The Sveriges Riksbank Prize in Irrelevant Neoclassical Toolbox Economics

15 Oct, 2012 at 13:37 | Posted in Economics | 14 Comments

Åter lyckades ekonomi- priskommittén visa varför de är så fullständigt ur takt med tiden. Årets pris gick som vanligt till verktygs- lådemakare. Alvin Roth och Lloyd Shapley.

Mer om detta och varför jag tycker det är dags att skrota det här priset kan ni läsa om i en purfärsk artikel på SvT Debatt.

Added: And the Google Translate version of my article goes like this (sorry, but time doesn’t permit anything else today):

People in all times have tried to picture and understand the economic contexts with the help of economic theories. These theories both creates and is a part of the community and its history.

In the past century, the economic theories developed at an increasing rate. And over the past fifty years, theories have become increasingly mathematical and abstract in nature. This particularly applies to the dominant economic wisdom, the so-called neoclassical theory.

Developments in this direction has gone so far that even many economists themselves claim that the subject has lost touch with reality – it has become a new form of scholasticism, which proved to be mostly nonsense on stilts without coverage in real people’s thoughts and actions.

Instead of math and dreamy assumptions about people who self interested and utility-maximizing machines advocate more and more economists now greater pluralism and farsightedness. We need space for critical reflection, where different theories are allowed to compete and not pre utdefinieras of the economics establishment.

The natural reaction when a theory has clearly done her well to look for other, better theories. Building new? But no! Unreason prophets draws instead the protective belt even harder on their own theory. You go into the toolshed – and stay there.

While the economic problems in the real world are growing, they play happily on with the mathematical toolbox latest funky gadgets. But just as today it raised questions about the economic crisis, we must dare to question the economic theory patented artificial world and its robotic imitation of human beings.

The economics being taught in our universities has proven to be just another in the line of scientific straitjackets.

Faced with the economic theory of apparent inability to tackle the real economic and finaansiella problems, retreats economists to the wonderful world of models. Instead of constructing theories based on empirical facts is abandoned the real world and prove things about imaginary worlds. If the goal is knowledge of the real world, the value of these say the least, unclear.

When the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel was instituted in 1969, there were no problems whatsoever finding worthy winners. Gradually, however, was thin ranks of winners given out, and the less obvious names came to figure in the discussions. A theoretical and ideological bias also appeared increasingly evident.

Almost exclusively economists representing the ruling orthodoxy has been questioned. Other important schools and theories seem a priori be excluded – those who, instead of being engaged in the development toolbox, directed their research labors to analyzing and trying to understand the conditions for economic growth and environmentally sustainable development and transformation of our economy.

Of all the winners since 1969 is about two-thirds of Americans, nearly half coming from one university: Chicago. The prize committee repeatedly chose to reward the Chicago economists – as Milton Friedman, Gary Beckeroch Robert Lucas – and their neoliberal ideas have contributed to the international economy price lost much of its former status.

This year’s award goes once again to the two Americans, spelteoretikerna and mathematicians Alvin Roth and Lloyd Shapley. It illustrates very well how the economy the price repeatedly reward the typical verktygslådeekonomen that allows model and mathematics become a substitute for reality anchored thinking. Thereby they also – as Henry David Thoreau once put it – in fact become their “tools’ tools”.

Clearer than this can not economics prize dilemma be highlighted. The price in its current form has survived itself. To save the last of its remaining prestige and restore its early glory there are only two ways forward.

● Make the price of an economy price open to all – including economists with different views than the prevailing orthodoxy.

● Make the price a broad social science price where other social scientists than economists can get it. Surely this would help us regain worthy winners for the prize.

Unless the necessary changes come about we might as well scrap the price.