The soul of economics: editorial

The Financial Crisis of 2007–2009 has been one of the worst economic crises since the Great Depression of the 1930s. In addition to directly impacting the economy, it had substantial ramifications also for economics as a science (Colander et al., Citation2011; Kirman, Citation2010; Lawson, Citation2009). In its aftermath, there has been considerable soul-searching within the economics profession that concerned, among other things, its methodological and conceptual core, the lack of trust in the epistemic qualities of economic theorizing and concerns about its function as a policy science.

This soul-searching was triggered mainly by questions about the potential causes of the crisis and the failure of economics in predicting its occurrence. The claim was that the discipline had failed to accurately predict the crisis and explain its causes, and to offer useful policy recommendations to help its remedy (e.g. Akerlof et al., Citation2014; Allen & Carletti, Citation2010; Krugman, Citation2011). Some critics even questioned the scientific status of economics itself (e.g. Taleb, Citation2010). This soul-searching led to discussions and a fundamental reassessment of the central assumptions, methodologies, and principles underlying economic theories and models. Scholars from within and from outside economics were puzzled about what was quickly perceived as a lack of performance of economics as a scientific enterprise and the discipline’s failure to fulfill its expected social function (Krugman, Citation2011). This also revived several more general methodological debates about the usefulness of traditional as well as more recent theoretical, conceptual, and empirical tools used by economists to explain and predict economic phenomena and to suggest policy measures towards enabling social change. Those debates did not only remain within academic circles, but spilled over also to the policy realm, and to the broader public. Indeed, they engendered a deep skepticism in some corners concerning economists’ claims to economic expertise and led to widespread mistrust in their ability to assess and recommend good policies.

Today, fifteen years after the crisis, it is time to take stock and ask the question where economics currently stands regarding this soul-search. This special issue provides a platform to present and reflect on the current status, and on some of the main arguments and outcomes of this search. Largely consisting of papers that were presented at a conference entitled The Soul of Economics and organized by Catherine Herfeld, Chiara Lisciandra, and Carlo Martini at the University of Zurich (Switzerland) in 2019, it provides a sketch of debates engaged with the contemporary state of economics fifteen years after the Financial Crisis. The articles collected here reflect in different ways upon economics in its current state in light of recent criticisms and calls for reform. They show that although economics’ conceptual, methodological, epistemological, and policy dimensions have been questioned throughout its existence, there is a renewed and continuing interest in questions surrounding the core constituents and goals of economics as an epistemic endeavor and as a policy science. This ongoing interest among economists, historians and philosophers of economics speaks to the observation that the crisis has renewed those debates and that economics has not yet come to rest.

Against this background, the first goal of this special issue is to identify some of the major debates that have been opened or revived after the Financial Crisis and that are representative of what we take the soul-searching in economics to be. The second goal is to enable drawing some preliminary conclusions from the results presented about the current state of economics. The overarching aim of this special issue is thereby to push the reflection on a set of key methodological issues that could help us better understand where this soul-search could constructively lead us in the future. We hope that all contributions will provoke new questions and open new avenues for how they could be fruitfully answered.

To provide an overview of different areas of economics, we structured the discussions around three main areas of ongoing disagreement: first, the debate in macroeconomics about the usefulness of DSGE models and the demand for microfoundations; second, the discussion concerning the conceptual core of microeconomics – the question about the status of fundamental principles and, in particular, the role and usefulness of behavioral economics towards epistemically improving neoclassical economics; and, third, the debate about the role of methodological consensus to regain public trust in economic expertise and the feasibility of economics as a policy science. Each contribution addresses questions that are directly or indirectly related to one of those three areas and the respective debates that have (re-)gained relevance since 2007.

Find the full article here.