The Death of Economics

by PAUL. OMEROD

The world economy is in crisis. America faces crushing deficits in both the federal budget and the balance of trade. Unemployment in Western Europe rises towards the twenty-million mark. Vast tracts of the former Soviet empire are on the brink of economic collapse. In this grim context, the opinions of economic gurus increasingly dominate actions in business, politics, and international affairs. Yet orthodox economics seems powerless to help. Notoriously, economic forecasters failed to predict the Japanese recession, the depth of the collapse in the German economy, and the turmoil caused by the Exchange Rate Mechanism. In this insightful and sweeping critique, Paul Ormerod demonstrates how schools of economic thought, despite their many disagreements, share the same underlying defects - flaws that go far deeper than quibbles between theorists. Ormerod provides real answers and hard facts. What the world needs, he contends, is a radical new approach, drawing on ideas from other disciplines such as biology, physics, and the behavioral sciences.

Genres: Economics, Nonfiction, Science, Social Science, Politics, Business

240 pages, Paperback

First published January 1, 1994

Reviews

[Malcolm · Rating 3 out of 5]

This fabulous little book makes on clear point: macro-economic systems are more than the sum of their parts. Now, for many of us we may say – yeah, so what? It is a biggie so what: orthodox economic theory – the stuff that helps determine government policy – all assumes that a macro-economic system (like a nation’s) is simply the sum of that system’s micro-economic decisions (that is you and me, saving, buying houses or underpants). What is more, this orthodox theory all assumes that we act is self-interested, rational individuals who weight up the pros and cons of any economic activity and act in our own best interest (that’s what Thatcher meant when she said there is no such thing as society).

Ormerod – former journalist at the Economist, macro-economic model maker and analyst, successful business operator and it seems to me generally smart guy – is out to show that this idea is bunk, and while it holds national economies and economic policy is going to keep getting it wrong. Although the subject matter may seem as dry as dust he is such an interesting writer that even the arcane economic theory he has to explore and the maths on which much of that theory is based was engaging. His basic case then is that macro-economic systems are much more complex and much more than the sum of their parts, and we need a new approach – in this he is picking up on ideas that have been round economics since the early 1960s, and some of the ‘hard ‘sciences – physics and biology especially for many years. His closest parallel subject area is climatology, and he draws on some models developed in climatology (but not the specific maths) to make the case for complexity theory based approaches (that is a form of non-linear mathematics linked to chaos theory).

Still, I suspect this description isn’t making many people want to rush out and read this even though it is written in 1993/4 (so some of the contemporary hooks are out of date, or with the benefit of hindsight seem plain wrong) it is as current as it ever was, and it critique of the supposed links between unemployment and inflation remain topical (we in the UK only need to listen to the absurd arguments about public spending cuts, economic growth, the dangers of inflation to recovery, and wishful thinking about employment in most government policy and economic reporting to see just how topical it is). What is more, this is stuff we, as interested citizens need to know. It may not sound interesting, but take my word for it – it really really is, and it really really should be read! Not that I agree with all of it, but when such a knowledgeable insider says something as damning as this we need to pay attention.

[Bryn Holder · Rating 4 out of 5]

This is why I took the E out of PPE.

[Ietrio · Rating 1 out of 5]

A bull**** artist and his desire to help his beloved Big Brother control more of the lives of others.

Or how Economics can be just another symbol for Big Brother's might.

[Ken Muldrew · Rating 4 out of 5]

A nice overview of the insanely irrelevant models used to justify free-market policies up to the present day. Economics has much to answer for.
Also a good introduction to the Goodwin nonlinear model used to relate the unemployment rate to economic growth. This is a Lotka-Volterra model and shows qualitative agreement with the dynamics shown by the data. It goes a long way to explaining the business cycle.
The book was written in the 90s but is still valuable for its slapdown of neoclassical economics.

[Kym Robinson · Rating 4 out of 5]

I had kept this book in my car for quite some time and had it as an emergency read when ever the need arose. So it had been read from traffic lights, the gym, the ER to carp parks. The book is well written and provides a basic introduction into economics. Though no 'Economics in One Lesson' it certainly is a good inclusion into anyone Econ collection.

It is also a good book for first time readers and their desire to learn about the field of study that is Economics.

80 %

[Darlene · Rating 4 out of 5]

A good overview of what is wrong with the orthodox theories of economics. Has started me thinking about new ways to solve social problems, like unemployment, undervaluation of the caring professions, environmental degradation and lifting quality of life through productivity enhancements, education and improvements in technology.

[Geoff Davies · Rating 4 out of 5]

Excellent discussions of some of the (many) fundamental deficiencies of mainstream economics, and of better ways to analyse important economic phenomena. Well written for the "intelligent layperson". However it pulls its punches on the implications for mainstream economics, which needs simply to be displaced. Doesn't live up to its title.

[Handoko]

Want to read

[Nicolas Sansone · Rating 3 out of 5]

Nice basic critique of orthodox liberal economic theory. Necessarily dry, but fairly thorough.

[Air Transport]

A fresh new look at Economics which makes most popular Economists somewhat out-of-date.