Economics in Trouble

Economics in Trouble

Theoretical economics, for understandable reasons, is rarely a topic of public discussion. For economists, it is perhaps just as well; they are spared the task of explaining their highly abstract and often irrelevant models. But times of crisis produce demands for explanation and remedies, which in turn lead to a reexamination of the theory underlying policy prescriptions. The demands for explanation seem only reasonable since economics claims a special status among social sciences as the most “scientific.” Indeed, the application of mathematics to economic theory, linear programming, input-output analysis, and econometrics is an impressive technical and analytic tool. But whether these advances in technique give us greater insight into the functioning of the economy is another question. Lester Thurow, in Dangerous Currents, agrees with a verdict once pronounced by Robert Heilbroner that “the prestige accorded to mathematics in economics has given it rigor but, alas, also mortis.”

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