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<nettime> Nobel laureate in economics aged 102 endorses the human econom
Keith Hart on Fri, 18 Jan 2013 16:02:18 +0100 (CET)


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<nettime> Nobel laureate in economics aged 102 endorses the human economy approach


*Thanks for the idea*, Mark. Nettimers can check out the human economy
program at http://web.up.ac.za/humaneconomy.
Ronald * *Coase, an American economist of British origin, won a Nobel prize
for inventing the idea of transaction costs in his famous paper "The nature
of the firm" (1937). He is now 102 years old and has just announced his
desire, with a young Chinese associate, to found a new journal called "Man
and the economy" (well he was born in 1910).

A century ago, Alfred Marshall, author of Principles of Economics (1890)
and Keynes' teacher at Cambridge defined economics as ?both a study of
wealth and a branch of the study of man?. But, in a manifesto published in
the Harvard Business Review last month, "saving economics from the
economists" http://hbr.org/2012/12/saving-economics-from-the-economists/ar/1,
Coase argues that "The degree to which economics is isolated from the
ordinary business of life is extraordinary and unfortunate."

"In the 20th century, economics consolidated as a profession; economists
could afford to write exclusively for one another. At the same time, the
field experienced a paradigm shift, gradually identifying itself as a
theoretical approach of economization and giving up the real-world economy
as its subject matter. Today, production is marginalized in economics, and
the paradigmatic question is a rather static one of resource allocation.
The tools used by economists to analyze business firms are too abstract and
speculative...This separation of economics from the working economy has
severely damaged both the business community and the academic discipline.
Since economics offers little in the way of practical insight, managers and
entrepreneurs depend on their own business acumen, personal judgment, and
rules of thumb in making decisions".

"Economics thus becomes a convenient instrument the state uses to manage
the economy, rather than a tool the public turns to for enlightenment about
how the economy operates. But because it is no longer firmly grounded in
systematic empirical investigation of the working of the economy, it is
hardly up to the task."

"At a time when the modern economy is becoming increasingly
institutions-intensive, the reduction of economics to price theory is
troubling enough. It is suicidal for the field to slide into a hard science
of choice, ignoring the influences of society, history, culture, and
politics on the working of the economy. It is time to reengage the severely
impoverished field of economics with the economy. Market economies
springing up in China, India, Africa, and elsewhere herald a new era of
entrepreneurship, and with it unprecedented opportunities for economists to
study how the market economy gains its resilience in societies with
cultural, institutional, and organizational diversities. But knowledge will
come only if economics can be reoriented to the study of man as he is and
the economic system as it actually exists."

There is also an article on all this in Businessweek last November, "urging
economists to step away from the blackboard" http://www.businessweek.com/
articles/2012-11-29/urging-economists-to-step-away-from-the-blackboard.


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