Uneconomic Economics and the Crisis of the Model World

1. Front Matter

   Pages i-x

   PDF

2. Setting the Scene: From a Crisis of Economics to a Crisis of the State

   • Matthew Watson

   Pages 1-19

3. The Collapse of the Model World: From Faith in Equations to Unsustainable Asset Bubbles

   • Matthew Watson

   Pages 20-44

4. The Creation of the Model World: From Formalist Techniques to the Triumph of Uneconomic Economics

   • Matthew Watson

   Pages 45-67

5. Looking Ahead: From Uneconomic Economics to a Different Future

   • Matthew Watson

   Pages 68-83

6. Back Matter

   Pages 84-108

   PDF

What has gone wrong with economics? Economists now routinely devise highly sophisticated abstract models that score top marks for theoretical rigour but are clearly divorced from observable activities in the current economy. This creates an 'uneconomic economics', where models explain relationships in blackboard rather than real-life markets.

• global financial crisis
• economists' model world
• orthodox economics opinion
• Arrow-Debreu
• Black-Scholes
• David Li
• Guassian copula formula
• collateralised debt obligations
• CDO
• mortgage-backed securities
• MBS
• austerity
• expansionary austerity
• crisis construction
• Schumpeterian Vision
• general equilibrium economics
• Walrasian economics
• efficient markets hypothesis
• EMH
• dynamic stochastic general equilibrium
• crisis
• economic theory
• economics
• equilibrium
• financial markets
• general equilibrium
• growth

• University of Warwick, UK

  Matthew Watson

Matthew Watson is Professor of Political Economy in the Department of Politics and International Studies at the University of Warwick, UK. Since 2013 he is also an ESRC Professorial Fellow working on the project 'Rethinking the Market'. In his research he applies methodologies from the history of thought in order to understand how modern-day markets take their distinctive form.

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