David Colender, in Beyond Microfoundations: Post Walrasian Macroeconomics, explains that Post Walrasian macro is based on the idea that complexity of macro economy and limits to individual rationality mean that there will not be a unique equilibrium. Institutions and non-price coordinating mechanisms are needed to constrain the available degrees of freedom, to produce stability. But “while many past critics of Walrasian economics have based their criticism on the excessive mathematical nature of Walrasian models, I want to be clear that this is not the Post Walrasian criticism; if anything, the post Walrasian criticism is that the mathematics used in Walrasian models is too simple. … The reason Marshall stuck with partial equilibrium was not that he did not understand the interrelationships among markets…. Instead Marshall felt that general equilibrium issues should be dealt with informally until the math appropriate for them was developed. That has only recently happened.” I heard something very similar from Duncan Foley last week: Heterodox macro needs to be more mathematically sophisticated than the mainstream, with nonlinear regressions and models using statistical mechanics drawn from physics.
Sorry, I’m not buying it. Colender and Foley are right that it’s not possible to construct a consistent, tractable, intuitive model of the economy using linear equations. But the solution is not to construct intractable, non-intuitive models using more complex math. It’s to abandon the search for a general model and focus instead on locally stable aggregate relationships that allow us to tell causally meaningful stories about particular developments. We don’t need a theory of institutions in the abstract, but historically grounded accounts of specific institutions.