In this month's issue, Howard Reed says we need to rebuild economics from its very foundations. Plus: the great economic thinkers suggest the next big question for their fieldby Tom Clark / April 14, 2018 / Leave a comment
Published in May 2018 issue of Prospect Magazine
“Let those who will write the nation’s laws if I can write its textbooks.” So said the late great economist Paul Samuelson. Having sniffed the influence, he went on to sell over four million textbooks himself. The basic economic concepts that frame vast tracts of public policy—market equilibria, marginal costs and “externalities”—are all encountered in the very first term of an undergraduate course. But the breathtaking charge pressed by Howard Reed is that the textbook is irredeemably flawed, and so we’d be better off ripping it up and starting again.
Many other economists—including Diane Coyle who has written a robust counter-polemic—will take umbrage at Reed’s caricature of their work. Coyle points out that professionals don’t spend their days with textbooks, but with data about real human beings; some of them are taking rational economic man to pieces in the process.
But old theories can be hard to shrug off. When intellectual architecture is installed in young minds, then adults—busy with work and family—will inevitably make sense of later experience within its frame. Or, as Keynes put it: “Practical m…