The New Economics

The 2008-9 economic and financial crisis was a tremendous shock to the discipline of economics. Economists were mortified by their failure to predict events.

Within a short time it became widely accepted that many core elements of the discipline were sadly lacking.

Common themes in the discussion of economics included the need to make it more moral, historical and understanding of human psychology. This meant it should be correspondingly less focused on profits, mathematical models and the idea of rationality.

Typically the case for the new economics, also sometimes referred to as the “Keynesian resurgence”, was put in counter-position to a supposed free market orthodoxy. Supporters of new economics saw themselves as pragmatic proponents of state intervention rather than doctrinaire advocates of the free market.

Perhaps the best known institution promoting new economics was the Institute for New Economic Thinking. Since its foundation in October 2009 the organisation has gained the support of many of the world’s top economists and economic policymakers.

Existing think tanks which took up the theme included Demos and the IPPR. This was in addition to organisations that pre-existed the crisis such as the New Economics Foundation and the New Economics Institute - although the latter changed its name from the EF Schumacher Society in 2009.