His new book should be of some interest, and does not disappoint. I have read only a few chapters as yet, and there is no doubt that the book is required reading: it raises fundamental issues in economics, economic methodology, philosophy of science, social sciences and epistemology.
Its fundamental subjects are: are conventional views on microfoundations justified, and what is the Post Keynesian approach to microfoundations?
King sees four basic viewpoints amongst Post Keynesians on microfoundations:
(1) explicit supporters of microfoundations who think Post Keynesian microfoundations are superior to neoclassical ones (e.g., Paul Davidson, Malcolm Sawyer, Erich Streissler), usually a system of Marshall-Keynes microfoundations or, alternatively, Kaleckian microfoundations;One of the most important insights King makes is this: the idea of reducing macroeconomics to neoclassical microeconomics is an instance of the strong reductionist fallacy.
(2) explicit critics of microfoundations (Joan Robinson);
(3) those who are confused, inconsistent or unclear (e.g., Geoff Harcourt, Sidney Weintraub, John Cornwall, Victoria Chick, and Jesper Jespersen);
(4) those who just ignore the whole issue. (King 2012: 149–150).
Strong reductionism has already failed, not only in biology, but also (more importantly) in the social sciences (King 2012: 226). There are fundamental emergent properties in macroeconomic systems that make their reduction to microeconomics impossible (King 2012: 226).
For example, a lower-order set of parts in a biological system may interact in ways that cannot be inferred by reductionist analysis (King 2012: 51). The principle of “downward causation” consists in the manner by which a “whole” (a system broadly defined) may affect, constrain or influence its parts.
In economics, we see macroeconomic phenomena that are irreducibly social in nature.
Nor does the strong version of methodological individualism work (King 2012: 60; see also Hodgson 2007). For interactions between individuals may cause “emergent properties” or (that is to say) novel properties not displayed by, or deducible from, the individuals in isolation.
The idea that the economy is more than the sum of its parts can be traced back to (interestingly enough) the 19th century advocate of infant industry protectionism Friedrich List (King 2012: 66).
As an aside, King points out that Richard Dawkins’s “genetic determinism can very easily degenerate into the worst type of Social Darwinism.” A whole section in King provides criticisms of Dawkins’s (alleged) genetic determinism (King 2012: 48ff.), but I think it might be unfair to Dawkins himself for reasons explained by Steven Pinker (2003: 112–114).
King gives two reasons for the continuing attraction of the neoclassical microfoundations delusion: physics envy and politics in the age of neoliberalism (King 2012: 229). Reductionist ontological thinking in economics is nothing less than the attempt to reduce macroeconomics to the aggregate of micro behaviour, and the assumption of individual rationality implies a socially rational outcome (King 2012: 229, quoting Denis 2009: 14). In other words, this method produces the delusion that laissez faire results in the best economic outcomes.
Finally, I just want to note how Steve Keen has argued in much the same terms as King in also pointing out how (1) macroeconomic processes are emergent properties not necessarily reducible to microeconomics, and (2) how neoclassical economics commits the fallacy of strong reductionism: although reductionism does work to a great extent, it also has fundamental limitations.
One can hear Keen talk of these issues in the video below at 15.24 onwards. See also Keen 2011: 205–209.
Hodgson, G. M. 2007. “Meanings of Methodological Individualism,” Journal of Economic Methodology 14.2: 57–68.
Keen, S. 2011. Debunking Economics: The Naked Emperor of the Social Sciences (rev edn.). Zed Books, New York and London.
King, J. E. 2012. The Microfoundations Delusion: Metaphor and Dogma in the History of Macroeconomics. Edward Elgar, Cheltenham.
Pinker, Steven 2003. The Blank Slate: The Modern Denial of Human Nature. Penguin Books, London.