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What's Left of Cambridge Economics?

Although mainstream economics has moved past the market fundamentalism of the 1970s and 1980s, it has yet to establish a new theoretical footing. One reason is that well-meaning reformers in the field continue to embrace the same false premises that they should be seeking to overturn.

AUSTIN – Diane Coyle, an economist and professor of public policy at the University of Cambridge, has set a daunting task for herself: to provide a reasoned critique of the economics discipline from an insider’s perspective, while defending mainstream economics from the harsh – and mounting – criticism leveled by outsiders.

In Cogs and Monsters, Coyle seeks to advance an engaged, policy-relevant vision of economics drawn from the work of leading academics in the field. The implication is that the pieces are there and need only to be assembled. “For economics itself,” she tells us, “the agenda is clear”:

“We need to build on the work that already exists to incorporate as standard externalities, non-linearities, tipping points, and self-fulfilling (or self-averting) dynamics. We need to revive and rethink welfare economics. ... We need a modern approach to the public provision and regulation of information goods, applying the rich literature on asymmetric information. ... And we need to put the social, not the individual, at the heart of the study of economics ...”