[This is posted in the new Category Economics, Technical]

[Published 14 March at Real World Economics Review Blog.  Also posted 12 March at Steve Keen’s Debtwatch]

Many people, including many heterodox economists, understand that the neoclassical equilibrium approach to understanding economies is futile and misleading [1], because modern economies are far from equilibrium.  The neoclassical prediction of equilibrium or near equilibrium requires a string of patently absurd assumptions.  However the development of better theories seems to be significantly hindered by a feeling that any superseding theory has to be thoroughly quantified before it can be useful, and a feeling that the neoclassical theory has set a benchmark for sophisticated mathematics that must be matched before another theory can be respectable.  Less fundamentally there seems to be a common perception that empirical insights can only be gained through elaborate statistical treatments of observations.

Here I offer some discussion from my experience as a natural scientist, and some examples regarding the Global Financial Crisis, to counter these hindrances.  Continue reading →