The Empress’s New Clothes: The Identity Crisis of Economics

Abstract

Economics is in crisis. After decades of dogmatic teaching and analysis, focusing on narrow mainstream models and excluding alternative thinking from its ivory towers, the purported queen of the social sciences is naked. Most economists have failed to foresee the financial crisis, while some helped bring it about. The paper follows the emergence and evolution of the discipline over time, from its political and moral roots towards a discipline modeled on physics. It examines some recent swings of the pendulum back towards political economy, and considers the way forward.