HOW ECONOMICS BECAME A RELIGION by
John Rapley
“Yet if history
teaches anything, it’s that whenever economists feel certain that they have
found the holy grail of endless peace and prosperity, the end of the present
regime is nigh. On the eve of the 1929 Wall Street crash, the American
economist Irving Fisher advised people to go out and buy shares; in the 1960s,
Keynesian economists said there would never be another recession because they
had perfected the tools of demand management.
The 2008 crash was
no different. Five years earlier, on 4 January 2003, the Nobel laureate Robert
Lucas had delivered a triumphal presidential address to the American Economics
Association. Reminding his colleagues that macroeconomics had been born in the
depression precisely to try to prevent another such disaster ever recurring, he
declared that he and his colleagues had reached their own end of history:
“Macroeconomics in this original sense has succeeded,” he instructed the
conclave. “Its central problem of depression prevention has been solved.””
Updates:
Noah Smith on critics of economics
Paul Krugman on economic theories that were true in the past but are no longer relevant
https://krugman.blogs.nytimes.com/2017/07/10/formerly-true-theories-wonkish-and-self-indulgent/