In the wake of the global financial crisis of 2008, the greatest economic disaster since the Great Depression, the cover story of the July 18th 2009 issue of The Economist, entitled “What went wrong with economics,” opened with an unequivocally incriminating statement: “Of all the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself.” In the months surrounding this indictment, many influential economists, including several Nobel laureates, were drawn to the same embarrassing (...) conclusion. Despite the existence of a handful of Cassandras, economists, as a group, had failed to foresee the crash. This short essay reviews the criticisms addressed to modern economic theory in the immediate aftermath of the crash. Overall, the main issues raised by critics were that (a) economists versed in the dominant models in macroeconomics and finance have been blinded to the possibility that we live in an uncertain and complex world; and (b) that the content of current economics education has sidelined many of the relevant insights to be found in the history of the discipline. This has led the critics to call for changes in the institutional structure of discipline, with a particular emphasis on the promotion of interdisciplinarity, and theoretical and methodological pluralism. (shrink)

This paper articulates and defends three interconnected claims: first, that the debate on the role of values for science misses a crucial dimension, the institutional one; second, that institutions occupy the intermediate level between scientific activities and values and that they are to be systematically integrated into the analysis; third, that the appraisal of the institutions of science with respect to values should be undertaken within the premises of a comparative approach rather than an ideal approach. Hence, I defend the (...) view that the issue be framed in reference to the following question: "What kind of institutional rules should be in place in order for the scientific process to unfold in such a way that the values that we deem more important come to the fore?" Addressing this concern is equivalent to conducting a debate on institutions and their role for science. (shrink)

ABSTRACTThis is a critical discussion and proposed refinement of the inspiring account of the successes and failures of economic modelling sketched in Dani Rodrik’s Economics Rules. The refinements make use of a systematic framework of the structure of scientific modelling. The issues include distinguishing the discipline of economics from the behaviour and attitudes of economists as targets of normative assessment; nature and sources of success and failure in modelling; the key role of model commentary; model transparency; purposes and audiences of (...) modelling; the nature of critical assumptions; negligibility, applicability, and tractability in modelling; the possibility of generally applicable models; and economics fundamentalism. The proposed refinements submit sharper formulations for some of Rodrik’s ideas and supplement others, but they also reveal tensions and relieve some – not yet all – of these. (shrink)