READING ROOM: Economics has met the enemy, and it is economics

The Globe and Mail published a long piece about the dismal science,
covering a lot of ground from moral philosophy to rational
expectations, from Adam Smith to this year’s Nobel laureate Thomas
Sargent, from the Post-Autistic Economics movement to the Institute for
New Economic Thinking. Excerpts:

In June of 2000, a small group of elite graduate students at some of
France’s most prestigious universities declared war on the economic
establishment. This was an unlikely group of student radicals, whose
degrees could be expected to lead them to lucrative careers in finance,
business or government if they didn’t rock the boat. Instead, they
protested – not about tuition or workloads, but that too much of what
they studied bore no relation to what was happening outside the
classroom walls. They launched an online petition demanding greater
realism in economics teaching, less reliance on mathematics “as an end
in itself” and more space for approaches beyond the dominant
neoclassical model, including input from other disciplines, such as
psychology, history and sociology. Their conclusion was that economics
had become an “autistic science,” lost in “imaginary worlds.” They
called their movement Autisme-economie. …

As for morality, economics would concern itself with the behaviour of
rational, self-interested, utility-maximizing Homo economicus. What he
did outside the confines of the marketplace would be someone else’s
field of study. As those notions took hold, a new idea emerged that
would have surprised and probably horrified Adam Smith – that economics,
divorced from the study of morality and politics, could be considered a
science. …

“It’s not just that we’re not listening to sociologists,” Prof.
Mehrling laments. “We’re not even listening to economists.” He says he
has no problem with teaching efficient-markets and rational-expectations
theories, but as hypothesis, not catechism. “I object to the idea that
these are articles of faith and if you don’t accept them, you are not a
member of the tribe. These things need to be questioned and we need a
broader conversation.” …

Link: Economics has met the enemy, and it is economics