Dani Rodrik’s recent post provides a helpful clarification between the profession’s flaws and economics as a discipline:
“The fault lies not with economics, but with economists. The problem is that economists (and those who listen to them) became over-confident in their preferred models of the moment: markets are efficient, financial innovation transfers risk to those best able to bear it, self-regulation works best, and government intervention is ineffective and harmful.
They forgot that there were many other models that led in radically different directions. … If anything needs fixing, it is the sociology of the profession. The textbooks – at least those used in advanced courses – are fine.
Non-economists tend to think of economics as a discipline that idolizes markets and a narrow concept of (allocative) efficiency.
If the only economics course you take is the typical introductory survey, or if you are a journalist asking an economist for a quick opinion on a policy issue, that is indeed what you will encounter. But take a few more economics courses, or spend some time in advanced seminar rooms, and you will get a different picture.”
The real question is then why those simplistic models prevailed and not alternative theories that captures the complexity of the economic system?