Below are a few different articles on the shortcomings and false assumptions of modern economics. What’s central to each of these is the difference between the human sciences and the natural sciences and the consequences of mistaking one for the other. Economics is a social science and many problems arise when we treat it as if, because of its sophisticated mathematical models, that it is like a natural science. The last article is an interesting example of the important of models when trying to understand reality.
Old economics is based on false ‘laws of physics’ – new economics can save us
It is time to ditch the belief that economies obey rigid mechanical rules, which has widened inequality and polluted our planet. Economics is evolving
In the 1870s, a handful of aspiring economists hoped to make economics a science as reputable as physics. Awed by Newton’s insights on the physical laws of motion – laws that so elegantly describe the trajectory of falling apples and orbiting moons – they sought to create an economic theory that matched his legacy.
Their mechanical metaphor sounds authoritative, but it was ill-chosen from the start
The End of Economics?
Human beings are rarely rational—so it’s time we all stopped pretending they are.
In the social sciences, it is generally understood that theoretical assumptions never mirror reality—they’re abstractions designed to simplify—but do provide a powerful way to understand and predict. What the behavioral economists showed is that the assumption of rationality actually produces misunderstandings and bad predictions. It is worth noting that one of the very few economists who predicted both the dot-com bubble that caused the crash of 2000 and the housing bubble that caused the crash of 2008 was Shiller, who won the Nobel Prize in 2013 for his work in behavioral economics.
Finally, a breakthrough alternative to growth economics – the doughnut
Instead of growth at all costs, a new economic model allows us to thrive while saving the planet
This recognition of inconvenient realities then leads to her breakthrough: a graphic representation of the world we want to create. Like all the best ideas, her doughnut model seems so simple and obvious that you wonder why you didn’t think of it yourself. But achieving this clarity and concision requires years of thought: a great decluttering of the myths and misrepresentations in which we have been schooled.