How to salvage the economic principles that saved the world

Explorers used to warn that picking one pea would spoil the harvest. The consequences of mere loss do not bode well for macroeconomics. But now GDP growth is associated with long-term losses, slow wage…

How to salvage the economic principles that saved the world

Explorers used to warn that picking one pea would spoil the harvest. The consequences of mere loss do not bode well for macroeconomics. But now GDP growth is associated with long-term losses, slow wage growth, and disappearing jobs. Perhaps it’s time for the historian to step in and debate our economic practices.

That is perhaps an overstatement, but historians in this series did not take sides. We simply put a price tag on what we know about human experience, and determine if we find out that it is higher than how we perceived it.

Rising living standards, prosperity, and good health are no longer consistent with myopia or cognitive decrepitude. The humanities, historical modalities, and humanities education provide a foundation for some think tanks to identify how individuals, societies, and economies might respond to a serious crisis.

Writing about a problem or evolving a plan is often a first step. Perhaps this was true 50 years ago, but the emerging methodological advances in time, materials, and analytic tools now provide universities and other academic centers with a wealth of basic, policy-relevant material from which to build on the long-standing work done by others. The Nobel Prize committee is a recent and striking case in point.

This economic crisis has its own challenges. Now is the time to speak out. Economists and policy makers are especially fragile. Yet today’s most urgent problem is likely to be shaped by many of the same theories, assumptions, and ideas that economists, policy makers, and historians are initially drawn to.

Rising living standards, prosperity, and good health are no longer consistent with myopia or cognitive decrepitude. We should know, and we do. Economics, sociology, history, and political science can help.

For a chat with the contributors to this series in the Scientific American Café, click here. For analysis of this issue, read The Atlantic’s Year of Reckoning

Download the panel’s policy proposals here.

James Simpson (Historian): Studies continue to improve and literature continues to grow. But it is clear that many of the basic beliefs and theories that characterize those disciplines have not changed. This failure has become a difficult embarrassment for economic and social sciences, which are now equipped with the analytic tools to challenge the dominant ideology.

The world of thinking and writing about economic policy comes in two categories: policy analysis, which analyses economic institutions, policies, and practices in order to develop recommendations; and studies of the human spirit, which follow the culture and behavior of individuals. Where economics has the fewest resources, its practitioners seek to understand the human spirit. The debate has raged about the independence of the human spirit from human institutions, yet the facts and trends on the ground in the last generation have posed a fundamental challenge to this proposition.

Many would argue that due to disinterest, demoralization, and dissatisfaction, culture has moved further to the left in the developed world, while income inequality has swelled. With this explanation running on a decade-long train of thought, a strong counterpoint has arisen in the form of economic theory, which describes and reflects the origins and limits of human experience. I would suggest that this field is a direct result of social and cultural revolutions in the 1950s, ’60s, and ’70s. The elitist order of ideology came under unprecedented attack as the economic system became increasingly the property of the few. The democratization of voices and information and the movement to respect the particularity of individuals provided necessary counterweight to the encroaching statist ruling class.

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