Why Economics Must Go Digital — Diane Coyle

Another argument for paradigm shift away from the neoclassical model in economics. It no longer fits the facts (if it ever did). The "free market" that neoclassical economics assumes, the atomism of methodological individualism, and other such assumptions based on "simplifying," are myths concocted partly for methodological convenience ("mathematical tractability") and partly owing to ideology (cognitive bias). Theoretically, this would just be a curiosity of history, like the "ether" and "philostigon" of physics if economics were not crucial to policy formulation and adoption.

The Enlightened Economist
Why Economics Must Go Digital
Diane Coyle | freelance economist and a former advisor to the UK Treasury. She is a member of the UK Competition Commission and is acting Chairman of the BBC Trust, the governing body of the British Broadcasting Corporation

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

Lars P. Syll — Economics in need of a re-think

George Cooper, author of the highly praised, The Origin of Financial Crises: Central Banks, Credit Bubbles, and the Efficient Market Fallacy, has a new book, Money, Blood and Revolution: How Darwin and the doctor of King Charles I could turn economics into a science.

Lars P. Syll | Professor, Malmo University
Economics in need of a re-think

Quoting George Cooper

My comment there:

I haven’t read Cooper’s book yet, but based on the passages quoted above, I would agree that economics is in a pre-revolutionary stage, much as classical physics was immediately prior to relativity and quantum mechanics. Nineteenth century physicists actually sounded a lot like today’s conventional economists that dominate the field and have declared the methodological debate over. Perhaps economics will get its Einstein, Bohr and Plank, et al.

And perhaps we see some the early work having already emerged in Keynes, Lerner, Minsky, Tobin, and Godley, as well as in philosophy, life sciences, psychology, and social sciences. I lead with philosophy there with a reason — economics is foundationally normative and economic institutions are not based on nature as much as they are on custom and law. 

The just so stories that economists since John Locke and Adam Smith tell about the origins of property, markets, money, utility, and motivation are just that — made up. There has been little serious examination of these key elements in conventional economics in light of the disciplines that actually study these matters empirically and historically.

A large stumbling block for conventional economists is “lack of formalization” that enables precise predictions. Well, that was a huge stumbling block in the acceptance of quantum theory as well. Even Einstein objected that God does not play dice and he never really accepted the stochastic nature of physical reality at its core. Maybe, just maybe, the subject matter exceeds the degree of precision that economists holding on to traditional econometric models admits — as Keynes, who knew something about probability, told Tinbergen.

Comment by Tom Hickey— 24 March, 2014 #

Bill Storage — Are You Kuhnian?

For the epistemologically inclined:

So let’s take a look at the minimal Kuhn and then some of the main flavors of Kuhnians. Among Kuhn essentials, I see:

1. There is normal science and then revolutionary science, which causes a paradigm shift to the next normal science.

2. Revolutions, originating in crisis, are required for paradigm shifts

3. Inter-paradigmatic communication is impossible (Kuhn’s “incommensurability”).

4. Theories fully pervade observation; observation language that is free of theoretical influence is impossible (Kuhn vs. Popper)

5. Paradigms dictate - not reflect – the world. Reality is constructed, not observed.

6. The ultimate desideratum of truth is solidarity.

The first three claims are what Kuhn and his defenders see as his core material. But he explicitly and repeatedly states points 4 and 5 in unambiguous terms – and point 5 in terms nearly identical to the postmodern constructivists who preceded him. Point 5 is something Kuhn doesn’t state explicitly but is an unavoidable conclusion from his discussion of points one through three.

The Multidisciplinarian
Are You Kuhnian?
Bill Storage

Clarification: "normal science" means doing science within a paradigm. It's what scientists normally do "as a rule" (norm = rule).