Where to Now? Answer: Economics Needs to Move from Being a Set of Competing Philosophies to Being a Science
So, no breakthroughs from the economics community are likely in the near term. Still, what do we do? How do we get economics moving on the right track so that it can solve our economic problems? Where should economics go for more breakthroughs? How do we improve economics?
First we need to realize that we need a massive paradigm shift. It’s not a regular paradigm shift which may be simply moving economics from being nonmathematical to being mathematical.
The paradigm shift needed is much more fundamental. Economics needs to move from a philosophical approach to a more scientific approach. There is a reason that Robert Heilbroner’s great book on the history of economics and economists is called The Worldly Philosophers. Past economists have been philosophers first and economists second.
They look at the real world and then make an abstraction of it to try to better explain how the real world economy works. As we mentioned, an economist might develop an idealized nineteenth century grain market to better explain how a market works. It’s an abstraction of the real world economy.
They also have fallen into philosophical camps—Communists, Capitalists, Socialists, and so on. Or they follow a certain philosophy of an economist or group of economists—Keynesian, Austrian, Marxist, and so on.
As mentioned earlier, two of the great breakthroughs of twentieth century economics—greater ...