Economics needs to learn the discipline of rejecting theories not backed by facts
Thursday 12 October I will give a webinar to the CFA Societies of France, Italy, Spain, Switzerland. This webinar is about qualitative economics and the theory of qualitative growth. This theory represents a major methodological change for economics. Let me repeat once more that the rationale behind this new economics is simple and cogent: modern advanced economies are evolving complex systems where products, services and the structure of interactions between agents change continuously. Simply put, this type of economic system cannot be described by the conceptual tools of mainstream economics.
One might object that the current geopolitical situation, with wars and conflicts that proliferate and seem to escalate to large scale confrontations, make theoretical discussions futile. But these objections would be ill conceived. In fact, we need sound economic reasoning to avoid new conflicts.
Above all we need the ability to base decisions on sound economic reasoning. If a theory is wrong, we cannot continue to use it to advise economic decisions. Economics must learn the discipline that if a theory is in contrast with empirical facts, it must be rejected.
In my presentations I will try to convey the essential of the new methodological approach that we propose. We cannot insist aggregating variables that cannot be aggregated, we cannot make untenable assumptions. We must distinguish between approximations and idealizations. One might use an approximate reasoning but idealizations that do not correspond to any empirical reality should be rejected.