Com­pelling View

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Ti­tle: Fore­cast: What Physics, Me­te­o­rol­ogy, and the Nat­u­ral Sciences Can Teach Us About Economics Author: Mark Buchanan

Pub­lisher: Blooms­bury Pub­lish­ing, 2013. Pages: 272

Time to grap­ple with the stormy re­al­i­ties of an un­bal­anced mar­ket­place, ar­gues this scathing cri­tique of economics-as-usual. Physi­cist and jour­nal­ist Mark Buchanan at­tacks what he thinks are the un­re­al­is­tic as­sump­tions of mod­ern economics: that fi­nan­cial mar­kets ef­fi­ciently process all in­for­ma­tion; that hu­mans make per­fectly ra­tio­nal de­ci­sions; that mar­ket economies re­li­ably find a placid equi­lib­rium when freed from reg­u­la­tion. To un­der­stand the real econ­omy of ir­ra­tional mort­gage bub­bles, pro­longed re­ces­sions and split-sec­ond stock-mar­ket crashes, he con­tends, we must look to other sciences — me­te­o­rol­ogy, physics, cog­ni­tive psy­chol­ogy — for in­sights into the in­trin­sic in­sta­bil­i­ties of com­plex sys­tems like the mar­ket. He does a good job ex­plain­ing some con­cep­tual un­der­pin­nings of the science of com­plex­ity, but since that ap­proach re­lies on mod­el­ling chaotic mar­kets with mys­te­ri­ous black-box com­puter sim­u­la­tions, it lacks the an­a­lyt­i­cal clar­ity and catch­i­ness of neo­clas­si­cal economics sim­plis­tic the­o­ries. Still, Buchanan of­fers a com­pelling out­sider take on the hubris and fail­ures of reign­ing eco­nomic ortho­dox­ies.

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