Neoclassical synthesis

Neoclassical synthesis is a postwar academic movement in economics that attempts to absorb the macroeconomic thought of John Maynard Keynes into the thought of neoclassical economics. Mainstream economics is largely dominated by the resulting synthesis, being largely Keynesian in macroeconomics and neoclassical in microeconomics.

Quotes

• The Neoclassical Synthesis was taken as an article of faith. Fundamental questions about the failures of the market system, such as the causes of periodic depressions and the unemployment that accompanied them, were avoided.
  • B. Greenwald and J. E. Stiglitz, "Keynesian, New Keynesian and New Classical Economics", Oxford Economic Papers (1987)
• The essential problem of the West today is not just that we need to come to grips with those who, even after the fall of the Berlin Wall and the overwhelming empirical evidence, continue to advocate for impoverishing socialism. But there's also our own leaders, thinkers and academics who are relying on a misguided theoretical framework to undermine the fundamentals of the system that has given us the greatest expansion of wealth and prosperity in our history. The theoretical framework to which I refer is that of Neoclassical economic theory, which designs a set of instruments that, unwillingly or without meaning to, end up serving intervention by the state, socialism and social degradation.
  • Javier Milei, Special Address to the World Economic Forum, 18 January 2024
• The problem with Neoclassicals is that the model they fell in love with does not map reality, so they put down their mistakes to supposed market failures rather than reviewing the premises of the model. Under the pretext of a supposed market failure, regulations are introduced. These regulations create distortions in the price system, prevent economic calculus, and therefore also prevent saving, investment and growth. This problem lies mainly in the fact that not even supposed libertarian economists understand what the market is because if they did understand, it would quickly be seen that it's impossible for there to be market failures. The market is not a mere graph describing a curve of supply and demand. The market is a mechanism for social cooperation, where you voluntarily exchange ownership rights. Therefore based on this definition, talking about a market failure is an oxymoron. There are no market failures. If transactions are voluntary, the only context in which there can be market failure is if there is coercion and the only one that is able to coerce generally is the state, which holds a monopoly on violence. Consequently, if someone considers that there is a market failure, I would suggest that they check to see if there is state intervention involved. And if they find that that's not the case, I would suggest that they check again, because obviously there's a mistake. Market failures do not exist.
  • Javier Milei, Special Address to the World Economic Forum, 18 January 2024

• That was building up during the '50s, in the so-called neoclassical synthesis, better called the neoclassical-neo-Keynesian synthesis, I think. The main thing was that classical economics didn't explain the Great Depesssion and didn't give you any hope of solving it. Keynesian economics did.
  • James Tobin, in Conversations with Economists (1983) by Arjo Klamer