At this point, blanket critiques of the economics (or “econ”)discipline have been standardized to the point where it’s pretty easy to predict how they’ll proceed. Economists will be castigated for their failure to foresee the Great Recession. Some unrealistic assumptions in mainstream macroeconomic models will be mentioned. Economists will be cast as priests of free-market ideology, whose shortcomings will be vigorously asserted. We will be told that economics moves in cycles of fad and fashion. Readers will be reminded that economics deals with humans instead of atoms, making scientific certainty impossible. The piece will end with a call for humility on the part of economists, a more serious consideration of unconventional ideas and reduced prestige for the economics profession.
Writers for the British newspaper The Guardian are especially adept at producing this sort of broadside. The latest one, by John Rapley, is entitled “How Economics Became a Religion”, and it follows the script pretty closely. But by now it feels like the refrain is getting a bit stale.
There are some grains of truth in this standard appraisal. I’ve certainly lobbed my fair share of criticism at the econ profession over the years. But the problem with critiques is that they offer no real way forward for the discipline. In the wake of the Great Recession, outbursts of anger might have served to awaken economists from their contented intellectual slumber, but at this point a more constructive tone would be preferable.
Pundits should focus on what is going right in the discipline—because there are some very good things happening.
First, economists have developed some theories that really work. A good scientific theory makes testable predictions that apply to situations other than those that motivated the creation of the theory. Slowly, econ is building up a repertoire of these gems.
One of them is auction theory, which predicts how buyers will bid for things like online ads…