Paul Krugman Explains Why Economics is Bankrupt as a Profession--And an Explanation.

The most important thing written over the weekend was not about health care but about the dismal profession of economics by Paul Krugman. It’s important for innovators, designers and just about everyone to read this splendid story of how economists, especially the math-based, market-manic Chicago-school economists, have hurt the US and much of the rest of the world.

The Krugman piece reaffirms my own view of the economics profession. I began my journalism career writing for The Far Eastern Economic Review while I was still in the Peace Corps in the late 60s. The Review was run by Brits and its analytic paradigm was that of British political economy. Economics and business was seen within the context of real people, policy, society and politics. Economics was relevent to undertanding what was happening to our personal lives. When I went to the University of Michigan, I discovered this was no longer the case. I still have six incompletes in my economics courses because every time I took one, the professor began with “imagine an equilibrium.” Why in the world would you want to imagine an equilibrium when you wanted to discuss growth, mobility, inequality, trade, currencies? Why pretend? The answer was so we can generate equations that were long on elegance but short on explanation. So I gravitated to Anthropology and Sociology and loved them. Political Science was still great then as well, although it later went the road of Eonomics.

Krugman shows how economics as practiced in the US left all this behind to become an arcane, narrow and ultimately hollow social "science." It has to be reinvented. And it is. Behavioral economics and Innovation economics are beginning to replace it. None too soon.

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