What Was Wrong In The Functionalities Of Economists?

The economy misunderstood some really basic things, and some economists are now trying to correct them, says Evan Davis, presenter of the Radio 4 PM program and former Economics editor of the BBC News.

Two warnings before I got caught.

First, I must say that I love the economy and economics. It is a wonderful toolkit to make sense of the world: you can look for some of the most attractive concepts, from the prisoner's dilemma to the comparative advantage and the saving paradox.

Needless to say, we should not want to throw away the economy.

Second, the economy has not had a bad streak. In recent decades, economists have had (more than ever and more than anyone else) an influence on all aspects of our lives. They have directed the central banks, they have taken to thinking about the businesses and they work in the highest levels of the civil services in all the west and in the international institutions. Its orthodoxy has supported all types of government policies (such as the choice in education, for example). And during this era in which economists have reigned, the world has achieved some remarkable successes. The reduction in the proportion of human beings living in extreme poverty in the last thirty years has been extraordinary.

But for all this, the economy is right in the middle of a rethinking.

It was obvious that many things had gone wrong at the time of the financial crisis; It was a professional shame that the worst shock in three generations occurred shortly after economists took over the booth.

And then, just as significantly, a decade after that crisis, we know that the orthodox economic model (what many people call "neoliberal") is leaving large groups of people dissatisfied in all Western societies.

Obviously, politics and policy makers are responding to anger in the usual way, trying to find something different. The great research on inequality recently launched by the Institute of Fiscal Studies is an example of the changing priorities of economists working at the practical end of the profession.

But something else is also happening: the entire academic discipline of the economy is being reconsidered: both theory and policy advice.

Not all economists agree with this project, and not all economic aspects are being overthrown. And not all rethinking is actually new. But it seems that we are in the middle of a slow change of paradigm. Who knows where it will end?

By: Preeti Narula

Content: https://www.bbc.com/news/business-48350211