The recent financial crisis has revealed the limits of Economics. These limits relate to both its capability to offer predictions -given its failure in foreseeing the crisis- and its very analytical strength that would allow us to understand the mechanisms that exist in the economy. After all, the financial and regulatory policies that were implemented in various developed countries prior to the crisis, which are admittedly -and to a large extent- to blame for the crisis, were highly influenced by the teachings of the economic science. In various foreign countries, a discourse has begun -already since the beginning of the crisis- regarding its significance to the economic science, both as to the content of dominant theoretical approaches and to the way it is taught in universities.
The discourse focused its criticism mainly on particular fundamental assumptions of Economics, on the systematic absence of the financial system from macroeconomic models, on the unilateral emphasis of most economists upon mathematics, as well as on the degradation of the role of institutions and politics in the functioning of the economy, on the one hand, and of history in the way Economics is taught, on the other.
In an attempt to bring this discourse to Greece as well, the Crisis Observatory has launched a new initiative, a new “File” concerning Economics in the wake of the crisis, by organising a series of interviews with distinguished Greek academics who teach in Greek and foreign universities. The questions they were invited to answer are the following:
Question 1: In the wake of both the financial crisis and the economic crisis that ensued (and continues to cause problems, especially to the European economy), Economics came under harsh criticism. This criticism involved its failure to foretell the crisis, but also the validity of its established models and approaches in general, and their capacity to correctly diagnose economic problems and to offer appropriate policies therefore. In your opinion, is this criticism justified and, if so, what do you think are the lessons that Economics should draw from the recent crisis?
Question 2: Based on your previous response, what do you think that ought to change in the way Economics is taught in universities, considering that economic policy makers of tomorrow are today’s students of Economics?
The interviews shall be posted on a regular, weekly basis -starting on Thursday, 23 October- on the YouTube channel of the Crisis Observatory and -of course- on its website.
The interviews will be gradually supplemented with various texts (research papers, opinion articles) on the same issue, written by Greek academics.
Professor Emilios Avgouleas, inaugural holder of the International Banking Law and Finance Chair at the University of Edinburgh [27 November 2014]
Aristides N. Hatzis, Associate Professor of Philosophy of Law and Theory of Institutions, National and Kapodistrian University of Athens (Department of Methodology, History & Theory of Science) [19 November 2014]
Nikos Theocharakis, Associate Professor of Political Economy and Economic History at the Department of Economics, National and Kapodistrian University of Athens [13 November 2014]
Kostas Kostis, Professor of Economic and Social History at the National and Kapodistrian University of Athens [06 November 2014]
Giorgos Argitis, Associate Professor of Macroeconomics at the National and Kapodistrian University of Athens, Department of Economics [30 October 2014]
Nicos Christodoulakis, Professor of Economic Analysis at the Athens University of Economics, Department of International and European Economic Studies [23 October 2014]
- Parramore, Lynn (2015) “Welcome to the Hunger Games, Brought to You by Mainstream Economics“, Institute for New Economic Thinking, 05 January.
As a virulent strain of austerity capitalism takes over Europe, leaving shattered lives in its shadow, researchers Servaas Storm and C.W.M. Naastepad, Senior Lecturers in Economics at Delft University of Technology in The Netherlands, consider how things got so bad, what role economists and misguided policy-makers have played, and which models and ideas are needed to change course. In the following interview, they discuss how most are getting the story about Europe wrong. They explain how their research shows that when countries try to compete with each other by lowering wages and slashing the social safety net, the costs are high both economically and socially, and why co-operative and regulated capitalism is a far better path.