What happened to economics?
Economics has lost its way.
What once was a bold, curious attempt to understand how the world works has become an over-mathematized echo chamber obsessed with fantasies instead of truth. It didn’t have to be this way. But somewhere along the way, economics turned its back on the real world—and the consequences are obvious.
The economists.
Many of the greatest economic thinkers in history weren’t economists by training. Adam Smith and Karl Marx were philosophers. David Ricardo was a politician. John Maynard Keynes and John Nash were mathematicians, despite Keynes’ General Theory barely containing any mathematics. These thinkers weren’t just solving equations—they were observing, questioning, and challenging the systems around them.
Today, the field has shut its doors to outsiders. If you don’t have a PhD in economics, a pipeline of peer-reviewed publications, and an unhealthy obsession with Greek letters, you’re dismissed. The discipline became more about credentials than curiosity. And that’s tragic—because economics touches everything. Anyone who understands how the world works should be part of the conversation.
Great economists are rarely just economists. The world doesn’t run on calibrated DSGE models or perfectly concave utility functions—it runs on power, psychology, institutions, and often, randomness. The field needs more thinkers, fewer technicians.
The fantasies.
What universities teach students today about economics is built on fantasy. Introductory economics courses always begin with perfect competition—a theoretical state where rational agents, armed with perfect information, selfishly maximize their own utility in a frictionless market. This model assumes idealized conditions that do not exist in reality. No one behaves like that in the real world. Yet we still teach this nonsense as the foundation of the field.
Why? Because it makes the math easier.
That’s the real issue. Economics became obsessed with mathematical perfection. If it can’t be modeled, it doesn’t exist. And in doing so, we’ve created a fantasy world—one where the assumptions are always “for simplicity,” even if they distort the truth. This isn’t a harmless simplification. It’s a fundamental failure. We’re teaching students things that are false, not just unrealistic. That’s not education. That’s indoctrination.
Although modern economics tries to relax these assumptions by assuming markets are imperfect, if a perfect market doesn’t exist, what does imperfection even mean? Economics must start from reality, and then work on possible explanations of why it happens that way. The economics taught in universities, however, works the other way around. We start from something that doesn’t exist, and then work on possible explanations of why it doesn’t happen that way.
The ignorance.
What happens when the real-world facts don’t fit the model? They’re ignored.
Take money creation. The idea that banks create money out of nothing when they issue loans—something that has been understood for centuries—is absent in most undergraduate textbooks. Instead, they still teach the fictional “market for loanable funds” which posits that banks are intermediaries who just lend out deposits. Even the Bank of England has published papers debunking this. But academia stays quiet. Why? Because acknowledging how powerful banks really are would change how we think about policy, inequality, and who runs the economy. Thus, it’s in the banks’ best interest to keep the general public clueless about this.
Then there’s reflexivity—George Soros’s idea that markets don’t just reflect reality, they shape it. Asset prices influence its fundamentals, which feed back into prices. It’s messy, nonlinear, and it destroys the idea of equilibrium. But mainstream economics hides it under the rug. Not because it’s wrong—because it’s impossible to derive mathematically.
The econometrics.
Econometrics is a tool of persuasion, not discovery. Want to “prove” something in economics? Wrap it in enough statistics, use jargon nobody understands, and hope no one asks too many questions. DSGE models and heavily restricted VARs are designed to impress other economists, not to understand the world.
If ordinary people can’t understand your work, you’ve failed as a communicator. And if only five people in the world understand your model, you should be skeptical of its relevance. The field needs to embrace humility—especially in macroeconomics. There are too many black-box models claiming predictive power they don’t have.
The conclusion.
So where does this leave us?
With an economics that’s more interested in elegance than relevance. A field that shuts out voices who don’t play by the rules. A discipline that teaches fantasies to students while the real world burns outside.
If we want to fix this, we need a reset. Economics must become interdisciplinary again—open to ideas from history, psychology, political science, and philosophy. We need to ditch the obsession with equilibrium and embrace the fact that the world is complex, unstable, and often irrational. We need to value insight over technique, clarity over complexity, truth over fantasy.
Above all, we need to stop pretending economics is a hard science. It’s not. It’s a human science, and humans are messy.
The inspirations.
- Keynes, J. M. (1936). The General Theory of Employment, Interest and Money.
- Schumpeter, J. A. (1954). History of economic analysis.
- McCloskey, D. N. (1983). The Rhetoric of Economics. Journal of Economic Literature, 21(2), 481-517.
- Soros, G. (1987). The Alchemy of Finance.
- McLeay, M., Radia, A., & Thomas, R. (2014). Money Creation in the Modern Economy. Bank of England Quarterly Bulletin, Q1.
- Shaikh, A. (2016). Capitalism: Competition, Conflict, Crises.
Tags: Economics