The mathematical methods of recent economics did not predict or prevent the current crisis. Should we look for a better way?
Mathematical modeling has revealed itself to be a vain and formalistic exercise incapable of explaining the international currency crises, stock-market and real-estate bubbles, or the global financial crises that have racked our world in the past two decades. It is increasingly evident, even to professional economists, that the tortuous positivist detour has led to an intellectual dead end. Hence, bizarre heterodox sects, such as behavioral economics, experimental economics, the “happiness” literature, neuro-economics, etc. now abound. Some market-oriented economists have even abandoned modern economic theory altogether for the less rigorous rhetoric and metaphors of Adam Smith’s “invisible hand” and Hayek’s “spontaneous order.”
The death knell is now tolling for the mathematical and positivist pretenders to the mainstream of economics.
via The Ambition of Rothbard’s Treatise – Joseph T. Salerno – Mises Institute . Note that positivism “seeks to apply the experimental methods of the natural sciences to the study of the problems of human action.” This tends to mechanize society with undesirable effects.