I attended the New Economy Network Australia conference in Melbourne recently (19-21 Oct). There I met in person Karl Fitzgerald who does a spot call Renegade Economists on radio 3CR , and with whom I’d done an interview a few years ago. We didn’t manage an interview at the conference, but did one by phone a couple of days later.
I found NENA to be a very diverse group very engaged with each other. They even listened to my pitch about The Little Green Economics Book and bought copies. There are so many people and groups doing good things, my impression is that NENA is likely to spread rapidly and link us into a more powerful movement. It was just their third annual conference.
[This is a more technical post, addressed to those interested in re-making the field of economics into something relevant, informed and capable of self-improvement.]
Debates about whether economics is or can ever be a science appear frequently on the Real World Economics blog, such as making economics a relevant science. Perhaps more in the subsequent comments than in the articles themselves, there are some recurring confusions and misconceptions, such as whether mathematics should be involved, about what the role of mathematics might be, about “prediction” as a necessary part of a science, about the role of assumptions and approximations, about whether any study involving people can ever be a science and, fundamentally, about what science really is.
I have commented in passing on this topic before, for example here, but in this comment I’d like to offer a more focussed discussion.
Non-mainstream economists are all-too aware of the failure of mainstream economists to anticipate, let alone avoid, the Global Financial Crisis and the ensuing Great Recession. The mainstream profession is also failing to fix the problem, and is actually making it worse.
It is hard to get alternative views heard, and the mainstream carries on almost totally unperturbed, despite being centrally responsible for a global disaster. This is of course extremely frustrating.
After reading yet another cri de coeur from yet another frustrated economist, I thought perhaps we need to spell out the message in all bluntness
Readers of this blog will have encountered the idea that near-equilibrium neoclassical economic theory is irrelevant to dynamic, far-from-equilibrium, real modern economies, and that the body of theory built around the neoclassical assumptions is full of inconsistencies. You will also be familiar with the idea that money and debt play central, dynamic roles in modern economies.
Yet it can be argued there are other equally fundamental flaws in the broader stream of theory and practice that might be called mainstream economics.
– See more at: http://www.debtdeflation.com/blogs/2013/12/07/sack-the-economists/#sthash.oWYTzwRS.dpuf
The honourable Alan Greenspan testifies before the House Financial Services Committee. (Photo credit: Wikipedia)
[My silence for some time here has been mainly because I was focussed on re-packaging my economic ideas in a form that might gain more traction. So, there is a new book manuscript of the above title. It will help to promote it (to publishers) if I have readers’ reactions. Therefore, if you will undertake to give me feedback, I will supply you with the draft MS (120 pages, 2.2 Mb pdf). You don’t have to be expert, it’s for a general audience and so I want feedback from that audience. Most helpful to me will be comments on its readability and interest. Of course any discussion of its arguments are also welcome.]
Here is the first part of the introductory chapter. I will post more in a few days.
Chapter 1. Economists Don’t Know What They’re Talking About
In 1994 Paul Ormerod published a book called The Death of Economics1. He argued economists don’t know what they’re talking about. In 2001 Steve Keen published a book called Debunking Economics: the naked emperor of the social sciences2, with a second edition in 2011 subtitled The naked emperor dethroned?3. Keen also argued economists don’t know what they’re talking about.
Neither of these books, nor quite a few others, has had the desired effect. Mainstream economics has sailed serenely on its way, declaiming, advising, berating, sternly lecturing, deciding, teaching, pontificating. Meanwhile half of Europe and many regions and groups in the United States are in depression, and fascism is making a comeback. The last big depression spawned Hitler. This one is promoting Golden Dawn in Greece and similar extremist movements elsewhere. In the anglophone world a fundamentalist right-wing ideology is enforcing an increasingly narrow political correctness centred on “free” markets and the right of the rich to do and say whatever they like. “Freedom”, but only for some and without responsibility.
Evidently Ormerod and Keen were too subtle. It’s true their books also get a bit technical at times, especially Keen’s, but then they were addressing the profession, trying to bring it to its senses, to reform it from the inside. That seems to have been their other mistake. They produced example after example of how mainstream ideas fail, but still they had no effect. I think the message was addressed to the wrong audience, and was just too subtle. Economics is naked and dead, but never mind the stink, just prop up the corpse and carry on.
[I expanded the introduction to the original post and sent it to Real World Economics Review Blog, where it is now posted.]
The challenge, and reactions to it
Many economists, and more non-economists, agree that economics needs new ideas, given the comprehensive failure of the mainstream to foresee the Global Financial Crisis and its continuing failure to lift the US and Europe out of deep recession or depression.
In a previous article on The Conversation, Stephan Lewandowsky asked, why do people reject science? I’m going to take a slightly different angle and consider how people are able to reject climate science in the face of strong evidence.
Whether economics can be a science, and whether mathematics has a place in economics or economic science, seem to be vexed questions among heterodox economists. Having been a natural scientist for over four decades and thought hard about the nature of science and the place of mathematical models within it, I would hope to offer some clarification on these issues. After discussion, this post will be put in a permanent page.
The long, and slightly modified, version of Eight Elementary Errors of Economics is now on SteveKeen’s Debtwatch. Reblogged on Business Spectator, 22 June and The Bull 23 June. I consolidated two of the previous points and added what is now the final point on emergent wealth of land. See also on Real World Economics Review Blog, 7 June, with long discussion.
Post edited 4 July: the full modified version now follows, so it’s all consolidated here.
The Global Financial Crisis, the extreme inequality of wealth world-wide, the materialism of modern life and the dire state of the planet are not accidents, nor just unavoidable consequences of the nature of things. They are the result of the modern practice of economics, which makes elementary errors of accounting, evidence, perception and theory.