David Brooks, never one of my favorite columnists, actually does a pretty good job summarizing the history of mainstream economics:
Act I • the era of economic scientism, “the period when economists based their work on a crude vision of human nature (the perfectly rational, utility-maximizing autonomous individual) and then built elaborate models based on that creature.”
Act II • the past few decades, when “a few brave economists tried to move beyond this stick-figure view of humanity.”
Act III • the economic crisis of 2008 and 2009, which “exposed the shortcomings of the whole field.”
Act IV • “the period of soul-searching that we are living through now.”
Act V • “they will blow up their whole field.”
OK, the fifth act is merely wishful thinking. And what Brooks presents is a play that only pertains to mainstream economics. If boiled down to two acts (let’s call them classical and neoclassical economics), then we can see that mainstream economics first appears as tragedy, then as farce.
As for Brooks’s imagining that mainstream economists will first blow up the discipline and then reinvent it as a “subsection of history and moral philosophy,” we need go no further than Marx’s analysis of the “Eighteenth Brumaire of Louis Bonaparte“:
The tradition of all dead generations weighs like a nightmare on the brains of the living. And just as they seem to be occupied with revolutionizing themselves and things, creating something that did not exist before, precisely in such epochs of revolutionary crisis they anxiously conjure up the spirits of the past to their service, borrowing from them names, battle slogans, and costumes in order to present this new scene in world history in time-honored disguise and borrowed language.
Greg Mankiw’s response is hardly surprising:
I doubt there will be a fundamental change in the field of economics. The old textbooks don’t need to be thrown away.
His textbook should have been thrown away long ago.