Out of Robotic Constructs and into Realistic Science: A Critique of Conventional Economic Wisdom

Jamil Hammoud
(American University of Science and Technology, Beirut, Lebanon)

Abstract: The international financial crisis brought the world’s economy down to its knees and placed economics as a discipline in crisis, the depth of which may be paralleled only by the aftermath of the Great Depression. Consequently, the debate about the current state of economics has greatly re-intensified since at least 2008, and ranged in scope from the basics of what we traditionally teach in undergraduate and graduate economics courses to the very core of economic theory and policy choices. A review of the literature would in our judgment reveal that while the debate is warranted and long overdue, it has revolved around reforming conventional economic wisdom. To reform the latter is to maybe tinker with one thing here, possibly change another there, or even plausibly introduce new elements or considerations into what already exists. In this paper, we argue that to limit our efforts to reforming conventional wisdom, keeping in mind the pains we undergo in the process, is missing out on the historic opportunity that has opened up to truly redirect economics toward the right track of realism. This redirection will require in the least reflection on the epistemology of economics, thought about the philosophy that underlies economic theory, and consideration of an interdisciplinary approach that may lead to incorporating advances in related disciplines. It is only after we restudy these fundamentals that we must reexamine the roles of markets and mathematics in economic analysis. This paper is predominantly theoretical. It relies on reexamination and analysis of existing theories, principles and fundamentals. What has been taken for granted in economic analysis becomes subject to question in this paper.

Key words: economics; macroeconomics; economic theory; economic policy; international financial crisis; international economic crisis; economic science

JEL code: A10