The Economic Crisis and the Crisis in Economics

In many quarters, it has long been accepted that the discourses economists construct when theorizing do not simply mirror the external world but also define it and influence its course in fundamental ways (Gibson-Graham 1996; Ruccio and Amariglio 2003). But this insight tends to be of little interest to most economists, who hold fast to much more conventional epistemological presumptions. As every economist worth his salt knows, the world out there is what it is, for better or worse. That we might like it to be other wise — that we might prefer a world in which people acted on altruistic rather than egoistic motivations, say—is of no theoretical relevance. In this account, good theory provides a faithful representation of the world as it is, not as the economist would like it to be. And when two theories seem to do the job equally well, economists are trained to choose that alternative that is most elegant, parsimonious and tractable. Moreover, the economist’s epistemology induces the comforting belief that theoretical knowledge improves over time, yielding explanatory models that do a better and better job of capturing the world. This is an epistemology that generates faith in theoretical progress. Hence there is little need to expend time and energy examining the macro-theory of the 1930s when surely the macro-theory of the 1990s has overtaken its predecessor in its explanatory power and verisimilitude.