It is tempting to see this as a story about the arrogance of. And in part, it is. The discipline’s imperialism—its tendency to claim the territory of fields adjacent to economics as its own—is a bugbear of social scientists. Yet the professor had a point. In the 1990s economics could plausibly claim to be moving towards a unified science of business. A realistic theory of the firm was in prospect. Alas, three decades on, it is no closer.has rich models of competition and markets.
That is the theory. It has a glaring omission, as Ronald Coase, an economist, pointed out in a paper in 1937. Much of the allocation of resources in economies occurs not in markets but within firms. The prime movers are employees. They are directed not by price signals but by administrative fiat. The theory that firms are profit-maximisers is another clash with reality. They operate in a fog of ignorance and error, noted Herbert Simon, a pioneer of artificial intelligence and decision sciences.
A key pillar to this is the idea of the firm as the co-ordinator of team production, where each team member’s contribution cannot be separated from the others. Team output requires a hierarchy to delegate tasks, monitor effort and to reward people accordingly. This in turn needs a different kind of arrangement. In market transactions, goods are exchanged for money, the deal is done and there is little scope for dispute.
Such avenues of research would earn Nobel prizes in economics for Oliver Williamson, Oliver Hart and Bengt Holmstrom. Their work explains in part why, by the mid-1990s, our business-school professor was so confident that economics should rule the study of business. The bestselling books of Michael Porter, an economist-turned-business guru, further fuelled such optimism, as did excitement about the potential for game theory in corporate strategy.
Rule 1, follow profits and forget CSR.
the intangibles as it were ... RWMann - also: tacit learning and engagement - critical skill-sets
I am astonished at how The Economist so often fails to understand economics. What the blurb essentially says is, “the founders of successful business highly value their work and workplace.” But basic economic theory understands that value is subjective, and often intangible.
shorter: most economists have ZERO business experience RWMann lisaabramowicz1 tracyalloway
Economics is an ideology like all ideologies, it doesn’t exist but for rhetorical advantage
Economics is an ideology like all ideologies, it doesn’t exist but for rhetorical advantage
Dudes. Don't compare econ to a field of study where conditions can be greatly controlled, experiments repeated at the same conditions. Econ is a social science, a behavioral science.
TIME PHYZIC ECONOMIC FINANCE
Wait…. OK. That’s like saying a biologist doesn’t understand life.
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Hayek's idea that all are only driven by self-interest and therefore Friedman's micro-economic modelling based on this 'assumption' often leads to promoting a cruel and bitter world of the survival of the fittest. Whereas Keynes promoted Uncertainty and the goal of a 'good life'
I think economics is not a science. The name of a system that slaps people as a result of manipulations.
Not engineering. Astrology.
Please explain Macroeconomics then?
Tell us about it. And that not all you don't understand. How long have you got?
'The importance of balancing AI progress with safety and reliability'
No, political actors who think they know economics destroy business