Provocation 168. How to expand the scope of economics.

In the spirit of provocation..

Economics advanced by making assumptions that treated most of society as external to economics, but it turns out, as it has, that the dynamics of society profoundly affect the mainstream neo-classical economic model: ownership, wealth: interest, politics, people’s state of mind and taste, new inventions, state of the earth. How can we now bring the externalities back in to the thinking of current economics?

In a simple way economics started with a broad interest in society , Adam Smith, Ricardo, Malthus, and then in the mid 1800’s (and many others, see the flow in for example The Edinburg Review), then succumbed to formalism and math, looking scientific with equilibrium and “rational” economic man, and with these narrowing its scope of interest. But now, with a society in disarray because it is undone by the things economics (the understanding of an economy) excluded (people, politics, earth), the trend is back toward needing good narratives of what happened – and maybe even to what could happen. Since economics aligned itself with, even advanced, the dominance of models and formalism, what can economics do now to reorient its thinking around the issues of consequence – the interface between society and nature?
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Physics friend “ Physics models are relevant to circumstances which never change. Economics make models that sort of work – until circumstances change.”

The following from Andreas Malm’s essential book, Fossil Capital.

Re climate: “We are looking always at the impact of climate on society. It should be the other way – looking at the impact of society on climate.”

“The traditions of the dead are breathing down necks of the living, leaving them with two choices: smash their way out of business as usual – and the heavier the breath, the more extreme the measures must be – or succumb to an accumulated, unbearable destiny.”

Knock knock economics. Anybody home?