A Manifesto for Damned Economists

As young economics students, we often try to understand the ultimate goals of economists. As the recovery from the worst crisis since the Great Depression proceeds, the state of economics is not more encouraging than the state of the economy. Economists, politicians and ordinary people around the world, concerned about the dramatic consequences of the crisis, are wondering about the roots of the downturn and why the current crisis was not predicted. In 1953, Milton Friedman claimed that

“the ultimate goal of a positive science is the development of a “theory” or “hypothesis” that yields valid and meaningful (i.e., not truistic) predictions about phenomena not yet observed.”

Unfortunately, almost all economists failed to predict the current global recession. And there is no agreement concerning the optimal response to the crisis. As a result, the eternal intellectual fight between mainstream economists against neokeynesians has been fueled again. The high pitched debate that saw Krugman accusing the neoclassicals of blindness to market failures and Cochrane reaffirming the validity of the neoclassical view is one of the most evident examples. Nevertheless, the debate is more complex than a simple confrontation between neokeynesians and neoclassicals. There are a plethora of different theoretical point of views and economic prescriptions, many of which are collected in Bachmann’s Methodenstreit.

In the meantime, the real economy has continued to deteriorate: many people have lost their jobs and savings, several firms have been in trouble. For the ordinary people, the current debate among economists is probably viewed as a cold and futile intellectual battle with few implications for the real economy. However, the present crisis is likely to harm more economics than the economies. As argued by Hodgson in a recent paper, the increasing use of advanced mathematical techniques and advanced models in the last thirty years has led economics to lose contact with reality. There is a need to dialogue more with the other social sciences and to rethink economics as a whole, beginning from the teaching in the universities. If this fails -he continues- then the risk is that another type of economics, which he calls the broad-minded real-world economics, may reorganize itself as a separate social science.

Of course, this blog has not the ambitious objective to address these problems. It aims principally at becoming an open space for thinking about economic issues and at sharing the ideas of all the participants. The most disparate opinions will be welcomed, since this represents the best way to expand our mental horizons. We hope that this blog can become a place of honest and fruitful discussion about economics, always keeping in mind that economics is a science at man’s disposal that should help everyone achieve his needs.