Where Economics Went Wrong: A Review Essay

Journal of Economic Literature, Forthcoming

47 Pages Posted: 9 Aug 2019

See all articles by Marianne Johnson

Marianne Johnson

University of Wisconsin - Oshkosh - Department of Economics

Date Written: August 6, 2019

Abstract

In their recent book Where Economics Went Wrong, David Colander and Craig Freedman (2018) argue that economics went wrong when it abandoned the Classical liberal firewall that demanded separation of scientific theory from the art of policy making. Colander has long advanced the idea that applied economics should be classified neither as positive nor as normative economics. Instead it should be placed in a third category, “the art of economics;” art requires vision and acumen in addition to knowledge and technique, and is thus more akin to engineering than the natural sciences. The primary contribution of Where Economics Went Wrong is thus to advance Colander’s general argument through the specific story of Chicago Economics. This essay make two interconnected claims. First, while I agree with Colander and Freedman that applied economics would benefit from more art and less calculation, the Chicago School is not the best vehicle by which to tell a convincing story. Second, a thicker history of the Chicago School reminds us of the importance of institutions and rules, not only for understanding the economy but also for thinking about how economists have constructed our discipline and how internal institutions and incentives affect our behavioral choices.

Keywords: Classical Liberalism, University of Chicago, James M. Buchanan, Henry C. Simons, Sociology of Economics Profession

JEL Classification: B12, B20, B41

Suggested Citation

Johnson, Marianne, Where Economics Went Wrong: A Review Essay (August 6, 2019). Journal of Economic Literature, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3433105 or http://dx.doi.org/10.2139/ssrn.3433105

Marianne Johnson (Contact Author)

University of Wisconsin - Oshkosh - Department of Economics ( email )

800 Algoma Blvd.
Oshkosh, WI 54901
United States
920-424-2230 (Phone)
920-424-1734 (Fax)

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