Question the Economists not Economics
"So is economics in need of a major shake-up? Should we burn our existing textbooks and rewrite them from scratch?
Actually, no. Without recourse to the economist’s toolkit, we cannot even begin to make sense of the current crisis.
[. . .]
The fault lies not with economics, but with economists. The problem is that economists (and those who listen to them) became over-confident in their preferred models of the moment: markets are efficient, financial innovation transfers risk to those best able to bear it, self-regulation works best, and government intervention is ineffective and harmful.
They forgot that there were many other models that led in radically different directions. Hubris creates blind spots. If anything needs fixing, it is the sociology of the profession. The textbooks – at least those used in advanced courses – are fine."
My own recommendation for a textbook account of microeconomics that not only avoids, but goes some distance toward puncturing, the arrogance of the economics profession is David Kreps' A course in Microeconomic Theory [Princeton UP 1990]; it is self-effacing and funny and, beyond that offers a quite reasonable account of the scope and, importantly, limits of basic economic models. As a result Kreps is quite useful in sorting out the need for thinking about political economy.
Labels: political economy