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Where Economics Went Wrong: A Review Essay

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  • Marianne Johnson

Abstract

In their recent book, Where Economics Went Wrong, David Colander and Craig Freedman (2019) argue that economics went wrong when it abandoned the Classical liberal firewall that demanded separation of scientific theory from the art of policy making. Colander has long advanced the idea that applied economics should be classified neither as positive nor as normative economics. Instead, it should be placed in a third category, "the art of economics"; art requires vision and acumen in addition to knowledge and technique, and is thus more akin to engineering than the natural sciences. The primary contribution of Where Economics Went Wrong is thus to advance Colander's general argument through the specific story of Chicago economics. This essay make two interconnected claims. First, while I agree with Colander and Freedman that applied economics would benefit from more art and less calculation, the Chicago school is not the best vehicle by which to tell a convincing story. Second, a thicker history of the Chicago school reminds us of the importance of institutions and rules, not only for understanding the economy but also for thinking about how economists have constructed our discipline and how internal institutions and incentives affect our behavioral choices.

Suggested Citation

  • Marianne Johnson, 2020. "Where Economics Went Wrong: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 58(3), pages 749-776, September.
    • Handle: RePEc:aea:jeclit:v:58:y:2020:i:3:p:749-76
    DOI: 10.1257/jel.20191583
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    Cited by:

    1. Eileen Tipoe, 2024. "Foundations of Real‐World Economics: What Every Economics Student Needs to Know, by John Komlos (Routledge, New York, 2023)," The Economic Record, The Economic Society of Australia, vol. 100(328), pages 123-125, March.
    2. Sergio Mariotti, 2021. "Forging a new alliance between economics and engineering," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(4), pages 551-572, December.

    More about this item

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;

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