Monday, March 16, 2009

”The only function of economic forecasting is to make astrology look respectable.” -John Kenneth Galbraith

Funny, but these days it's no laughing matter. I heard on NPR the other day that Economics is becoming one of the most sought after majors on college campuses…not because students want to practice the profession but because they want to understand what the heck is happening to the world around them. While it serves as the basic underpinning of our modern western way of life, we get little to no formal instruction and even then typically on only a very rudimentary basis.

When I studied Economics at university, it seemed so simplistic and disconnected from the real world. My textbooks lacked any sort of vital energy and had the amazing capacity to grow in weight and induce drowsiness whenever I held them too long in my hands. And rather than presenting from a rich and diverse landscape, they seemed to describe a monoculture, subscribing to just one framework of thinking --- capitalism---and in a Cliff Notes version at that. In the same way religious school was a total turn off growing up but “comparative religions of the world” turned me on later in college, it wasn’t until I started looking at differing economic theories in the historical contexts from which they had sprung and reading the actual writings of the gospels (Smith, Ricardo, Keynes, etc.), that the dismal science began to fascinate. When in doubt, follow the money---Om!

If you find yourself still feeling this way, take a few minutes to read Amartya Sen’s new essay, Capitalism Beyond The Crisis, which appears in the New York Review of Books. Rather than arguing for a new economic theory to supplant capitalism, she argues for a deeper understanding of the full wisdom of some of its greatest thinkers to optimize the best of what it already has to offer. For example, you may be surprised to learn that Adam Smith, who many consider to be the ultimate free-marketeer, in fact clearly believed that morality, certain state protections and other non-market based institutions are necessary to an optimized market economy. Well worth the read as you ponder why we should trust that the macroeconomic policy tools of capitalism can help guide us out of the mess they would in fact have seemed to have created in the first place.

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