The Terrible Simplifers: Common Origins of Financial Crises and Persistent Poverty in Economic Theory and the new ‘1848 Moment’
AbstractOne element explaining the financial crisis is what Hyman Minsky called ‘destabilizing stability’: long periods of stability lead to increasing vulnerability. This paper argues that similar mechanisms are at work inside economics: long periods of economic progress in the core countries lead to increasingly abstract and irrelevant economic theories (‘terrible simplifications’). This leads to turning points towards more relevant economic theories, referred to as ‘1848 moments’. The paper further outlines the key variables that need to be re-introduced into economic theory in order to furnish poor countries with the type of productive structures that makes it possible to eliminate poverty.
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Bibliographic InfoPaper provided by United Nations, Department of Economics and Social Affairs in its series Working Papers with number 88.
Length: 29 pages
Date of creation: Dec 2009
Date of revision:
Uneven economic development; production-based economics; technological change; innovations; increasing returns; synergies;
Find related papers by JEL classification:
- A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
- B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
- F10 - International Economics - - Trade - - - General
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-10 (All new papers)
- NEP-HPE-2010-01-10 (History & Philosophy of Economics)
- NEP-PKE-2010-01-10 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Erik S. Reinert & Rainer Kattel, 2009. "The Economics of Failed, Failing, and Fragile States: Productive Structure as the Missing Link," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 18, TUT Ragnar Nurkse School of Innovation and Governance.
- Erik S. Reinert, 1999. "The role of the state in economic growth," Journal of Economic Studies, Emerald Group Publishing, vol. 26(4/5), pages 268-326, September.
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