Where Do We Stand Today in Making This Transition?
So, where do we stand today in advancing our knowledge of these four key elements for making economics more of a science?
Well, fortunately a few people are concerned that current economic theory needs to change. This has been especially true after the failure of the economics community to foresee the popping of the U.S. bubble economy. Hence, some people refer to this focus on developing a new theory as the search for a postcrash model.
A physicist, Doyne Farmer, from the Santa Fe Institute, recognizes the limits of current mathematical models of economics. He believes we should be using numerical simulation models in economics. He is moving in the right direction, but his proposed model leaves out property rights, information dynamics, and technological evolution. Hence, such a model is guaranteed to be wrong, or at least quite incomplete. It is also telling that such a non–status quo idea comes from a physicist and not an economist.
A psychoanalyst, David Tuckett, from University College London, is doing work on bringing more psychology into understanding market gyrations. It’s good to bring more psychology into economics, but without a full understanding of Information Dynamics, of which psychology is definitely a part, this will lead to a dead end. Again it is also telling that such a non–status quo idea comes from a noneconomist.