Gavin Kennedy — 'Mathiness' In Economics Is A Dead End

Adam Smith expert Gavin Kennedy on Justin Fox's post at Bloomberg on Paul Romer on "mathiness."

Many of us tend to put all the blame on the Chicago School that drove Keynes and the rest of heterodoxy out of the mainstream but it was MIT's Paul Samuelson probably more than anyone that drove economics in the direction of being a "science" and therefore math-based, which led to formalism over realism and absorption with model creation instead of causal explanation (which is what science is actually supposed to be about). 

There's plenty of blame to go around. No need to get bogged down in who is most to blame. 

Adam Smith's Lost Legacy
'Mathiness' In Economics Is A Dead End

Gavin Kennedy

Justin Fox — "Alternatives" Isn't a Dirty Economic Word

Fox argues that TINA is not the only way. While capitalism has delivered the highest living standards per country and poverty is falling worldwide, this doesn't apply that laissez-faire is the only alternative. There are many types of capitalism and laissez-faire has not turned out to the be the most successful on many measures, of which Scandinavia is evidence. Note also that this view is being put forward in a premier business publication rather than a premier economic one.

The Harvard Business Review — HBR Blog Network
"Alternatives" Isn't a Dirty Economic Word
Justin Fox | Executive Editor, New York, of the Harvard Business Review Group

Francis Fukuyama on the crisis of capitalism and democracy

Wouldn't it be nice, Francis Fukuyama writes in an article called "The Future of History" in the current issue of Foreign Affairs, if some "obscure scribbler ... in a garret somewhere" would "outline an ideology of the future that could provide a realistic path toward a world with healthy middle-class societies and robust democracies."

This ideology, Fukuyama goes on:

"could not begin with a denunciation of capitalism as such, as if old-fashioned socialism were still a viable alternative. It is more the variety of capitalism that is at stake and the degree to which governments should help societies adjust to change. Globalization need be seen not as an inexorable fact of life but rather as a challenge and an opportunity that must be carefully controlled politically. The new ideology would not see markets as an end in themselves; instead, it would value global trade and investment to the extent that they contributed to a flourishing middle class, not just to greater aggregate national wealth.

"It is not possible to get to that point, however, without providing a serious and sustained critique of much of the edifice of modern neoclassical economics, beginning with fundamental assumptions such as the sovereignty of individual preferences and that aggregate income is an accurate measure of national well-being."

Read it at Harvard Business Review Blog

Is the Next Karl Marx a Management Consultant?

by Justin Fox
(h/t Mark Thoma)