Economists under fire

As to be expected in the wake of the deteriorating economic situation, economists (and economics!) are at the forefront of criticism. Ilanna Bet-El reireated her view in the The Guardian (Economists should get smarter) that 'economics may be less than a science, quoting Jane Jacobs, author of Cities and the Wealth of Nations. "Never has a science, or supposed science, been so generously indulged. And never have experiments left in their wakes more wreckage, unpleasant surprises, blasted hopes and confusion, to the point that the question seriously arises whether the wreckage is reparable."'

'The massive stimulus bill just passed in the US is apparently an attempt to repair the current wreckage. However, since it is mostly based upon economic theory, there is room to doubt its future success: this may be yet another vastly expensive experiment based on a model, which is the tool of the economist. And given simulated models of securitised mortgages are what brought about the crisis to start with, what is now needed is a severe dose of harsh reality, combined with some common sense.'

She challenges the assumption that the answer to our economics woes is to get consumers back into the shops. Many consumers just don't have the money, credit has dried up and most of us in developed countries have sufficient consumer goods and don't actually really need anything. 'There is no obvious solution to the financial crises, but it should be clear that they cannot be resolved by economic theory or by depending on mass consumerism: that is a way back to the bad past.'

Instead economists should use 'a full range of tools as appropriate to a specific situation rather than sticking to a specific model or theory. In other words, rather than just veering between tax cuts and stimulus, between funding banks and buying up their bad debt, there should be room for examining each case in the round of a given economy and society – and seeking to balance both, not just the books.'
We should 'start thinking about "smart consumerism": a mode in which need and quality would be at the heart of production and consumerism rather than cheap credit and greed. More money would be exchanged per item, but less frequently: both sides would therefore stand to gain, and the environment would be filled with fewer cast-off items. '

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