Last week, Rethinking Economics NL published an outstanding analysis of the state of economics education in the Netherlands today. It starts out by explaining how economics has gone from a science whose focus, domain and methods are defined or at least informed by its subject matter to a science whose subject matter is wholly defined
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Economists are generally hardly interested in how markets really work. If they were, they would have abandoned the concept of equilibrium as soon as its inconsistency with freedom and individuality became apparent through the work of Sonnenschein (1972), Mantel (1974) and Debreu (1974). The fact that they haven’t, indicates that the majority of them is
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It is commonly believed that markets enhance efficiency. Markets prioritize companies that make bigger profits and to keep your profits high, you have to keep your costs low. As wasted resources add to cost, but not to the value of the final product, a profit maximizing firm will minimize waste. Problems may occur when resources
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Contrary to popular belief and university propaganda, academia do not always foster an independent mind. In their first course on microeconomics, every budding economist is confronted with the notion of rational economic man allocating his scarce resources to fulfill as many of his stable and given preferences as possible. If these budding economists are like
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Constant economic growth is not doing the planet any favors. ‘Global average temperature has already risen by 0,8°C,’ ‘[a]round 40% of the world’s agricultural lands is now seriously degraded’ and ‘over 80% of the world’s fisheries are fully or over-exploited’ (Raworth 2017: 5, based on: Climate Action Tracker 2016; Global Agriculture 2015 and FAO 2010),
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In political parlance and mainstream media alike, the economy is often presented as an entity in its own right. It ‘can speed up, slow down, improve, decline, crash or recover, but no matter what it does, it must remain at the center of political attention’ (Earle, Moran & Ward-Perkins 2016: 7). Like the demigods of
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As the majority of economists were (and most of them still are) working on a model in which markets ensure superior outcomes if left to themselves, they could not foresee the financial crisis. All the deregulation that happened since the early 80s, the supposed rational behavior of market participants, the technological capacity for calculating risks
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On Friday, November 3rd, Professor Rodrik is in Room for Discussion to discuss Trade and Globalization, a topic he has discussed at length in The Globalization Paradox (2011). What I appreciate about Rodrik is that he is highly self-critical and openly admits that he, too, was overoptimistic in the run-up to the financial crisis. As
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Economics as usually taught is not a positive science at all. To be fair, no science is. If we claim that scientists should stick to the facts, this implies they should give up the goal of explaining or predicting real world events. This is true even in physics. Why has the pen I just dropped
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I would like to start this series of columns with a brutal display of intellectual honesty: despite my PhD in Economics, I do not understand many fundamental features of the economy and the way economic science tends to handle it. First up: I do not understand how economics gets away with ignoring marketing and advertising.
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