“This book is an essay in what is derogatorily called "literary economics," as opposed to mathematical economics, econometrics, or (embracing them both) the "new economic history." A man does what he can, and in the more elegant - one is tempted to say "fancier" - techniques I am, as one who received his formation in the 1930s, untutored. A colleague has offered to provide a mathematical model to decorate the work. It might be useful to some readers, but not to me. Catastrophe mathematics, dealing with such events as falling off a height, is a new branch of the discipline, I am told, which has yet to demonstrate its rigor or usefulness. I had better wait. Econometricians among my friends tell me that rare events such as panics cannot be dealt with by the normal techniques of regression, but have to be introduced exogenously as "dummy variables." The real choice open to me was whether to follow relatively simple statistical procedures, with an abundance of charts and tables, or not. In the event, I decided against it. For those who yearn for numbers, standard series on bank reserves, foreign trade, commodity prices, money supply, security prices, rate of interest, and the like are fairly readily available in the historical statistics.”
Source: Manias, Panics, and Crashes: A History of Financial Crises
“Success isn’t measured by applause or titles, but by the quiet integrity of how we live each day.”
Source: Fool for Thought: Reflections on Life, Identity, and Open-Mindedness
“A good way to do econometrics is to look for good natural experiments and use statistical methods that can tidy up the confounding factors that Nature has not controlled for us.”
“I am often asked what I would keep of Neoclassical economics in a new paradigm. My answer is that I would keep as much of Neoclassical economics as modern astronomy kept of Ptolemaic astronomy – which is to say, nothing at all.”
Source: The New Economics: A Manifesto
“As Thorstein Veblen correctly surmised over a century ago, the failure of economics to become an evolutionary science is the product of the optimizing framework of the underlying paradigm, which is inherently antithetical to the process of evolutionary change. This is the primary reason why the neoclassical mantra that the economy must be perceived as the outcome of the decisions of utility-maximizing individuals must be squarely rejected.”
Source: Adbusters #84 Pop Nihilism
“An essential pedagogic step here is to relegate the teaching of mathematical methods in economics to mathematics departments. Any mathematical training in economics, if it occurs at all, should come after students have at the very least completed course work in basic calculus, algebra and differential equations (the last being one about which most economists are woefully ignorant). This simultaneously explains why neoclassical economists obsess too much about proofs and why non-neoclassical economists, like those in the Circuit School, experience such difficulties in translating excellent verbal ideas about credit creation into coherent dynamic models of a monetary production economy.”
Source: Adbusters #84 Pop Nihilism
“Neoclassical economics has effectively insulated itself from the great advances made in science and engineering over the last 40 years. This self-imposed isolation must come to an end. For while the concepts of neoclassical economics appear difficult, they are actually quaint in comparison to the sophistication evident in today's mathematics, engineering, computing, evolutionary biology and physics. In order to advance, economics must humbly submit to learning from disciplines that it has studiously ignored for so long. Some researchers in outside fields have called for the wholesale replacement of standard economics curricula, using at least the building blocks of modern thought inherent in other disciplines.”
Source: Adbusters #84 Pop Nihilism
“When welfare is discussed in microeconomics textbooks, it is only in the domain of economic exchange in markets. The discussion in such places sets total welfare maximization as the virtuous end or criterion. In first-degree price discrimination adopted by a monopolist, there is no welfare loss. However, there is no consumer surplus either despite having optimal efficiency. Economics is neutral between desirable or undesirable equilibrium from the point of view of equity.”
Source: Reflections on the Origins in the Post COVID-19 World
“As is often noted, and only partially in jest, economists seek to explain why people choose to commit suicide, while sociologists explain why they have no such choice. On suicide, the sociologists have been rather more successful than the economists. For their part, economists have proposed a “rational” theory of suicide that posits that people kill themselves in order to “maximize utility.”
Source: Deaths of Despair and the Future of Capitalism
“The CDOs that sliced up and then spliced together disparate debts belonging to a heterogeneous multitude of families and businesses were put together on the basis of certain formulae, whose purpose was, supposedly, to calculate their value and their riskiness. These formulae were developed by financial engineers working for Wall Street (e.g. for J. P. Morgan, Bank of America, Goldman Sachs, etc.). To render the formulae solvable, certain assumptions had to be made. First and foremost was the assumption that the probability that one slice of debt within a CDO would go bad was largely unrelated to the probability of a similar default by the other slices in the same CDO. That is, it was assumed that what happened in 2007–08 was…impossible! That it was unnecessary to factor in the possibility of some crisis, during which Bob lost his house for reasons that increased the chances that Jane would lose her job and eventually also default on her mortgage.”
Source: The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy