Paul Ormerod - The Death of Economics

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At 2 per cent growth a year, an economy doubles in size in just thirty years.

Paul Ormerod
The study of human societies and economics is of great importance, and it is not the purpose of the book to suggest otherwise. Rather it is to argue that conventional economics offers a very misleading view of how the world actually operates, and that it needs to be replaced.

Paul Ormerod
The reader might reflect that an awful lot of supposing has to take place in order for the quantity theory of money to be true.

Paul Ormerod
Baseball players or cricketers do not need to be able to solve explicitly the non-linear differential equations which govern the flight of the ball. They just catch it.

Paul Ormerod
Even in financial markets, the concept of market efficiency does not hold.

Paul Ormerod
Once the true relationship between inflation and unemployment is understood, with luck and skill, a free lunch is possible.

Paul Ormerod
Despite the high salaries involved, employing economists is a cost-effective way for banks, and stockbrokers to secure exposure in the media.

Paul Ormerod
The importance to Smith of the overall set of values in which the economy operates is generally ignored by his followers in the late twentieth century. His economics, based upon individual self-interest, is remembered, but his moral framework is not.

Paul Ormerod
In most Western economies, the general relationship is not in fact between the rate of inflation and the level of unemployment, but between the rate of change of inflation and the rate of change of unemployment.

Paul Ormerod
The temptation to use mathematics is irresistible for economists. It appears to convey the appropriate air of scientific authority and precision to economists' musings.

Paul Ormerod
Many Europeans, while admiring the strength and power of the American economy, undoubtedly feel that the system of social values which prevails in the United States, manifested in the acute problems evident in the inner cities and the level of violent crime, for example, leaves much to be desired.

Paul Ormerod
Keynes tried to show that market economies could settle in equilibrium states in which the labour market did not clear, and in which the level of unemployment was high. He believed that this was due to a particular example of market failure, developed in his concept of effective demand.

Paul Ormerod
But Adam Smith was a philosopher as well as well as an economist, famous in his time as much for his Theory of Moral Sentiments as for The Wealth of Nations. And as he understood so well, society is more than the sum of its individual parts.

Paul Ormerod
By any reasonable criteria, the discipline of economics as a whole, in its present state, is sadly lacking.

Paul Ormerod
We need to abandon the economist's notion of the economy as a machine, with its attendant concept of equilibrium. A more helpful way of thinking about the economy is to imagine it as a living organism.

Paul Ormerod
The behavior of the economy as a whole, at the aggregate, macro-level, is built up from the individual equations at the micro-level.

Paul Ormerod
The second part of the New Right's policy package has been the belief that free-market solutions are always best. It is this latter view which is profoundly mistaken. Markets and profits are crucial, but the pure free-market model itself is deeply flawed.

Paul Ormerod
The model of competitive equilibrium which has been discussed so far is set in a timeless environment. People and companies all operate in a world in which there is no future and hence no uncertainty.

Paul Ormerod
The linear, mechanistic view of the world which pervades orthodox economics is simply not capable of capturing the richness and complexity of the rhythms and fluctuations of developed economies.

Paul Ormerod
The obstacles facing academic economists are formidable, for tenure and professional advancement still depend to a large extent on a willingness to comply with and to work within the tenets of orthodox theory.

Paul Ormerod