In a recently published Project Syndicate “Big Picture“, renowned economists share their perspectives on the current discourse on the self-image of economic science and the need for a departure from the status quo.
According to Kaushik Basu, the world economy and capitalism are at a crossroads. The Covid 19 pandemic and the increasingly visible consequences of climate change require new economic thinking. This was also emphasised at the 19th World Congress of the International Economic Association (IEA). In order to develop sustainable solutions, it is essential to become even more aware than before of the assumptions of economic models, some of which are implicit. James K. Galbraith presents a series of new books that deal with the history of economic thinking. Alicia Sasser Modestino and Dani Rodrik argue that in order to better position economics for the future, it is necessary to become aware of the lack of diversity in the discipline and the resulting distorting effect on research.
Eric Posner disagrees with the Wall Street Journal article by Casey B. Mulligan and Tomas J. Philipson of the University of Chicago, in which they identify a supposed government failure in the US. Nouriel Roubini describes Biden’s economic agenda as a break with the neoliberal paradigm of the last decades under Clinton, Bush and Obama. This is reflected in a more expansive fiscal policy, more progressive taxation, stronger regulation, more protectionist trade policies and ambitious industrial policies. Anne Krueger warns of the growing social divide in the United States that threatens modern achievements, such as the vaccination against Covid-19, which was produced in record time. In her opinion, this should be taken into account when developing new economic concepts.
There seems to be a growing number of voices calling for a paradigm shift. For instance, a G7 advisory body, the Economic Resilience Panel, published a 1.5-page document with political guidelines, the “Cornwall Consensus”, in addition to its policy recommendations on the occasion of the G7 summit in June 2021. Among other things, it calls on the G7 to strengthen the principle of solidarity, promote the common good and respond more decisively to economic crises, coercion and market distortions. As Gillian Tett points out in the Financial Times, this could be seen not only as a temporary reaction to the pandemic, but as a signal of a real ideological shift.
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