Economic Silo Busting: Overcoming “the biggest ponzi scheme in history”

Tuesday, May 1, 2012

"The Representative Agent"

Unemployment Line

Economic Silo Busting:

Overcoming “the biggest ponzi scheme in history”

The Institute for New Economic Thinking (INET) just concluded a conference in Berlin called “Paradigm Lost,” in which leading economists agreed to address the global economic crisis by creating innovative models. The short documentary below by filmmakers Micah Garen and Marie-Helene Carleton of Four Corners Media features many of leading thinkers and their ideas about what got us here and how to move forward.
 
One theory of neoclassical economics they are discarding is the notion of “The Representative Agent,” a person whose multiplied and aggregated behavior makes up what these economists believe is a faulty model of the macro economy.  That model, called Dynamic Stochastic General Equilibrium, has been the dominant modeling metaphor in modern economics. Economist Steven Keen describes the last 20 years of economics as “the biggest ponzi scheme in history.” 
 
Among other things, The Representative Agent model doesn’t take into account the possibility that people may be motivated by non-economic factors. This group of economists plans to consult sociologists, historians and neuroscientists to fully account for the complex nature of human behavior, a major shift in approach that economic journalist Gillian Tett calls a “silo bust.”  --Newsmotion
 
 
 
 
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