In an
interview in the Actuary, Professor John Kay explains why the next Keynes is unlikely to have a PhD in economics.
Kay is not the only critic of mainstream economists, and it would seem patently obvious that economics has failed as a predictive and explanatory tool.
After all, it failed to predict our current financial crisis and it has failed to provide a policy solution that actually works.
Was the profession changing?
Could there be an Einstein moment approaching, where the mainstream realises that the cranks were right?
No, says Kay. Unlike subjects such as physics, you cannot definitively prove economics wrong. “The rewards structure of the economics profession is basically a common value system,” he says.
Small marginal improvements are rewarded, critics are considered cranks and ignored.
In short, even though the economics profession has been thoroughly debunked, it is incapable of making the changes necessary to become relevant again.
ReplyDeleteBrilliant post and I could not agree more.
The next Keynes is Marx. The excessive concentration of capital seems likely to destroy not only capitalism, but democracy and lots of people's lives.
ReplyDeleteI hope not.
ReplyDeleteAs I have maintained since before the financial crisis started, we know how to address the twin problems of opacity and excess debt in the financial system so as to protect the real economy and society.
The question is when will policymakers and financial regulators put society and the social contract ahead of bankers.