What’s left of Cambridge Economics? by James K. Galbraith

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Although mainstream economics has moved beyond the market fundamentalism of the 1970s and 1980s, it has yet to establish a new theoretical foundation. One reason is that well-meaning reformers on the ground continue to adopt the same false premises that they should seek to overthrow.

AUSTIN — Diane Coyle, an economist and professor of public policy at the University of Cambridge, has set herself a daunting task: to provide a reasoned critique of the discipline of economics from an insider’s perspective, while championing mainstream economics against the rigors – and the rise – of criticism from outsiders.

In Cogs and monsters, Coyle seeks to advance an engaged and policy-relevant view of economics, drawn from the work of leading scholars in the field. The implication is that the parts are there and only need to be put together. “For the economy itself, she tells us, the agenda is clear”:

“We need to build on the work that already exists to incorporate externalities, non-linearities, tipping points and self-fulfilling (or self-avoiding) dynamics as standard. We need to revive and rethink the welfare economy. … We need a modern approach to the public provision and regulation of information goods, applying the rich literature on information asymmetry. … And we must put the social, not the individual, at the heart of the study of economics…”

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