Tag Archives: Social Sciences

Economists Need to Admit When They’re Wrong


Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown, Author: Philip Mirowski.

By Mark Buchanan – Several years ago, most people took the financial catastrophe of 2008 as definitive proof of profound errors in economic thinking. Some academic economists even lamented the discipline’s failure.

Mirowski argues that significant change would threaten the standing of the economics profession. Much of economists’ authority stems from their claims to insight on which policies will make people better off. Those claims arise from core theorems of mathematical economics — known as welfare theorems — which in turn depend on some wildly implausible assumptions, such as the idea that people are perfectly rational and make decisions with full awareness of all possible futures. more> http://tinyurl.com/m5sdrfq


The world has changed and economics hasn’t

By Steve Denning – The challenge is massive because shareholder value is now deeply embedded in the basic economics that is taught in business schools and economics faculties around the world. Moving on from the shareholder value theory, which even its foremost exemplar, Jack Welch, has called “the dumbest idea in the world”, will entail re-thinking and re-writing much of the basics of modern economics. more> http://tinyurl.com/n3btoca



When Will ‘The World’s Dumbest Idea’ Die?

By Steve Denning – Why will it take businesses so long to embrace what looks like an overwhelming case for change, supported even by original proponents like Jack Welch?  The sad fact is that the shareholder value idea is still a very widely-held view in both businesses and business schools.

Their whole understanding about how the world works is embedded in that ideology. Views held so deeply are not going to disappear rapidly. more> http://tinyurl.com/kpqu722


The Origin of ‘The World’s Dumbest Idea': Milton Friedman

By Steve Denning – No popular idea ever has a single origin. But the idea that the sole purpose of a firm is to make money for its shareholders got going in a major way with an article by Milton Friedman in the New York Times on September 13, 1970.

What’s interesting is that while the article jettisons one legal reality—the corporation—as a mere legal fiction, it rests its entire argument on another legal reality—the law of agency—as the foundation for the conclusions. The article thus picks and chooses which parts of legal reality are mere “legal fictions” to be ignored and which parts are “rock-solid foundations” for public policy. The choice depends on the predetermined conclusion that is sought to be proved. more> http://tinyurl.com/o2ewhov


Saving The World From The Economists: Ronald Coase & Paul Krugman

By Steve Denning – Economics, writes Nobel Prize winner Ronald Coase, as currently presented in textbooks and taught in the classroom does not have much to do with business management, and still less with entrepreneurship.

If the only problem of economists was one of irrelevance, then we could view the exchanging of econometric models of largely irrelevant issues by academics in ivory towers with the same nonchalance that we view medieval theologians arguing about how many angels can dance on the head of a pin.

The sad reality is that the people do pay attention to economists and their models. more> http://tinyurl.com/cfx3tbt