Paradigm shifts aren’t easy. As Thomas Kuhn pointed out, it may take a crisis to bring on a change. Academic ideas can be stuck in inertia in the same way organizations can be. The movement beyond inertia implies leadership, the capacity to take risks, and the ability to look at something differently.
Sometimes this may mean looking at something that’s been staring you in the face and suddenly saying to yourself, “I never realized what it meant before.” Sometimes it means looking at an old idea that you disregarded and seeing its current utility.
The John Cassidy, in his New Yorker piece, After the Blowup, maintains that Keynesian economics is an example of this phenomenon. Keynesian economics was there all along and now there’s a possibility that it’s coming back to life.
The reemergence of the Keynesian economics might even by overshadowed by the legitimization of the behaviorists who seem to be feeling that their moment has come. Pure Chicago economists, with their expected utilities and optimizing markets, are meeting the reality of the recent financial blow-out. Now, economists are learning what good leaders have known for a long time. Uncertainty is inevitable, very few things are held constant, and close models are dreams. Economists are now seeing things through a lens of social psychology and arguing that personality and culture inevitably play a role in market theory.
Cassidy’s article is a critical read for any leaders who still hope that cost/benefit analysis, expected utility, and markets are the only solutions to everyday problems. Further, if you let yourself go beyond this article Cassidy will help you understand that there is a possibility of a new paradigm of economics–but a paradigm that’s not restricted to market economies. It’s an exciting paradigm that can offer guidance to anyone who has to make choices. I strongly recommend that you read this piece in the New Yorker.