These concluding paragraphs from Anotole Kaletsky's column in today's Times should stir the passions of any self-respecting progressive:
So economics is on the brink of a paradigm shift. We are where astronomy was when Copernicus realised that the Earth revolves around the Sun. The academic economics of the past 20 years is comparable to pre-Copernican astronomy, with its mysterious heavenly cogs, epicycles and wheels within wheels or maybe even astrology, with its faith in star signs.
The academic Establishment will resist such a
shift, as it always does. But luckily economists understand incentives.
They should now be given a clear choice: embrace new ideas or return
their public funding and Nobel prizes, alongside the bankers' bonuses
they justified and inspired.
Alas, as you might expect from the always stimulating, but rarely anything but conventional Kaletsky, the rest of his piece says little about the nature of this paradigm shift.
The problem is that in order to be a successful academic economists, you have to toe the establishment, neo-classical, line. This narrow form of economics, which forms the basis of all economics text-books and teaching makes a set of assumptions about the foundations of the economy, and proceeds then to examine how this particular kind of economy works.
Any economists that values their career will not question these assumptions for fear of rocking the boat. As Keynes said 'In the City, it's better to be conventionally wrong than unconventionally right." The same applies to academic economics. And it largely explains why we're in the mess we're currently in.
What is needed is a rejuvenation of the discipline of political economy, of the kind practiced by Adam Smith, David Ricardo, Karl Marx, Henry George, Joseph Schumpeter. J.K. Galbraith and E.F Scumacher among others. Political economists need to wrest back the discipline from the econometricists that have come to dominate the profession. Their assumptions must be assessed against ethical criteria. We need to ask the question, 'what kind of economy and society do we want?' and then set about devising economic structures and institutions fit for the purpose of delivering that moral vision.
Brian Hodgkinson's book, A New Model of the Economy, is a good place to start for any economists that want to be in at the start of the paradigm shift.
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