Wednesday, January 7, 2009

nature tackles economics

I stopped reading any ToCs while my thesis was being written. Now that that's done, I still haven't returned. Too bad, because i opened up nature yesterday to find a really great correspondence from a prof. at the University of Montreal. Dig this: "However, [the prosperity of Western nations] is mainly based on the use of non-renewable resources and therefore is probably spurious."

So I did some digging. The essay that sparked the debate was entitled "Economics needs a scientific revolution." Sounds like an opportunity to get some really radical ideas across. The guy kind of effed up though--his key idea was that economists and economics rely too heavily on theories that have no empirical grounding: rational agents, profit maximization as motivator, and efficient markets, etc. and that economics is therefore unscientific. He then mentions that the economic models used are bad--they can't account for large price jumps. Fine. Conclusion states that other economic ideas (he mentions behavioral economists and people called "econophysicists") are not taken seriously by the mainstream. he doesn't mention some of the more radical economic subgenres, namely ecological economics and feminist economics. The text is generally weird and feels very old school. Still, it was nice to see dissenting views in this magazine.

Anyway, first letter responded and basically said that, look, modern economics has given us the prosperity of Western nations. Also, there are people challenging the assumptions of economics all the time that do pretty well (Paul Krugmann is given as an example).

So at this point, the original essay looks completely ridiculous. Enter the Montreal prof. He comes in and calls out the one remaining unchallenged assumption: growth. The essay didn't mention this, and the response did not mention this. Ecological economics challenges this assumption readily. Making economics prettier with better models and methods will not change the unsustainable course we're on. Shaking up economics at its core, challenging its assumption that economies must grow, is pretty much what needs to happen to put us on the right path.

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