The Need for Different Paradigms

The global crisis is also an intellectual provocation, and the discipline of economics has not risen to the challenge. Why not? The problem lies perhaps in its search for a universal model that is unattainable, and in a subsequent flight from empirical reality. To get our feet back on the ground, we need to rethink the assumptions behind economic modeling and also rethink the institutional organization of research and higher education.

“Wanted: A new Galileo or Copernicus capable of reformulating economic theory. Please present models to the top twenty economics departments in the world (according to the US News and World Report rankings). If you fail to receive any replies, proceed to the top twenty sociology departments.” Imagine this ad in an internationally recognized newspaper like Le Monde, Corriere Della Sera, Financial Times, or The Wall Street Journal.

Today's world leaders are struggling in vain to shed some light on the economic gloom brought about by the global crisis. Their tool of choice: the dim lantern of a low-amperage Keynesianism. I imagine that they are asking themselves: How can I be the next Franklin Delano Roosevelt? It seems that they are not finding any answers.

The last few years have not been kind to the reputation of economists. For more than two decades, we watched as the profession rose in prestige.