A sorry spectacle of unnecessary ignorance
Paul Krugman damns the economics profession:
…in responding to the crisis, the profession presented a sorry spectacle of unnecessary ignorance that didn’t even recognize itself as ignorance, of bitter debate over issues that were resolved many decades earlier. And all of this, of course, made the profession mostly useless at a time when it could and should have been of great service. Put it this way: we would have responded better to this crisis if macroeconomics had been frozen at the level of knowledge it had in 1948, when Paul Samuelson published the first edition of his famous textbook.
I’m not sure I agree with his conclusion, which is that the biggest problem economists had as a profession wasn’t failure to keep up with a changing world, it was failure to remember what their fathers learned. A lot of economists think that the formalisation of economics –which Krugman criticises in this article — was the start of the profession’s problems. The arcane maths that dominated the journals since the 1970s is mostly Samuelsonian in origin, as were rational expectations, the efficient markets hypothesis and general equilibrium. Samuelson helped separate economics from the other social sciences, sending the discipline into ever darker alleyways and removing it from reality.