Posted by: Dirk | January 1, 2015

Where does economics go in 2015?

I am reading a PhD thesis and found a memorable quote by Leontieff. It is put into context in a book by Steinmetz from 2005:leontieff quote plus
The critique of economics as a discipline comes from across the spectrum. Whatever economics will be in the future, it has been the science under which inequality in the US returned to pre-Great Depression levels without anyone big in the discipline raising a red flag. Joseph Stiglitz and Paul Krugman wrote at least a little bit about inequality before the sub-prime crisis, but these two authors seem to be the exception to the rule.

If economics has been the discipline arguing for “liberalized” markets – pay of CEOs and those in the sectors of finance, insurance, real estate (FIRE) has surged while that of typical workers has stagnated (in the US, but also elsewhere) – and against the welfare state (via railing against “the deficit”, which in fact is rather meaningless, since government debt need not be repaid), it seems to be clear that the demand for these kind of policies is limited, to put it mildly. The discipline of economics in 2015 stands at a crossroads: apologists for the super-rich, or progressive thinkers for the public. Or, to put it differently: plastic surgeons for the 0.01%, or dentists for the people. Only the latter seems to me a sustainable and mentally healthy strategy.

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