"Most economists, it seems, believe strongly in their own superior intelligence and take themselves far too seriously. In his open letter of 22 July 2001 to Joseph Stiglitz, Kenneth Rogoff identified this problem. "One of my favourite stories from that era is a lunch with you and our former colleague, Carl Shapiro, at which the two of you started discussing whether Paul Volcker merited your vote for a tenured appointment at Princeton. At one point, you turned to me and said, "Ken, you used to work for Volcker at the Fed. Tell me, is he really smart ?"

 

I responded something to the effect of, "Well, he was arguably the greatest Federal Reserve Chairman of the twentieth century." To which you replied, "But is he smart like us?"

Satyajit Das in this highly entertaining review of credit crunch literature also quotes US humorist PJ O?Rourke, who described economics as an entire scientific discipline of not knowing what you?re talking about. “One can only quibble with the word "scientific?.” Just how did the practice of economics end up in such a dead end ?

One plausible answer arises out of Eric Beinhocker?s outstanding "The Origin of Wealth? (Random House, 2007), which sets out to ask the questions: What is wealth ? How is it created ? How can we create more of it ? In short, blame Léon Walras. In what must surely be the obligatory preparation for becoming an economist, Walras started out by being rejected, twice, from the prestigious Ecole Polytechnique due to poor mathematical skills. He then failed as an engineer, then failed as a novelist. He then spent several years struggling as a newspaper writer and a bank employee. The fact that he was French may not have been an altogether promising attribute either.

“One evening in 1858, a depressed Walras took a walk with his father, a teacher and writer, discussing what he should do with his life. [An objective and dispassionate investor from the early 21st century would have responded: end it.] The elder Walras, a great admirer of science, said that there were two great challenges remaining in the nineteenth century: the creation of a complete theory of history, and the creation of a scientific theory of economics.. Prior to Walras.. economics was not a mathematical field.. Walras and his compatriots…

Unlock the rest of this Article in 15 seconds

or Unlock with your email

Already have an account?
Login here