"Economyths"

Recently I read a book called “Economyths” by David Orrell that talked about the limitations of orthodox economic theory. Here I’d like to share a section that he wrote in the introduction.

“Economics is a mathematical representation of human behaviour, and like any mathematical model it is based on certain assumptions. I will argue, however, that in the case of economics the assumptions are so completely out of touch with reality, and with the needs and behavior of most people, that the result is a highly misleading caricature. The theory is less a science than an ideology. The reason why so many people are so conned into thinking the assumptions are reasonable is that they are based on ideas from areas like physics or engineering that are part of our 2,500-year scientific heritage dating back to the ancient Greeks. Superficially they have the look and feel of real science, but they are counterfeit coin.

To make progress, it’s not enough to adjust or revise these assumptions. Much work has already been done in exploring minor variations. Instead, as a Nature article entitled ‘Economics Needs a Scientific Revolution’ put it: ‘We need to break away from classical economics and develop completely different tools.’ While economics has traditionally modeled itself after physics and mechanics, the economy has more in common with a living organism than it does with a machine.”