Friday, October 16, 2009

The Old Economics Is Dead - Long Live Socio-Economics!

The impact of the economic crisis on the mainstream economic theory is still to be felt. Alan Greenspan's mea culpa was instructive, but just a blip. What we do need is a radical overhaul of the economic theory, which for the past 50 years has been seduced into obscurity by elegant mathematics.

The Great Recession was the ultimate wake-up call, but there is a strange silence coming out from the economics departments near and far. Paul Krugman did adress the issue at length in the New York Times Magazine, and George Akerlof and Robert Schiller has fired a substantial volley, but considering the degree of complicity from the discipline, one could ask for a lot more in terms of self-critique from our dismal scientists.

Maybe the 2009 Nobel Prize in Economics can be of help here. At least, it point the discipline in the right direction. New York Times' Louis Uchitelle quotes Schiller in a blog:

“This award is part of the merging of the social sciences,” said Robert Shiller, a Yale University economist. “Economics has been too isolated and too stuck on the view that markets are efficient and self-regulating. It has derailed our thinking.”
Hans Sandberg

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