It has been very clear to me for three decades what needs to be done in economic theory....
But so far we have failed. I thought a generation ago that by now we would have a three-dimensional mapping among (a) plausible and common ways that individuals could be slightly stupid, (b) market structures and adjustment processes, and (c) emergent classes of macroeconomic outcomes. We don’t. The field of industrial organization had, after all built up a one dimensional to one-dimensional mapping, perfect competition, monopolistic competition, oligopoly, price leadership, duopoly, Cournot, Stackelberg, monopoly. And as far as market failures were concerned, we had a twelve-fold classification of ways that a market-economy could fail to deliver maximum social welfare:
with good ideas about how each of them set to work in producing interesting economic outcomes.
- externality
- non-excludability
- non-rivalry
- increasing returns
- adverse selection
- moral hazard
- maldistribution
- miscalculation
- monopoly power by sellers
- monopsony power by buyers
- expectational disequilibrium
- rationing disequilibrium
But a general framework, a paradigm? No. Instead, we are still building each application by hand–as if we are each a member of a handicraft guild, Master Clockmakers rather than proprietors of are workers in a clock factory. And for Paul Krugman it is fine to be a master clockmaker. And for Paul Krugman it is a useful intellectual discipline for him that increases the quality of his work to force him to start from a well-functioning Arrow-Debreu setup in which the market economy maximizes social welfare, and explain why in this particular application the market-optimality theorem’s assumptions are violated how.
But it is no way to run a railroad, or, rather, a clock factory to make a lot of reliable clocks…
And, of course, there is the disconnect between the good economics we do and political action to produce public policy....
WCEG — The Equitablog
In What Sense Does Economics Need a “New Paradigm”?
Brad DeLong
1 comment:
Economics is the ordained life experience of humanity, and is a paradigm presenting the experience of money in an age.
As communicated in Ephesians 1:10, economics is the paradigm and stewardship of all things by Jesus Christ in every epoch, bringing them to maturity and perfection, much like a ship’s captain completes the manifest before setting sail.
Economics is defined as the life experience between a person and another, a corporation, and the state, that is government; either it be ethical or pathological; economics is the trust and flow that comes from sovereignty, and the model that best presents economics is the Dispensation Economics Manifest.
An economy is defined as the life experience that comes from the administration of the credit and trade that comes from a household or stronghold. An economy exists for life and death experience, and is determined by the prevailing interest rate of the monetary regime and its monetary policies and schemes.
All be economists, as the field of economics is not restricted to NYT pundit Paul Krugman, or to ivory tower academicians, such as Oxford’s Simon Wren-Lewis.
Economics is money based; money is defined as the credit and trade that comes from the administration of a household or stronghold; debt based money bears interest, which is defined as the cost of money.
The banker regime established the freest of all economies in the history of mankind; beginning in 1999 with the repeal of the Glass Steagall Act and the provision of the Euro, it birthed and established the investor as the centerpiece of economic action.
The beast regime of regional governance and totalitarian collectivism, seen in Revelation 13:1-4, emerged on October 23, 2013, as Jesus Christ opened the first seal of the scroll of end time events, seen in Revelation 6:1-2, to provide the experience of diktat money replacing the democratic nation state and banker regime, which provided fiat money, to enable the bond vigilantes to begin calling the Interest Rate on the US Ten Year Note, ^TNX, from 2.48%, and thus pivoted the world from the paradigm of liberalism, meaning freedom from the state, into that of authoritarianism.
Liberalism featured democratic nation states which provided policies of investment choice and schemes of credit. But now with the failure of credit, seen in China, Russia, and the US Small Caps trading lower, authoritarianism is the new normal, and features regional governance which provides policies of diktat and schemes of debt servitude where the debt serf is the centerpiece of economic activity.
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