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Thought provoking article in Telegraph UK, on how the field of economics seems to be in the middle of a crisis of its own.
Excerpts from this : "Following its failure to fix the current mess, economics has tumbled into a full-blown existential crisis...
...late last year, Alan Greenspan, the former Federal Reserve chief and high priest of capitalism, was forced to admit in a Congressional hearing that he had "found a flaw" in the foundations of his economic understanding...
...The problem, said the experts, was a "failure of the collective imagination of many bright people" (by which they presumably meant themselves)...
...Despite this ineptitude, it is going much too far to conclude that economists are good for nothing. The primary purpose of what its practitioners call "the dismal science" has never been to predict the future. But somehow, this was the idea some in the trade propounded, and the rest of us were taken in....
...But in a strange way, the by-product of this financial collapse has been to free economics of this burden. In the corridors of the Bank of England and Treasury, there is a distinct whiff of excitement. For the first time in decades, economists have been able to throw away their textbooks and go back to first principles; to exhume once-sacrilegious figures such as John Maynard Keynes or Friedrich Hayek. It is unsettling, no doubt, but this is a fertile moment, an opportunity from which may be born a better model of how to run an economy. "
That's a century old ecomomist's debate on the Keynesian thought of govt intervention in markets vs. capitalism's free market theory (Hey.. I wrote a paper on this in my business school ! and do think it was fun reading and writing about the different theories) . But theories are what they are, and reality doesn't fit any one particular theory - though you can draw parallels and conclusions of the best fit model for a given time.
The root cause of what happened and still happening can be attributed to the slippery slope we are on with respect to :
> Greed & Conspicuous consumption,
> Lowering moral values & Integrity
> Missing accountability and lack of common sense
> Finally, the lack of courage to standup and do what we think is intuitively right for "collective we", rather than following the diluted dose of truth that will satisfy "selfish me".
These are traits not influenced by economists or economic theories, but are side-effects of the perilious path we have chosen as collective humanity while in aggressive pursuit of self-interests.
This crisis shows the nature's power of self-correction in an effort to bring things back to equilibrium.. may be here I am migrating from economics into realm of thermodynamics or even better philosophy, so time to say Adios..
Jul 30, 2009
Jul 1, 2009
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