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What’s Wrong with Economics? A Primer for the Perplexed
A passionate and informed critique of mainstream economics from one of the leading economic thinkers of our time
This insightful book looks at how mainstream economics’ quest for scientific certainty has led to a narrowing of vision and a convergence on an orthodoxy that is unhealthy for the field, not to mention the societies which base policy decisions on the advice of flawed economic models. Noted economic thinker Robert Skidelsky explains the circumstances that have brought about this constriction and proposes an approach to economics which includes philosophy, history, sociology, and politics.
Skidelsky’s clearly written and compelling critique takes aim at the way that economics is taught in today’s universities, where a focus on modelling leaves students ill-equipped to grapple with what is important and true about human life. He argues for a return to the ideal set out by John Maynard Keynes that the economist must be a “mathematician, historian, statesman, [and] philosopher” in equal measure.
This insightful book looks at how mainstream economics’ quest for scientific certainty has led to a narrowing of vision and a convergence on an orthodoxy that is unhealthy for the field, not to mention the societies which base policy decisions on the advice of flawed economic models. Noted economic thinker Robert Skidelsky explains the circumstances that have brought about this constriction and proposes an approach to economics which includes philosophy, history, sociology, and politics.
Skidelsky’s clearly written and compelling critique takes aim at the way that economics is taught in today’s universities, where a focus on modelling leaves students ill-equipped to grapple with what is important and true about human life. He argues for a return to the ideal set out by John Maynard Keynes that the economist must be a “mathematician, historian, statesman, [and] philosopher” in equal measure.
248 pages, Hardcover
Published April 28, 2020
94 people are currently reading
849 people want to read
About the author
Robert Skidelsky
67 books131 followersLord Skidelsky is Emeritus Professor of Political Economy at the University of Warwick. His three volume biography of the economist John Maynard Keynes (1983, 1992, 2000) received numerous prizes, including the Lionel Gelber Prize for International Relations and the Council on Foreign Relations Prize for International Relations. He is the author of the The World After Communism (1995) (American edition called The Road from Serfdom). He was made a life peer in 1991, and was elected Fellow of the British Academy in 1994. He is chairman of the Govenors of Brighton College
Robert Skidelsky was born on 25 April 1939 in Harbin, Manchuria. His parents were British subjects, but of Russian ancestry. His father worked for the family firm, L. S. Skidelsky, which leased the Mulin coalmine from the Chinese government. When war broke out between Britain and Japan in December 1941, he and his parents were interned first in Manchuria then Japan, but released in exchange for Japanese internees in England.
From 1953 to 1958, he was a boarder at Brighton College (of which he is now chairman of the board of governors). He went on to read history at Jesus College, Oxford, and from 1961 to 1969, he was successively research student, senior student, and research fellow at Nuffield College, Oxford. In 1967, he published his first book, Politicians and the Slump, Labour Government of 1929-31, based on his D.Phil dissertation. The book explores the ways in which British politicians handled the Great Depression.
During a two year research fellowship at the British Academy, he began work in his biography of Sir Oswald Mosley (published in 1975) and published English Progressive Schools (1969). In 1970, he became an Associate Professor at the School of Advanced International Studies, John Hopkins University. But the controversy surrounding the publication of his biography of Sir Oswald Mosley - in which he was felt to have let Mosley off too lightly - led John Hopkins University to refuse him tenure. Oxford University also proved unwilling to give him a permanent post.
In 1978, he was appointed Professor of International Studies at the University of Warwick, where he has since remained, though joining the Economics Department as Professor Political Economy in 1990. He is currently Andrew D. White Professor-at-Large at Cornell University.
The first volume of his biography of John Maynard Keynes, Hopes Betrayed, 1883-1920, was published in 1983. The second volume, The Economist as Saviour, 1920-1937 (1992) won the Wolfson Prize for History. The third volume, Fighting for Britain, 1937-1946 (2000) won the Duff Cooper Prize, the James Tait Black Memorial Prize for Biography, the Lionel Gelber Prize for International Relations and the Arthur Ross Council on Foreign Relations Prize for International Relations.
Since 2003, he has been a non-executive director of the mutual fund manager, Janus Capital and Rusnano Capital; from 2008-10 he sat on the board of Sistema JSC. He is a director of the Moscow School of Political Studies and was the founder and executive secretary of the UK/Russia Round Table. Since 2002, he has been chairman of the Centre for Global Studies. In 2010, he joined the Advisory Board of the Institute of New Economic Thinking.
He writes a monthly column for Project Syndicate, "Against the Current", which is syndicated in newspapers all over the world. His account of the current economic crisis, Keynes: The Return of the Master, was published by Penguin Allen Lane in September 2009. A short history of twentieth-century Britain was published by Random House in the volume A World by Itself: A History of the British Isles edited by Jonathan Clark in January 2010. He is now in the process of writing How Much is Enough? The Economics of the Good Life jointly with his son Edward Skidelsky.
Robert Skidelsky was born on 25 April 1939 in Harbin, Manchuria. His parents were British subjects, but of Russian ancestry. His father worked for the family firm, L. S. Skidelsky, which leased the Mulin coalmine from the Chinese government. When war broke out between Britain and Japan in December 1941, he and his parents were interned first in Manchuria then Japan, but released in exchange for Japanese internees in England.
From 1953 to 1958, he was a boarder at Brighton College (of which he is now chairman of the board of governors). He went on to read history at Jesus College, Oxford, and from 1961 to 1969, he was successively research student, senior student, and research fellow at Nuffield College, Oxford. In 1967, he published his first book, Politicians and the Slump, Labour Government of 1929-31, based on his D.Phil dissertation. The book explores the ways in which British politicians handled the Great Depression.
During a two year research fellowship at the British Academy, he began work in his biography of Sir Oswald Mosley (published in 1975) and published English Progressive Schools (1969). In 1970, he became an Associate Professor at the School of Advanced International Studies, John Hopkins University. But the controversy surrounding the publication of his biography of Sir Oswald Mosley - in which he was felt to have let Mosley off too lightly - led John Hopkins University to refuse him tenure. Oxford University also proved unwilling to give him a permanent post.
In 1978, he was appointed Professor of International Studies at the University of Warwick, where he has since remained, though joining the Economics Department as Professor Political Economy in 1990. He is currently Andrew D. White Professor-at-Large at Cornell University.
The first volume of his biography of John Maynard Keynes, Hopes Betrayed, 1883-1920, was published in 1983. The second volume, The Economist as Saviour, 1920-1937 (1992) won the Wolfson Prize for History. The third volume, Fighting for Britain, 1937-1946 (2000) won the Duff Cooper Prize, the James Tait Black Memorial Prize for Biography, the Lionel Gelber Prize for International Relations and the Arthur Ross Council on Foreign Relations Prize for International Relations.
Since 2003, he has been a non-executive director of the mutual fund manager, Janus Capital and Rusnano Capital; from 2008-10 he sat on the board of Sistema JSC. He is a director of the Moscow School of Political Studies and was the founder and executive secretary of the UK/Russia Round Table. Since 2002, he has been chairman of the Centre for Global Studies. In 2010, he joined the Advisory Board of the Institute of New Economic Thinking.
He writes a monthly column for Project Syndicate, "Against the Current", which is syndicated in newspapers all over the world. His account of the current economic crisis, Keynes: The Return of the Master, was published by Penguin Allen Lane in September 2009. A short history of twentieth-century Britain was published by Random House in the volume A World by Itself: A History of the British Isles edited by Jonathan Clark in January 2010. He is now in the process of writing How Much is Enough? The Economics of the Good Life jointly with his son Edward Skidelsky.
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May 11, 2020
In case you were wondering, economics is not going to save us. In fact, as Skidelsky develops in some detail, it can barely save itself from its own faults and foibles. With that said, this was a really nice tome by Keynes's biographer turned political economist.
As chronicled in What's Wrong with Economics?, the broader discipline of economics is ailing in several ways that go back down to its history. These issues are rooted in its grounding, or in its modern neoclassical variant, the lack thereof in ethics, epistemology, and ontology. Skidelsky does a nice job of connecting neoclassical economics, delimiting its shortcomings, and connecting them both to the history of economics and the broader field of political economy that it emerged from.
One of the most interesting developments is the theoretical departure of neoclassical economics from the lineage of classical economics and Marxist economics. The various lines of modern economics emerged from the lineage of classical economics dating back to Adam Smith and David Ricardo and their labor theory of value. Classical economics through John Stuart Mill and Alfred Marshall continued in this tradition. In the first major departure, starting with Karl Marx and his theory of surplus value, Marxist economics continued and further developed the labor theory of value. In a considerably developed form, with varying interpretations and lines of development, that lineage continues to this day and is evident in Marxist and post-Marxists intellectuals including studies in political and economic. With neoclassical economics, the point of departure was the development of the supply/demand model for the price and quantity of a commodity and as augmented by the concept of marginal utility. In the Kuhnian sense, for the line of neoclassical economics, the supply/demand and marginal utility model represents and carries forward a paradigm shift.
It's interesting that, like the evolution of animal species separated by distance and time, the lineages from a common ancestor depart in remarkably different directions with unique strengths and weaknesses. As Skidelsky develops, economics is not the queen of the social sciences. In fact, neoclassical economics's blindspot was and continues to be the relation to politics and its ethical and normative positions inherent in its uses. As mid to late 20th century philosophy developed time and again, ethical and political assumptions are already built into each discipline and each school's underlying assumptions whether we are aware of them or not.
Claims for neoclassical school for a higher mantle require an outdated understanding of the philosophy of science. In their heyday, positivist sciences, e.g. pursuits in neoclassical economics, presumed they were value free by disclaiming the political ambitions in those pursuits. However, that ignored two sources of value ladenness already inbuilt in the discipline. First, the history and development of the discipline was replete with politically diverse normative assumptions and debates. Later theorists cleansed the theories and math formulas of the early overt normative dimensions. Second, the aims of the pursuits carry with them a value decision and ethical end. Even if it’s as simple as using this method which pursued that goal e.g. growth rather than a different goal, e.g. redistribution, or a different method altogether. It occurred to me how we laughed and mocked the early and mid 20th century Marxist economists for their claims of pursuing science and a scientific discipline. However until very recently--I mean many people have not even reached this conclusion yet--we only started to disdain similar claims by neoclassical economists. If we need an example of how ideology is invisible to us and is a lens through which we view the world, and is always going to shape and distort that view one way or another, this is it.
There were shortcoming and limitations of the book that are worth noting. First, there were several instances where Skidelsky should have developed his point further or made his explanations clearer. The concept of marginal utility was important enough to his argument that it should have been flushed out in greater detail. In the first few chapters, Skidelsky should have offered a few paragraph-long summation and elaboration. This relates perhaps to a connected limitation. It was not clear who the audience for the book was. A readership steeped in economics, for instance, would not need this explanation. However, if the book is intended for a general audience, as the title purports, there were additional instances where concepts and models begged for elaboration. In addition, in an omission worth noting, Skidelsky misses perhaps the most fruitful relation of economics to its companions and related disciplines. While Skidelsky captures some of the limitations of econometrics, he seems to paint it only as a rival to good economic theory and perhaps as a handmaiden of neoclassical economics. However, econometrics does not stand in as an alternative to or a replacement for good economic theory. Econometrics is an empirical tool that can and is used to prove the efficacy of a policy intervention. For instance, we are able to adjudicate the efficacy of public policy and to determine if it worked better than the absence of that policy. Take a Medicaid expansion that due to budgetary limitations was implemented for say two of the five Oregon residents eligible for the program. Using this natural experiment, econometrics would be able to tell us if their enrollment in Medicaid had positive effects on their health and ultimately morbidity. This example is real. As such, econometrics properly conceptualized and used is not a rival for developing good economic theory and policy, this is a tool and complement, so we can continue developing policy that actually works and throw out the policies that did not work.
In my book, most of these shortcomings can be overlooked, if we take Skidelsky's argument for what it is. For the last several decades, keeping their distance from the formalism that has been embroiling philosophy (see e.g. structuralism, linguistic philosophy) and the related methodological disputes roiling the social sciences, Marxist and post-Marxist intellectuals have been perhaps the main line of theorists exploring the intersection of economics with history and politics. One of the merits of the book is Skidelsky signalling that post-Keynesian economics is coming to the table to meet up at the intersection of economics, history, ethics and politics. We welcome them to the table.
As chronicled in What's Wrong with Economics?, the broader discipline of economics is ailing in several ways that go back down to its history. These issues are rooted in its grounding, or in its modern neoclassical variant, the lack thereof in ethics, epistemology, and ontology. Skidelsky does a nice job of connecting neoclassical economics, delimiting its shortcomings, and connecting them both to the history of economics and the broader field of political economy that it emerged from.
One of the most interesting developments is the theoretical departure of neoclassical economics from the lineage of classical economics and Marxist economics. The various lines of modern economics emerged from the lineage of classical economics dating back to Adam Smith and David Ricardo and their labor theory of value. Classical economics through John Stuart Mill and Alfred Marshall continued in this tradition. In the first major departure, starting with Karl Marx and his theory of surplus value, Marxist economics continued and further developed the labor theory of value. In a considerably developed form, with varying interpretations and lines of development, that lineage continues to this day and is evident in Marxist and post-Marxists intellectuals including studies in political and economic. With neoclassical economics, the point of departure was the development of the supply/demand model for the price and quantity of a commodity and as augmented by the concept of marginal utility. In the Kuhnian sense, for the line of neoclassical economics, the supply/demand and marginal utility model represents and carries forward a paradigm shift.
It's interesting that, like the evolution of animal species separated by distance and time, the lineages from a common ancestor depart in remarkably different directions with unique strengths and weaknesses. As Skidelsky develops, economics is not the queen of the social sciences. In fact, neoclassical economics's blindspot was and continues to be the relation to politics and its ethical and normative positions inherent in its uses. As mid to late 20th century philosophy developed time and again, ethical and political assumptions are already built into each discipline and each school's underlying assumptions whether we are aware of them or not.
Claims for neoclassical school for a higher mantle require an outdated understanding of the philosophy of science. In their heyday, positivist sciences, e.g. pursuits in neoclassical economics, presumed they were value free by disclaiming the political ambitions in those pursuits. However, that ignored two sources of value ladenness already inbuilt in the discipline. First, the history and development of the discipline was replete with politically diverse normative assumptions and debates. Later theorists cleansed the theories and math formulas of the early overt normative dimensions. Second, the aims of the pursuits carry with them a value decision and ethical end. Even if it’s as simple as using this method which pursued that goal e.g. growth rather than a different goal, e.g. redistribution, or a different method altogether. It occurred to me how we laughed and mocked the early and mid 20th century Marxist economists for their claims of pursuing science and a scientific discipline. However until very recently--I mean many people have not even reached this conclusion yet--we only started to disdain similar claims by neoclassical economists. If we need an example of how ideology is invisible to us and is a lens through which we view the world, and is always going to shape and distort that view one way or another, this is it.
There were shortcoming and limitations of the book that are worth noting. First, there were several instances where Skidelsky should have developed his point further or made his explanations clearer. The concept of marginal utility was important enough to his argument that it should have been flushed out in greater detail. In the first few chapters, Skidelsky should have offered a few paragraph-long summation and elaboration. This relates perhaps to a connected limitation. It was not clear who the audience for the book was. A readership steeped in economics, for instance, would not need this explanation. However, if the book is intended for a general audience, as the title purports, there were additional instances where concepts and models begged for elaboration. In addition, in an omission worth noting, Skidelsky misses perhaps the most fruitful relation of economics to its companions and related disciplines. While Skidelsky captures some of the limitations of econometrics, he seems to paint it only as a rival to good economic theory and perhaps as a handmaiden of neoclassical economics. However, econometrics does not stand in as an alternative to or a replacement for good economic theory. Econometrics is an empirical tool that can and is used to prove the efficacy of a policy intervention. For instance, we are able to adjudicate the efficacy of public policy and to determine if it worked better than the absence of that policy. Take a Medicaid expansion that due to budgetary limitations was implemented for say two of the five Oregon residents eligible for the program. Using this natural experiment, econometrics would be able to tell us if their enrollment in Medicaid had positive effects on their health and ultimately morbidity. This example is real. As such, econometrics properly conceptualized and used is not a rival for developing good economic theory and policy, this is a tool and complement, so we can continue developing policy that actually works and throw out the policies that did not work.
In my book, most of these shortcomings can be overlooked, if we take Skidelsky's argument for what it is. For the last several decades, keeping their distance from the formalism that has been embroiling philosophy (see e.g. structuralism, linguistic philosophy) and the related methodological disputes roiling the social sciences, Marxist and post-Marxist intellectuals have been perhaps the main line of theorists exploring the intersection of economics with history and politics. One of the merits of the book is Skidelsky signalling that post-Keynesian economics is coming to the table to meet up at the intersection of economics, history, ethics and politics. We welcome them to the table.
December 2, 2020
I'm afraid to say that this book didn't quite chime as well as it could. I think that part of the problem is that the author didn't have clearly in his mind who the intended audience are. If it is intended for a more general readership, then it's a bit too technical. If it's aimed at the economics profession, then it merely states what is known already. If it is aimed at students of economics, then it's a bit like showing a feast to a starving man. I can see parts of the book where it tries to do all three, but it doesn't really achieve those objectives.
The basic premise is that economics is not fit for purpose. The global financial crisis exposed the flaws in economics, as it is currently taught, to be of little practical value. The core of this flaw are a set of foundational assumptions that are absurd. These assumptions have allowed the subject to become nothing more than vehicle to promote a single political opinion. That would be fine as long as that opinion is correct, but events have shown it to be flawed. As things stand, economics has little to offer questions of equity - what everyone would call fairness - because it has assumed the problem away. Unfortunately, we now live in times where it is not possible to do that.
It we look at some of the larger issues of the times - things like climate change, or inequality, or intergenerational justice - economics has very little to offer on these matters. As these issues become more and more pressing, economics will become more and more irrelevant. This is a shame because economics could have something to offer if it were to break free from the grip of it's utilitarian legacy. The author heads towards this conclusion himself, but rather underplays the role of utilitarianism in the foundations of economics.
The book can be a bit technical at times. Mercifully it avoids the higher maths that usually accompanies the subject. I applaud the move back to a more descriptive form of economics. Much has been lost in the advance into mathematics and statistics, generally at the cost of clarity. The book is part of a trend to denounce economics as a science. To many observers, it is obviously far from that, but that point is not obvious to economists. Perhaps these are the intended audience?
Which then begs the question of to whom I would recommend the book? I think that the audience who would benefit most from the book are recent economics graduates. They would know enough to be able to cope with the technical side of things, but wouldn't quite know why their learning has been an edifice of nonsense. This book would help to show them why, and it is to this narrow audience I would commend the book.
The basic premise is that economics is not fit for purpose. The global financial crisis exposed the flaws in economics, as it is currently taught, to be of little practical value. The core of this flaw are a set of foundational assumptions that are absurd. These assumptions have allowed the subject to become nothing more than vehicle to promote a single political opinion. That would be fine as long as that opinion is correct, but events have shown it to be flawed. As things stand, economics has little to offer questions of equity - what everyone would call fairness - because it has assumed the problem away. Unfortunately, we now live in times where it is not possible to do that.
It we look at some of the larger issues of the times - things like climate change, or inequality, or intergenerational justice - economics has very little to offer on these matters. As these issues become more and more pressing, economics will become more and more irrelevant. This is a shame because economics could have something to offer if it were to break free from the grip of it's utilitarian legacy. The author heads towards this conclusion himself, but rather underplays the role of utilitarianism in the foundations of economics.
The book can be a bit technical at times. Mercifully it avoids the higher maths that usually accompanies the subject. I applaud the move back to a more descriptive form of economics. Much has been lost in the advance into mathematics and statistics, generally at the cost of clarity. The book is part of a trend to denounce economics as a science. To many observers, it is obviously far from that, but that point is not obvious to economists. Perhaps these are the intended audience?
Which then begs the question of to whom I would recommend the book? I think that the audience who would benefit most from the book are recent economics graduates. They would know enough to be able to cope with the technical side of things, but wouldn't quite know why their learning has been an edifice of nonsense. This book would help to show them why, and it is to this narrow audience I would commend the book.
July 9, 2020
Excellent read, economics obsession with mathematics and being more like physics has led astray in modern times. Economics can’t ignore sociology, history and political science.
August 4, 2024
Skidelskiy is a big name in modern economic literature, and it's well deserved. However, I am a little confused about who this book is for. If it is for economists, then it is too trivial. If it is for someone outside of the field, then there is too much jargon. Anyway, this is a good book to read, basically for anyone.
April 17, 2023
I have a lot of love for economics, so I was intrigued by the idea that Skidelsky could find enough issues with economics to write a book.
There were some worrying issues outlined in the book, particularly about the methodology of economics, but the most worrying issue (to me at least) was the absence of ethics in economics.
I’ve given it 4 stars for many reasons, but mainly due to Skidelsky’s constant attack on the use of mathematics in economics and his lack of solutions produced to economics’ many problems (finding only four pages to devote to ‘the future of economics’).
Despite all this, I would recommend! (4.2 starts maybe)
There were some worrying issues outlined in the book, particularly about the methodology of economics, but the most worrying issue (to me at least) was the absence of ethics in economics.
I’ve given it 4 stars for many reasons, but mainly due to Skidelsky’s constant attack on the use of mathematics in economics and his lack of solutions produced to economics’ many problems (finding only four pages to devote to ‘the future of economics’).
Despite all this, I would recommend! (4.2 starts maybe)
Read
December 26, 2023Veel vraagstukken en benaderingen goed uitgelegd. Citeert voornamelijk Communistisch manisfetst; slechts een keer Das Kapital. Ik geloof niet dat ik het eens ben met zijn uitleg daarvan.
Maar verder super interessant.
Maar verder super interessant.
April 8, 2023
Key flaws and points:
Economics picture of human motives is incomplete
The assumption that humans are rational is deeply flawed.
Humans are also motivated by other things that cannot be quantified, like love, friendship, loyalty
Everything is reduced down to money, cost benefit analysis, no tragic choices, only trade offs
Even if you are consequentialist, almost no decision is made with perfect information and with full awareness of the consequences of each individual action.
Economics suffer from over simplified premises and axioms
Ceteris paribus
The economy is dynamic and constantly changing. Stationary conditions needed for equilibrium do not exist.
Equilibrium is restored in the long run
How long is the long run?
Until equilibrium is restored!
As above, humans are unpredictable
Furthermore, innovation and technology is unpredictable
Firms are not always profit maximising (can be countered by saying such actions are profit maximising in the long run)
Economics suffer from saying only the individual exists and that organisations are merely constructs when clearly the following plays a role in human decision making. Individuals are hard wired to act in a group.
social structure
Systems can act
Organisations, firms can act for their own survival
relations between individuals
power. Officials act in their own self interest, not the public interest; principal-agent problem. Moral hazard.in the form of
blunt power
agenda power
hegemonic power
Liberal: state has blunt power but derives its legitimacy from social construct
Marxist: power shaped by dominant class
Machiavellian: Power is power. struggle is struggle.
Economic growth, growing the cake, should not be a religion
We will never be satisfied. Because of relative wants, positional goods, we want something as long as other people cannot have it because it indicates position and power. inequality keeps people unsatisfied
Economic growth comes at the cost of the environment
A core assumption that economics has flawed is that it fails to recognise that economics in reality is rarely efficient
Scarcity itself is usually artificially imposed by government and big business
Consumer sovereignty rarely exists
People are paid less than what they produce so companies can have profit
Wages are stickier than theory
Economics does not address ethics at all
Economics is only concerned about means to an end.
There are economic and not economic ways to go about achieving something.
They try to quantify in economic terms ethical decisions on what is good for society and in the end just absolve governments moral and ethical responsibility.
Econometrics and methodology to measure economics is flawed
Impossible to isolate hypothesis
Insufficient time to prove hypothesis
Measuring non measurables is impossible
Reduction of incommensurable quantities to a single number is difficult
Shouldn’t the goal of economics be to abolish poverty?
Interesting idea: In a Perfectly competitive market, if we have perfect information we do not need markets! A central planner with all his models can just plan out the entire market.
The capitalist system is not natural. What is natural is custom, reciprocity, the gift economy, with the goal of maximising social honour.
Markets are natural, the market economy is unnatural. It was created to give the state more control over resources for war.
To prevent alienating forces of markets, the state must step in.
Economics picture of human motives is incomplete
The assumption that humans are rational is deeply flawed.
Humans are also motivated by other things that cannot be quantified, like love, friendship, loyalty
Everything is reduced down to money, cost benefit analysis, no tragic choices, only trade offs
Even if you are consequentialist, almost no decision is made with perfect information and with full awareness of the consequences of each individual action.
Economics suffer from over simplified premises and axioms
Ceteris paribus
The economy is dynamic and constantly changing. Stationary conditions needed for equilibrium do not exist.
Equilibrium is restored in the long run
How long is the long run?
Until equilibrium is restored!
As above, humans are unpredictable
Furthermore, innovation and technology is unpredictable
Firms are not always profit maximising (can be countered by saying such actions are profit maximising in the long run)
Economics suffer from saying only the individual exists and that organisations are merely constructs when clearly the following plays a role in human decision making. Individuals are hard wired to act in a group.
social structure
Systems can act
Organisations, firms can act for their own survival
relations between individuals
power. Officials act in their own self interest, not the public interest; principal-agent problem. Moral hazard.in the form of
blunt power
agenda power
hegemonic power
Liberal: state has blunt power but derives its legitimacy from social construct
Marxist: power shaped by dominant class
Machiavellian: Power is power. struggle is struggle.
Economic growth, growing the cake, should not be a religion
We will never be satisfied. Because of relative wants, positional goods, we want something as long as other people cannot have it because it indicates position and power. inequality keeps people unsatisfied
Economic growth comes at the cost of the environment
A core assumption that economics has flawed is that it fails to recognise that economics in reality is rarely efficient
Scarcity itself is usually artificially imposed by government and big business
Consumer sovereignty rarely exists
People are paid less than what they produce so companies can have profit
Wages are stickier than theory
Economics does not address ethics at all
Economics is only concerned about means to an end.
There are economic and not economic ways to go about achieving something.
They try to quantify in economic terms ethical decisions on what is good for society and in the end just absolve governments moral and ethical responsibility.
Econometrics and methodology to measure economics is flawed
Impossible to isolate hypothesis
Insufficient time to prove hypothesis
Measuring non measurables is impossible
Reduction of incommensurable quantities to a single number is difficult
Shouldn’t the goal of economics be to abolish poverty?
Interesting idea: In a Perfectly competitive market, if we have perfect information we do not need markets! A central planner with all his models can just plan out the entire market.
The capitalist system is not natural. What is natural is custom, reciprocity, the gift economy, with the goal of maximising social honour.
Markets are natural, the market economy is unnatural. It was created to give the state more control over resources for war.
To prevent alienating forces of markets, the state must step in.
September 19, 2020
Essential reading
“[A]n important and fundamentally correct critique of the core methodology of economics: individualistic; analytical; ahistorical; asocial; and apolitical”—Martin Wolf, Financial Times
“Robert Skidelsky has written the book that anyone who wants to learn economics—and anyone who thinks that they know economics—should read.”—Meghnad Desai, author of Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One
“This is a cogent and highly readable exposure of economics as a discourse, often free from the constraints of history and politics, and therefore free to inhabit an imaginary world underpinned by the seductive verities of logic and mathematics. It also helps to explain why 2008 took the whole world by surprise.”—Gareth Stedman Jones, author of An End to Poverty?
“Skidelsky gives a wonderfully readable, compelling and compassionate account of where economics goes wrong. This is an urgent message for all sides to hear.”—Nancy Cartwright, Professor of Philosophy, Durham University
“[A]n important and fundamentally correct critique of the core methodology of economics: individualistic; analytical; ahistorical; asocial; and apolitical”—Martin Wolf, Financial Times
“Robert Skidelsky has written the book that anyone who wants to learn economics—and anyone who thinks that they know economics—should read.”—Meghnad Desai, author of Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One
“This is a cogent and highly readable exposure of economics as a discourse, often free from the constraints of history and politics, and therefore free to inhabit an imaginary world underpinned by the seductive verities of logic and mathematics. It also helps to explain why 2008 took the whole world by surprise.”—Gareth Stedman Jones, author of An End to Poverty?
“Skidelsky gives a wonderfully readable, compelling and compassionate account of where economics goes wrong. This is an urgent message for all sides to hear.”—Nancy Cartwright, Professor of Philosophy, Durham University
December 12, 2021
I really enjoyed this book and would recommend it to anyone interested in economics. Throughout the first part of the book Skidelsky describes and critiques the core concepts in economics and explains how they are not fit for purpose. This was a real eye-opener for me and made me question how much weight people give to economics and how much it should be taken as a science, even though it aspires to be more like physics more than anything else.
In the latter part of the book Skidelsky runs through different aspects of economic in terms of psychology, epistemology, ontology and ethics, which was really interesting but much more impenetrable compared to the first half of the book. As someone who only studied Intro to Microeconomics and Intro to Macroeconomics at university and nothing else, there were parts of the book that were hard to wrap my head a round.
Overall, I really enjoyed this book and I appreciated that Skidelsky included a chapter of how we should change our approach to economics as usually a lot of books just critique the problem but don't offer solutions.
In the latter part of the book Skidelsky runs through different aspects of economic in terms of psychology, epistemology, ontology and ethics, which was really interesting but much more impenetrable compared to the first half of the book. As someone who only studied Intro to Microeconomics and Intro to Macroeconomics at university and nothing else, there were parts of the book that were hard to wrap my head a round.
Overall, I really enjoyed this book and I appreciated that Skidelsky included a chapter of how we should change our approach to economics as usually a lot of books just critique the problem but don't offer solutions.
December 10, 2022
Skidelsky has written a powerfully convergent book about the origins and enduring nature of economics and the lamentably over-hyped concept of Homo economicus.
“Economic Man”—the human calculating machine that continuously, exclusively acts in the most rational way to achieve maximum value at minimum cost—exists only in the imaginations of economists who invented him to fit their equally fictitious models of human behavior and modern economic activity.
In a nutshell: “…the neoclassical model of rational behaviour based on fixed preferences, complete contracts, and ample relevant information is the wrong one." (p. 90)
What’s Wrong with Economics? will help you understand what’s wrong with our current so-called capitalist system and the people, companies, and governments that it mostly benefits.
Read more of my book reviews and poems here:
www.richardsubber.com
“Economic Man”—the human calculating machine that continuously, exclusively acts in the most rational way to achieve maximum value at minimum cost—exists only in the imaginations of economists who invented him to fit their equally fictitious models of human behavior and modern economic activity.
In a nutshell: “…the neoclassical model of rational behaviour based on fixed preferences, complete contracts, and ample relevant information is the wrong one." (p. 90)
What’s Wrong with Economics? will help you understand what’s wrong with our current so-called capitalist system and the people, companies, and governments that it mostly benefits.
Read more of my book reviews and poems here:
www.richardsubber.com
October 4, 2024
I have to admit, I was quite a fan of the book at first. But as I kept reading, my excitement faded, much like the public's trust in economists has over the decades. Skidelsky explores why that trust has eroded in great detail, but why my enjoyment of the book diminished is easier to explain.
Skidelsky writes for a general audience but uses overly academic language. Or perhaps he's aiming at fellow economists, in which case, the book doesn't bring much new to the table. It feels like he—and maybe I—couldn’t quite figure out who the intended readers are.
And that’s a shame. Every mature field needs strong self-criticism, and economics, in particular, could use a lot of it. We tend to be overly complicated, inward-looking, and dismissive of other social sciences. The book addresses these issues, but the way it's presented just isn’t engaging enough to capture a wide audience.
Skidelsky writes for a general audience but uses overly academic language. Or perhaps he's aiming at fellow economists, in which case, the book doesn't bring much new to the table. It feels like he—and maybe I—couldn’t quite figure out who the intended readers are.
And that’s a shame. Every mature field needs strong self-criticism, and economics, in particular, could use a lot of it. We tend to be overly complicated, inward-looking, and dismissive of other social sciences. The book addresses these issues, but the way it's presented just isn’t engaging enough to capture a wide audience.
August 11, 2021
Really thorough book laying out the shortcomings of our current macroeconomic paradigm, which is the neoclassical school.
My only quibble with this book is that even though I am a grad student studying these topics, so I am well versed in any technical language, I had a hard time following the authors syntax and found myself needing to re-read sections many times to gain what was really being said. So I guess you could say I consumed this booked twice.
I was able to discover a few resources through the footnotes to continue my research on this topic as this book pulls from almost every major, and minor economist of the last 400 years.
This is not a book for the casual reader though.
My only quibble with this book is that even though I am a grad student studying these topics, so I am well versed in any technical language, I had a hard time following the authors syntax and found myself needing to re-read sections many times to gain what was really being said. So I guess you could say I consumed this booked twice.
I was able to discover a few resources through the footnotes to continue my research on this topic as this book pulls from almost every major, and minor economist of the last 400 years.
This is not a book for the casual reader though.
March 6, 2025
Not really what I was looking for. It doesn't address specific problems with current economic theory other than the usual general complaints of "it's too narrow", "it's unethical", "it's oversimplified", "it's tainted by politics," etc. I had to wade through a lot of history and jargon, so I had difficulty following some of the discussion. I am still unsure if economics is supposed to explain behavior or guide it. In other words, if the purpose of economics is to describe how the world works, then it's a science. If, instead, its purpose is to design and create solutions to improve society or politics or people's lives, then it's engineering, not science. I'm not sure the same discipline can or should do both.
July 16, 2023
Muy superficial, más político que científico, el típico libro que te hace leer tu profesor de economía con un ratio de 100 alumnos por clase.
Un manual de teorías fallidas con crisis que brotan de vez en cuando de forma “inexplicable” porque la economía no es una ciencia exacta. Un nadie lo vio venir en toda regla. Poco sentido común y mucho tecnicismo vacío de contenido.
Lo recomiendo si se quiere aumentar el nivel de incertidumbre.
PD: Mucho mejor “La Gran recesión”, un análisis de la crisis de 2008 que parece más una guía de la que se nos viene encima en 2023-2024. Estamos en el capítulo 12, by the way.
Un manual de teorías fallidas con crisis que brotan de vez en cuando de forma “inexplicable” porque la economía no es una ciencia exacta. Un nadie lo vio venir en toda regla. Poco sentido común y mucho tecnicismo vacío de contenido.
Lo recomiendo si se quiere aumentar el nivel de incertidumbre.
PD: Mucho mejor “La Gran recesión”, un análisis de la crisis de 2008 que parece más una guía de la que se nos viene encima en 2023-2024. Estamos en el capítulo 12, by the way.
November 28, 2024
Too theoretical and with a tendency to belabor points, the main value from this book is its broad strokes review of major economic theories. Too often the author's critiques of conventional economic thought rely on appeals to authority or borderline repetition. More examples of the misuse of econometrics would have been helpful and the overall structure of the book could have used some improvement. As it stands, the book advocates replacing the false precision of mathematical models in economics with vague, quasi-political rhetoric, so not sure that's a step in the right direction.
July 16, 2023
It's a relatively short read that is probably aimed at an audience with some familiarity of economics. I think for a general reader it might get too "into the weeds".
That being said, it gives a good overview of modern, technical economics and the many shortcomings of the field. I enjoyed it as someone trained as an economist. Well worth a read!
That being said, it gives a good overview of modern, technical economics and the many shortcomings of the field. I enjoyed it as someone trained as an economist. Well worth a read!
March 31, 2024
Neoclassical economics is indeed problematic as it assumes that humans are fully rational. Although it doesn’t necessarily mean that the mainstream economic theory is invalid, modern economists must not overlook factors such as sociology, history, politics and philosophy, if their objectives are to develop theories that are more relevant to the real-world economics.
May 23, 2020
Interesting and clear.
April 3, 2022
Essential reading for the student of economics.
December 9, 2022
I could have highlighted the whole book.
A well-written, informative primer.
A well-written, informative primer.
December 29, 2022
Short and punchy
A short punchy guide to the history of ideas in economics and how foundations might be re-established for a more relevant economics.
A short punchy guide to the history of ideas in economics and how foundations might be re-established for a more relevant economics.
July 9, 2023
honestly doesn’t go far enough
April 30, 2024
very informative and a clear structure
May 29, 2024
Jeigu planuojat skaityti viena knygą paprastau suprasti apie ekonomiką, tebūnie tai ši. Paprastai ir aiškiai kas veikia ir kas neveikia ekonomikos moksle. Ir kokie ekonomistai ne visažiniai.
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