Tuesday, April 29, 2014

Justin Fox — Will Economics Finally Get Its Paradigm Shift?

Justin Fox reflects on George Cooper's new book.
Then it comes time to offer up his ideas for a new economics paradigm: 
  1. Replace utility-maximizing economic man with a Darwinian fellow who simply wants to do better than the next guy.
  2. Let this selfish creature fight it out in a macroeconomic model based on the circulatory system. “Capitalism would act to push wealth up the social pyramid,” Cooper writes, “while democracy, and its progressive taxation system, would act in the opposite direction to push it back down, causing a vigorous circulatory flow of wealth throughout the economy.”

So what makes modern capitalism work is not so much the accumulation of capital as its constant flow through the system. It’s an interesting thought. The basis of a new paradigm for economics? Hmmm. Cooper does his best to prep the reader by showing how intuitive and simple the insights of Copernicus, Darwin, and William Harvey (Charles I’s physician, who figured out how blood circulates through the body) were, but I still found his suggestions to be almost laughably crude. Maybe that’s just me. Or maybe it’s the natural initial reaction to a potential new paradigm.
Harvard Business Review — HBR Blog Network
Will Economics Finally Get Its Paradigm Shift?
Justin Fox | Executive Editor, New York, of the Harvard Business Review Group

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