June 27th, 2012
I have just written a five-part series for Mindful Money, exploring the ideas of a group of ‘new economists’ who argue that alternative approaches to neoclassical thinking are essential if we are to emerge from the current financial dystopia
Introduction — The End of Economics as We Know it
The inhabitants of the floating island of Laputa (pictured above) which features in Jonathan Swift’s Gulliver’s Travels, are seriously detached from reality. This is not just because their island floats in the sky at varying heights above the world, but also because they are so obsessed with developing beautiful but largely useless equations relating to theoretical maths, science, music, and technology that they are incapable of putting their knowledge to any practical use.
The Laputan ‘masters of the universe’ put so much effort into whacky schemes, like divining how to “extract sunbeams from cucumbers”, how to soften marble so it can be made into pillows and how to mix paint by smell, that they neglect important practical things like how to house and clothe their people.
The massive air-born rock, which Swift named after the Spanish word for ‘prostitute’, terrorizes ground dwellers by raining down stones on them, depriving them of light and water, and in worst case scenarios lowering itself on top rebel cities, to crush them completely.
I don’t know if it is just me, but I am increasingly detecting parallels between the Laputans portrayed by Swift in his 1726 satire and today’s neoclassical economists – who, let’s not forget have played a key part in shaping macroeconomic policy and, to a large extent, guided the trajectory of the global financial system for the best part of three decades.
There is now a growing clamour of dissent from a group of ‘new economists’ who are calling time on neoclassical economics and shaking it right down to its Laputan foundations. This series of articles and blogs is written for those who would like an introduction to the key players in this bid to define a new economic paradigm that takes what happens in the real world and empiricism into account.
The rest of this series is entirely hosted by Mindful Money:-