Neuer Methodenstreit

Ralph Wrobel of the Westsächsische Hochschule Zwickau recently published an open letter on Ordnungspolitik (roughly regulatory policy). He discusses the ongoing fight between conservatives and progressives in German faculties of economics. In a nutshell, conservatives embrace mathematics and (partial) models in very specialized subfields which means that they care less about reality. Progressives’ knowledge is more broad, including psychology, economic history and thinking about interacting markets. Wrobel claims that the scientific system based on peer-reviewed publications leads to a monoculture, which robs economics of many discussions, since some opinions cannot be articulated.

While being sympathetic to the critique of economics, I think all this is still too early. We still don’t have a complete picture of what happened and how we can fix our economies. The models have failed and so far, there have been no replacements. This should be the first priority of economists right now. Which reminds me that Richard Koo’s latest book makes a lot of sense …

As an afterthought I would like to point out that once more the myth that all economists failed to predict the crisis has been voiced by Ralph Wrobel. This is plain wrong. There have been people (yes, also some Germans) which have warned and published research related to financial depression. I really think somebody should go on a field trip and try to find those people, talk to them and publish a book.