant, iterative engagement with real-world phenomena.

The same is even more true of biology and biomedical sciences. These fields resist neat, mechanistic theories and instead build models grounded in messy, layered realities. Theories with explanatory and predictive power certainly exist—but they weren’t born from pure thought. They emerged through painstaking experimentation, and every component of a good theory corresponds directly to something observable in the world. They developed through iteration and inductive reasoning.

Economics is even further removed from physics than biology. It studies how one particular biological species—humans—interacts with the physical and social world through systems of production and distribution. There’s no reason to expect that human behavior, let alone entire societies, would conform to the kinds of precise, law-like formulations found in physics. That’s why most social sciences look nothing like physics—and why they’re better for it. If biologists adopted the superficial methods of physics, they’d be far less effective. Likewise, it would be surprising if an economic theory with strong descriptive, explanatory, or predictive power superficially resembled physics.

And yet, Economics 101 students are typically introduced to a mix of ahistorical anecdotes and mathematical models designed more to illustrate assumptions than to reflect reality. Economists in this tradition often acknowledge that not everything in their models has a tangible real-world counterpart—but they tend to see these as deeper realities, something like “energy” or “action” in physics. These economic unobservables and abstractions—“rational agents”, “utility functions”, “general equilibrium”, “natural rates” of interest and unemployment, and so on—are still considered meaningful so long as the world behaves as if they exist.

But this analogy masks a key difference. Unlike physics, economics rarely benefits from controlled, repeatable experiments. When predictions fail, deviations are often rationalized through ad hoc explanations. Sophisticated econometric tools can make models appear empirically grounded, but the rigorous feedback loop that disciplines theory in physics is largely absent in economics—due not only to methodological choices, but to the complexity and variability of the subject itself.

While mainstream economics increasingly incorporates data and empirical tools, such analyses are typically conducted through the lens of models that have a tenuous relationship to reality, and its dominant theories often resist revision in light of contrary evidence—unlike in physics, where empirical failure typically leads to theoretical overhaul.

Bending towards power

In science, the ideal is simple: ask questions and follow the truth wherever it leads—even if the answer is inconvenient. If the evidence shows that the Earth revolves around the Sun, then that’s the conclusion, regardless of what authority says. When the state insists, “No, the Sun revolves around the Earth—go back and check your numbers”, science, in principle, does not yield.

In practice, neoclassical economics often values theories not for how well they explain real-world phenomena, but for how effectively they reinforce a set of ideological priors—more often due to the structure of incentives than to individual intent. Its postwar ascent was deeply intertwined with the broader neoliberal project and supported by American business elites eager to replace New Deal-style governance with a framework more favorable to their interests. The aim was to restore the diminished prestige of business leaders after the Great Depression by promoting a pro-“market”, pro-business worldview—one that was, in effect, anti-democratic, in that it sought to shield key areas of economic policy from democratic influence.

Prominent figures like Milton Friedman were relatively candid about their priorities: they championed a narrow definition of “freedom” centered on extreme understandings of individual property rights and market choice—principles that, in practice, served the interests of businesses and the wealthy. This vision often ran counter to broader democratic values such as equality and self-rule and downplayed more widely accepted understandings of freedom.

Economists have long occupied key positions of global influence, particularly within the architecture of American power. During the Cold War, for instance, American economists were involved in shaping the economic policies of the Pinochet dictatorship in Chile. While the CIA orchestrated the coup, economists trained in the U.S.—the “Chicago Boys”—were poised to implement market reforms aligned with U.S. strategic and business interests, prioritizing economic liberalization over political freedom. Needless to say, not all economists trained in the U.S. supported Pinochet’s regime or intended to serve U.S. strategic interests; those who happened to, however, were disproportionately rewarded and influential.

Today, the economic policies of many developing countries are still heavily shaped by economists at institutions like the IMF, World Bank, and WTO, often through coercive practices that are arguably antithetical to democracy. Though multinational in structure, these institutions often reflect the priorities and ideological frameworks of dominant donor countries—especially the United States. Economics, in this context, is not a neutral or purely empirical inquiry into how societies organize production and distribution. It is a field deeply shaped by the ideological and geopolitical conditions in which it evolved. Many of its practitioners likely see themselves as pursuing objectivity. In practice, the field's center of mass bends towards power.

Before World War II, the most influential economists were predominantly British—unsurprising, given that Britain was the global hegemon from the end of the Napoleonic Wars in 1815 until the early 20th century. During the interwar years, Britain’s influence declined, but no clear successor had yet emerged. After WWII, that role passed decisively to the United States, and with it, the intellectual center of economics shifted as well. Since then, the most prominent and globally influential economists have been overwhelmingly American.

Over this period, economics has served not just as a field of inquiry but also as a vehicle for projecting the ideological preferences of hegemonic powers—first Britain, then the United States—onto the rest of the world, often presented as neutral, technocratic expertise.

Science enables technology. What does economics enable?

Science is often judged by the technologies it enables. It is, at its core, understanding without ideology—useful for both noble and destructive ends, nuclear power or nuclear weapons. What matters is reliability: the ability to produce consistent, effective results.

By that standard, mainstream economic models fall short. If the purpose of these models is to help policymakers achieve their stated goals—whatever those may be—they have not performed well. Over the past 50 years, dominant models have consistently failed to anticipate, or often even to explain in hindsight, many of the most significant economic events, including the stagflation of the 1970s, the 2008 financial crisis, rising inequality, and recurring crises in developing countries.

Since the 2008 financial crisis, the economics taught in universities has changed little—and in some respects has grown even more rigid. In the decades leading up to the crisis, prominent economists shaped policy across the 1980s, 1990s, and 2000s, with governments often following their recommendations with near-religious conviction. Most mainstream economists failed to anticipate the coming storm, and even fewer challenged the assumptions that enabled it. After the crash, many economists offered vague postmortems, waited for the public scrutiny to fade, and largely returned to promoting the same models and policy prescriptions that had failed to foresee—and indeed fed into—the collapse.

The world has changed. Economics mostly hasn't.

Climate change—not a major issue when Adam Smith was writing or when the neoliberal project took shape—has done little to alter the core assumptions of mainstream economics. The field still largely treats the growth rate of economic activity as the central goal of economic policy, even as it struggles to consistently deliver that growth.

Within neoclassical economics, climate change remains a niche concern. Economists like William Nordhaus have attempted to model climate economics, but their conclusions are often incompatible with—and indeed often simply ignore—those of climate scientists, and often reflect modeling assumptions that are hard to take seriously. Such research reads more like a defense of the status quo than an ambitious and hard-eyed look at the challenge ahead.

Yet climate change and economics are not tangentially related—climate change is caused by economic activity, and any serious response must grapple with nearly every facet of how we produce, consume, and distribute resources. This should be a rich and urgent domain for economic inquiry. Instead, it remains underexplored and poorly integrated into the mainstream of the discipline. Despite increasing attention, climate change remains marginal in most core economic models, and many mainstream approaches fail to align with the urgency highlighted by climate science.

In a constantly changing world, neoclassical economics remains anchored to a rigid paradigm resistant to change. Its theoretical core is so detached from reality that it must be propped up by layers of ad hoc assumptions—concepts like “nominal rigidities”, “market imperfections”, “exogenous shocks”, “moral hazard”, “irrational behavior”, “externalities”, and so on—just to approximate the real world while preserving its ideological commitments. This core is treated as a kind of ultimate truth, even as the burden of making the models useful increasingly falls to these auxiliary patches. In many cases these adjustments have improved realism. I do not reject complexity per se—it's almost always necessary. I simply reject using it as a shield to protect an unchangeable hard core.

Move aside, TINA. We have alternatives.

During the Reagan-Thatcher era, a political mantra emerged: “There is no alternative”—TINA. This phrase captured a core feature of the neoliberal project: to shield economic policy from democratic accountability, people must believe not that theirs is the best way—or even that it is a good way—but that it is the only way. With the help of neoclassical economics, neoliberalism succeeded in establishing a kind of ideological hegemony. This hegemony is why neoclassical economics is typically called simply economics—and why neoliberalism is typically not called anything at all.

But it wasn’t always this way—and it doesn’t have to remain so. Economic phenomena can be studied with a commitment to descriptive accuracy and to building models that genuinely reflect complex relationships among observable realities. Economics can be modeled more like biology than theoretical physics: grounded in empirical detail rather than abstract deduction.

In fact, this is exactly how many other schools of economic thought have long approached their work. There was a time that pluralism—peaceful co-existence of a variety of approaches—reigned in economics, with cross pollination from different viewpoints. Thinkers like Keynes, Veblen, Marx, John Kenneth Galbraith, Michał Kalecki, Hyman Minsky, and even Adam Smith—whatever one might think of each individually—develop models, whether narrative or formal, in which each element corresponds to something real in the world. They begin with observation, not abstraction, and aim to explain how actually existing economies function in context, not how they might behave in theory. Many present day economists carry on this tradition of preferring inductive to deductive reasoning.

This includes many economists with a neoclassical background who maintain an openness to changing their minds when confronted with contradictory evidence. There is plenty to be learned from the work of such economists, even while there is plenty of room for disagreement. Economists like Joseph Stiglitz, Paul De Grauwe, and Robert Reich, for example, represent a range of views and ideological orientations, but are all economists with neoclassical backgrounds who have rejected some aspect of the core neoclassical approach and are better for it.

Many economists who take this more grounded approach have given up on reforming the field from within, especially those with more heterodox views that reject neoclassicism altogether. Outside a few remaining strongholds—many of which have been steadily eroded over the past generation—heterodox economists are scattered across other academic departments like public policy, sociology, and law. Rather than trying to shift the mainstream, many now focus on developing stronger models and insights out of the spotlight, aiming to influence public policy directly where possible.

If economics is to reclaim the spirit of science, its future lies with those developing more empirically grounded and interdisciplinary approaches—many, though not all, of whom currently work outside the mainstream. Not all economists trained in the neoclassical tradition are beyond reach. While many in the field remain true believers, many others enter economics with a genuine desire to contribute to positive change. In many institutions, neoclassical economics is the only tradition taught, and disillusionment is common once its limitations become clear to students. These individuals—despite differences in background or perspective—are potential allies in building a healthier field. Pluralism is essential to the progress of any scientific discipline. Why should economics be the exception?

The future is what we make it.

Despite the continued dominance of neoclassical economics, interest in pluralism and heterodox approaches is steadily growing. In the wake of the financial crisis, economics students at leading universities began petitioning their departments for curricula that were more useful, more empirically grounded, and better equipped to address the pressing challenges of the day. Institutional resistance to change remains strong—but there is reason for hope. As neoclassicism and neoliberalism teeter under their own weight, what feels like a collapse may in fact be an opening—a rare chance to build something better.