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Stephanie Flanders raised the question "Is economics a busted flush"? today and is asking if the global crisis has shown that economics is a load of rubbish ... I believe the answer to this question is yes, and it appears the Economist magazine (the bastion of free market economics) thinks so too ... take a look at Stephanie's blog, as well as my comments on this subject below (and previous post too) ...
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Post 13 (leanomist) wrote:
IMHO Traditional 'economics' is dead - because it's both out of date and too narrow in scope. Dr W. Edwards Deming, a renowned 'creative outsider', wrote two landmark books nearly 20 years ago (and please note the titles - 'Out of the Crisis' and a 'New Economics')*. Deming was 20 years before his time, but his books still tell us far more about the future than a book like 'Nudge' (which is interesting, but certainly not profound).
Economics does need to include more about behaviour (pyschology), but it needs to consider much more besides (e.g. power, values, leadership/management styles, communities, democracy ... ). For example the following simple definitions are built on Deming's work and quickly bring in the concept of values/styles too ...
Poweromics = People using position and power for their own personal gain, based on poor moral values, self interest and greed.
Ignoromics = People are either effectively ignorant of the situation (e.g. the overall environment) or not prepared to take responsibility to make sure it changes for the better.
Leanomics = People taking responsibility for adding value and continuously improving the situation for others (e.g. customers, communities, overall environment), based upon fundamental values such as trust, honor, responsibility and respect.
By these definitions it's very quick to see why we have a crisis (e.g. in economies, banks, enterprises, governments ...etc) .. as (in the UK/US particularly) a toxic mix of Poweromics and Ignoromics prevail (nb they are partners in crime) ... and Leanomics is also starting to point to the 'enterprises, 'nations' and 'economies' that will succeed in the long run (which Deming also indeed predicted, and which is now starting to become reality ) ...
Interesting times ahead - and ones 180 degrees different to what most people in the US/UK have become accustomed too ...
David Clift, A Future 500 Leader
* "LEAN WORLD: The DNA of Success and the Path to Prosperity" builds on Deming's work too. You can also find out more about Poweromics by taking a look at http://poweromics.blogspot.com/2009/07/economic-fools.html as well as the other posts there too
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