Hi everyone – or, at least, whoever is left out there. As you probably know, this blog has been shut down since October 2014 and I have pretty much fallen off the face of the planet. Actually I’ve been working in investment where I’ve found a job that allows me to pursue non-mainstream economic research.
Some of you may recall that I was writing a book during the last days of this blog. I’m happy to say that this book is now fully completed and has been accepted for publication by Palgrave Macmillan. The provisional publication date for the book will be October 2016 and the price will be around £19.50. The book’s title will be: ‘The Reformation in Economics: A Deconstruction and Reconstruction of Economic Theory’.
The book will not be a rehash of material that is available on this blog. I consciously avoided this as I thought that it would be rather boring. So the book is all brand new material. Some of the ideas were thrown around on this blog in more primitive form but I have tried to develop them properly in the book.
The idea for the book is to go right back to first principles. The more I engaged with economic theory the more I found two things.
First of all, much economic theory is in fact ideology. By ‘ideology’ I do not mean something resembling a political ideology – I do not mean ‘socialism’ versus ‘libertarianism’ or ‘left-wing’ versus ‘right-wing’ or anything like that. Rather I mean a manner of structuring how we view the world around us – how we frame things to ourselves and how we understand what is and what is not possible to accomplish. A good example of an ideology is the idea that the world is flat and that if you sail out beyond a certain point you will be devoured by monsters. These sorts of ideas provide a sort of semi-conscious map that we use to engage with the world that has no basis in rationalistic or scientific inquiry.
Secondly, most of the problems with economic theory are actually buried in its very foundations. In the book I argue that much of economic theory is not actually aimed at being applied to the real world and that most economists have never actually thought through how their theory applies to reality. A physicist, for example, will typically have some real-world object that they are trying to understand – say, a ball falling from a building – and they know exactly how to fit their abstract theory onto the phenomenon that they are studying. I do not think that the vast majority economists have a clear conception of the real-world object that they are trying to approach and I do not think that they have the faintest clue of how they should apply their theory to the real-world. In this they typically fall back on institutionalised norms such as econometric testing which they do not really understand.
The aim of the first half of book is to interrogate these foundations – this is the act of deconstruction alluded to in the title. When we interrogate these foundations much of mainstream economic theory is shown to be entirely irrelevant – nothing more than a series of floating symbols that have no parallel existence in the real world. By understanding this this we also form a clear conception of what a good theory that is actually oriented to the real-world would look like.
The second half of the book attempts a reconstruction of what I call ‘stripped-down macroeconomics’. The first half of the book argues that any theoretical edifice that is overly precise or unwieldy will not function when applied to the real world. For this reason, economic theory is much better served by using very simple and clearly understood ideas. These ideas are then thought to serve as schemata – that is, “an organized pattern of thought or behavior that organizes categories of information and the relationships among them” – which can be mapped onto empirical material in order to gain an understanding of the world around us.
There is much else in the book that is dealt with along the way: critiques of the ISLM model; an examination of the different conceptions of equilibrium applied in economic theory; a critique of the EMH view of financial markets; reflections on the use of mathematics in economics; and much more. Although the book attempts to tackle the foundations of economic theory I had no interest in turning it into a dry, abstract tome full of needlessly big words and short on examples.
Anyway, I will be doing some media for the book in the coming weeks and months. I will update this blog post whenever new media appears. If you are interested in following this I would suggest that you should just check back here from time to time. Of course, when the book comes out I will also provide links to purchase it on this blog. I have also included the table of contents for the book.
- Philip Pilkington on Determinism and the Reformation in Economics. An interview with Frank Conway on the Economic Rockstar podcast.
- INET YSI Seminar Based on a Draft Version of Chapter 4 ‘Methodology, Modelling and Bias’.
The Reformation in Economics: A Deconstruction and Reconstruction of Economic Theory
By Philip Pilkington
Section I: Ideology and Foundations
- Economics: Ideology or Rationalistic Inquiry?
- The Limiting Principle: A Short History of Ideology in 20th Century Economics
- Deconstructing Marginalist Microeconomics
- Methodology, Modelling and Bias
- Differing Conceptions of Equilibrium
Section II: Stripped-Down Macroeconomics
- Theories of Money and Prices
- Profits, Prices, Distribution and Demand
- Finance and Investment
Section III: Approaching the Real-World
- Uncertainty and Probability
- Non-Dogmatic Approaches to the Economics of Trade
Conclusion and Appendices
- Philosophical and Psychological Appendices
- Determinism and Free Will in Economics
- Between Personal Responsibility and Poor Theory
- Economic Modelling: A Psychologistic Explanation