Saving the Appearances (of Standard Finance)

Unbalanced

Back in the Europe of the Middle Ages there existed a curiously schizophrenic attitude to the question of whether the Earth was at the center of the universe. The doctrine of the established Catholic Church decreed that it was. The practical evidence suggested that it wasn't and the orthodox scientific theory endeavored to fit the evidence to the theory, at the expense of commonsense and logic.

Today there exists a similarly curious attitude to the question of whether or not economics is governed by people making rational decisions in consistent ways. The doctrine of the established economic theory says that it is. The practical evidence suggest that it isn't. And the orthodox economic theories endeavor to fit the evidence to the theory, at the expense of commonsense and logic.

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Copernicus, Muddling Through

Revolutionary Ideas

The story of how Nicolas Copernicus overturned centuries of dogmatic adherence to an Earth centred cosmos is well known – too well known, perhaps. Copernicus’ ideas didn’t come out of the wide blue yonder in a sudden revelation; they arose out of the careful work of earlier scientists, paving the way for his final proposition.

Although our preferred methods of storytelling give preference to dramatic tales of sudden jumps the truth is nearly always much more gradual. Just as in science, corporations and industries tend to change slowly. Generally when they don’t there’s something either badly wrong or about to go badly wrong. We’re usually at our best when we’re incrementally muddling through, not trying to re-invent the world anew.

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