Assault on the Establishment

Linked on our blogs with World Economics Association WEA. – Published on Real-World Economics Review Blog, by Editor, May 25, 2011.

Below is an English translation of an article by Olaf Storbeck in today’s (26 May) Handelsblatt, the German business daily … // … Economists from all over the world have founded the World Economics Association – and are almost overwhelmed by people wanting to join …

… The Revolution was a week late. For months, 141 economists from all corners of the earth had prepared the foundation of the “World Economics Association” (WEA). The goal is to turn the profession inside out.  First, however, technical problems with the online payment service Paypal held up the project. Then, on Monday 16, the “first genuinely international and pluralistic association for economists” was operational.

From the day it went publoic, the association was flooded with membership requests from all over the world.  More than 3,600 economists from 110 countries joined in the first 10 days. “This is more than we had expected”, says the father of the WEA, the British economist  Edward Fullbrook. 

The new association already has a similar number of members as the German Verein für Socialpolitik or the Royal Economic Society (RES) in Britain.

The WEA is pushing for a renewal of economics in content and methodology. Mainstream economics has been widely criticised after the outbreak of the financial crisis for being blind to what is going on in the real world and not being helpful for practical policy. “The economic profession has confused mathematical elegance with truth”, complains Nobel-laureate Paul Krugman.

“We share the public perception that knowledge of the real world is lacking in parts of the economics profession” it says in the invitation to join. This is not the first initiative that wants to modernize economics, though. The Institute for New Economic Thinking (INET), which was founded last year with a million-dollar-donation by Hedge-fund manager George Soros, has similar goals. “We are natural partners”, says INET-Boss Robert Johnson, who has already joined WEA.

So far, WEA is keeping its distance from INET and is stressing its independence. “This is why we have not tried to win large grants”, says Fullbrook. He adds that “this does not preclude cooperating with national or regional associations or to take grants from foundations or organizations in the future” and stresses that there are currently no concrete plans in this respect. Individual members have donated about $14,000 so far, according to Fullbrook. “This is enough for now to finance what we intend to do” … //

… Despite all the arguments that can be raised in favor, established economists are sceptical of the WEA. “I am not sure we need something like that”, says Lars Hendrik Röller, President of the German economists’ association Verein für Socialpolitik. “The established association are no closed shops. They are open for all economists. Many German economists are members of the AEA, for example.”

Richard Blundell is also rather critical. “These guys are probably exactly the wrong ones to make the change stick,” he says. In his opinion, this requires the backing of the old guard and the production of policy relevant research that wins the attention of policy makers.  He predicts that “setting up an alternative journal run by alternative types will attract a very low quality of work.”

The AEA is trying to ignore the new competitor. “I am afraid I do not know enough about the organization or issues related to it to comment,” says AEA-President Orley Ashenfelter from Princeton. (all full text).

Link: How To Waste Money, on Real-World Economics Review Blog, by Peter Radford, May 28, 2011.

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