Why economics has failed so miserably

18 Jul, 2021 at 16:01 | Posted in Economics | 1 Comment

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The economy is — as emphasised by both Keynes and Soros — pervaded by genuine uncertainty and reflexivity. The uncertainty makes the future difficult to anticipate and reflexivity often makes our expectations about the future something that actually changes the future. They both severely undermine the explanations and predictions that are made  within the standard economic models.

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  1. Thanks for this, and other such links.

    The big question is this: why is the economics profession dominated by people who feel you can do economics like this? By people who believe you can understand economies with formalism, quantification and rational choice based modelling, or alternatively understand that the most questions can’t be understood that way but we can proceed anyway by ignoring them and concentrating on those things where we think we can? Why is it dominated by people who feel this is progress even if it is at the expense of real knowledge?

    Surely they can see that this can ultimately have very serious social and political consequences?

    Why is the discipline dominated by people who should be doing physics or engineering? We can see that since at least Samuelson it has been like that. There also seems to be some connection with the 1950s idealist project and its faith in rationality and technology.

    I know Adorno talks a lot about the development of technocracies in capitalism and the attraction quantification has for the bourgeoisie and why they prefer things like this to the complexities of argument and nuanced analysis. One place to start I guess, although it isn’t easy reading.


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