5-coyle - Do economic crises reflect crises in economics...

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1 Do economic crises reflect crises in economics? Keynote address, ‘Rethinking Economics’ conference, Stiftverband für die Deutsche Wissenschaft/Handelsblatt, Frankfurt am Main, 23 January 2012. Diane Coyle, Enlightenment Economics and Institute of Political and Economic Governance, University of Manchester The ‘series of unfortunate events’ in the global economy since 2008 make it natural to ask where the economists have been. 1 If you have a leaky boiler, you expect the plumber to mend it; a dentist should cure your toothache; so why haven’t the economists been able to fix the economy? When economists meet privately these days, we will most often whisper to each other, isn’t it all so interesting ? These are fascinating times. Every day brings something new to think about. It isn’t only economists who want to understand what’s going on. There has been an increase in the number of students choosing economics at university, and there seems to be a strong appetite for popular books and lectures. Even Her Majesty the Queen has shown an interest in why economists didn’t predict the crisis, a question she posed to academics on a visit to the LSE. 2 She was too polite to say so directly, but a lot of people blame economists and economics – as the title of this session indicates. Some of this criticism has been fierce; the film ‘Inside Job’ savaged economists as essentially corrupt and directly responsible for the financial crisis. 3 The rest of us squirmed when we watched his treatment of the economists unlucky enough to have been interviewed by him. So I’m torn between my quiet exhilaration about how interesting things have become and a nagging doubt: I wasn’t doing macroeconomic forecasting, and never worked in finance – but am I still somehow to blame for the crisis because I’m an economist? Is it my fault? Has my profession, just by the way it thinks about the economy, caused all this damage? We have to ask ourselves this question. A lot of people think so. And a lot of the criticisms they make of economics have been made in the past. The Post-Autistic or Real World Economics Movement has been gaining prominence but it’s been around for a long time. 4 The difference now is that the crisis seems to be proof that the criticisms are true – they are not so easy now for the mainstream of the economics profession to shrug off. In fact, many economists are on the contrary taking the critique very seriously. 1 See Lemony Snicket’s novels in the series of the same name, http://lemonysnicket.com/ 2 http://www.telegraph.co.uk/news/uknews/theroyalfamily/3386353/The-Queen-asks-why-no- one-saw-the-credit-crunch-coming.html 3 http://www.sonyclassics.com/insidejob/site/ 4 http://www.paecon.net/
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2 So I would like to present a paradox. Economics is both in crisis and experiencing an extraordinarily fruitful renaissance. There is already a new approach emerging from the pre-crisis framework, like a butterfly hatching out of its chrysalis. It’s much less tied to a particular theoretical approach, more
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5-coyle - Do economic crises reflect crises in economics...

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