Paul Volcker: “The ‪‎economics‬ profession is in trouble… We need to pull economics back into the real world of Political Economy.”

Paul Volcker, the former Chairman of the Federal Reserve under Presidents Carter and Reagan (1979 – 1987), has been a key figure in leading the Neoliberal-Monetarist policy shift in the US economy. Although it is never too late to repent, as he partially does in this statement from 2011 while he was the chairman of the Economic Recovery Advisory Board under President Obama, it looks like Volcker is still trapped in praising mathematical approaches and captured in a problematic 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.”