It didn't predict the crash—and that isn't its only flaw
by Diane Coyle, Andrew Haldane / December 9, 2014 / Leave a comment
Adam Smith, Karl Marx, Joseph Schumpeter and JM Keynes: universities are beginning to teach a range of economic philosophies
President Harry Truman famously yearned for a one-handed economist, in exasperation at their inability to give a straight answer. But economists have long been united about at least one thing—their positive assessment of their own subject. Since the 1980s, at least, economics has accorded itself high professional status, as well as taking an increasingly prominent role not just in shaping public policy, but in shaping many other aspects of public life.
However, that confidence has begun to wane in recent years. Internally, economics is more fractured than perhaps at any time in a generation. The reason for this is not difficult to find: the global financial crisis has made economists’ pre-crisis self-confidence look, in hindsight, more like hubris.
The areas of economics suffering most acutely are those whose shortcomings were exposed by the crisis—the fields of finance and macroeconomics. Although many economists do not work in either of these fields, they are the areas of economics most visible to the wider world. It is talk of recession, recovery, the ups and downs of inflation, Gross Domestic Product and unemployment that fills television and radio programmes. Beyond that, there is a broader public awareness, sometimes concern, that an incomplete economic orthodoxy may have intruded into wider society. And economics is not always a welcome guest there. This concern sometimes manifests itself in fears about rampant consumerism, the erosion of public spiritedness or the emergence of markets in everything from votes to kidneys, from education to clean air.
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