Muddling through and policy analysis

In a variety of books and articles, both published and in process, I've been out pushing the idea of the “economics of muddling through “ as the description of the approach to policy that will become standard in economics over the next 20 or 30 years. The argument is both prescriptive - I argue muddling through is what should be done - and descriptive - I argue that muddling through is what is currently being done, although, like Monsieur Jourdain speaking prose in Moliere 's Le Bourgeois Gentilhomme, many economists don't recognize that that's what they are doing.1 If we've been muddlers for so long, why should we be willing to admit it now? I think there are three reasons. • First, there is a change occurring in formal theorizing in which the holy trinity -rationality, greed, and equilibrium - is being abandoned as required aspects of any model, and being replaced by a slightly broader trinity-purposeful behavior, enlightened self-interest, and sustainability.2 • Second, the work in the formal general equilibrium model built upon the foundation of the holy trinity has been thoroughly explored; all the low hanging fruit has been picked, and young theoretical researchers are naturally gravitating to less explored areas. • Third, today's muddling through is not your father's muddling through; it involves the use of a whole range of applied mathematics that is difficult to use unless we admit we are muddling. Today's muddling is technically impressive muddling and is afar cry from the armchair heuristics that characterized early muddling. The paper is organized as follows: First I consider the history of welfare economics, providing a narrative of how we got to where we are. Second, I briefly outline some important changes that are currently occurring in economics. Third, I expand on my reasons for believing that we are now ready to accept a “muddling through” characterization of applied policy, something we have not previously been willing to embrace.