Paul Volcker, the former Chairman of the Federal Reserve under Presidents Carter and Reagan (1979 – 1987), has led the Neoliberal-Monetarist breakthrough in the US economy. Although it is never too late to repent — this statement made by him in 2011 — it looks like Volcker is still trapped in praising mathematical and statistical approaches and captured in an erroneous striving for consensus.
“The economics profession is in trouble. I have been involved in questions of economic policy for almost 60 years, and despite all the years of economic theorizing and the application of high-powered mathematical and statistical approaches, an analytic consensus on policy approaches has eluded us. Never has that been more evident than during these recent years of financial and economic turmoil…
We are dealing with an intellectual problem—a profession that has been absorbed by theoretical constructs abstracting from human behavior. We are dealing with ingrained ways of thinking. The challenge is to raise questions about accepted approaches, in drawing lessons from recent experience.
We need to pull economics back into the real world of political economy.”
(From: Institute for New Economic Thinking. 2011. “Building a Global Community of New Economic Thinkers.” Page 5.)