Sorry about the several typos in my previous post.

I just read through the section of Soulful Science on human psychology as an extension of the fundamental economic model. I really liked it that Diane Coyle indicated that the fundamentals are the core of economics, notwithstanding her devotion of an entire chapter to the subject. I was disappointed that my co-authored work extending Harry Markowitz's (JPE 1952) paper "The Utility of Wealth" was no on Diane Coyle's radar. In our extension (Journal of Economic Behavior and Organization 1998) , Coelho and I augment the Markowitz function with arguments for: 1) status; and 2) reciprocal altruism. This allows Markowitz's model to be operationalized. Testable implication about gambling, insuring and peer group selection result. This approach is an alternative to the widely acclaimed "Prospect Theory" that Coyle provides a generous discussion of.

I like Diane's article, and agree with almost everything she says. (What I don't agree with is the suggestion that I said in the FT that "economists have an arid view of human nature, miss all that is rich and complex about life, and reduce everything to the profit motive". I don't believe that economists believe humans really act as their models suggest, but just that this is a necessary approximation. I never suggested that the profit motive is all that drives them. I think Diane has imposed her own template on my remarks.) What I think she fails to recognize is that, while many good economists have taken bold and difficult steps beyond the neoclassical model, much of economic policy at the level of governments and businesses is not informed by this new thinking, but draws on undergraduate-level theory, or worse, bowdlerized versions of it. This point was made nicely in one of the subsequent letters to the FT. It seems to me that the problem is that the first-order model of economics is not an approximation of the more sophisticated picture she describes (like the physicsts' Bohr atom), but is simply wrong and due for a complete overhaul if not obsolescence. I do recognize that, to take one instance, there may be some occasional value in looking at an equilibrium model of the economy - but economists really do need to acknowledge from day one of their teaching courses that the economy is in fact a non-equilibrium system. This is crucial.

Besides, I think she is a little optimistic about the state of academic economics too. I have been told on several occasions that papers have been rejected out of hand from top journals simply because they used agent-base modelling that does not conform to the neoclassical paradigm and are intrinsically non-equilibrium. These is a lot of exciting innovation out there, but there is also still huge inertia in what Alan Kirman and others have called the Citadel. Economists need to take a hard, long look at what they teach students and at how their ideas get translated into practice in the outside world, not just at what the creative thinkers are publishing in the journals. That's precisely why books like Diane's are needed.

It was irresponsible for me to have spelt RESPONSIBLE incorrectly above.

We live in a world where business, the economy, jobs, wealth and prosperity are held above and before the majority of most people's interests. Indeed economic and human needs are too often conflated.

Whether or not economists deserve the negative press, the fact is that business and governments invariably dance to the tune of the economists and analysts. We, the public, see this and, as joefranks69 said, we also see the failures of the systems; we see the few get richer and the many get the poorer, we see the rape of the environment and we see the dehumanisation of people into workers. Anyone who tries to add responsibility or humanity to the economic system is described as "anti business" or dismissed with the usual excuses ("it's too expensive", "it would cost jobs/efficiency/prosperity/".

(At this point I would normally cite dozens of examples, but since the article is one giant generalisation I don't currently feel any pressure to go into much detail. I will drop these in, though: the environment, the mental health of the workforce, taxation of the rich, actual sustainability - you get the idea.)

At the core of the hubris surrounding economics we have this simple truth: In an economically-focused world, if something is 'uneconomic' it will invariably not be done unless there is *huge* democratic/public demand.

What we need, absolutely and urgently, is RESPONISBLE economics. The intangibles must be made tangible and costed in, no exceptions. The polluter (of any kind) must pay.

I am currently deeply unconvinced this will happen because, put simply, being completely responsible is uneconomic.

There is a history to Economic's notoriety, and also to its attempted rehabilitiation since the 1980s.

The dominant form of economics globally is a particualr strand of "laissez faire" neo-liberal economics, overseen by Washington-based international institutions, set up to run the world, and marginalise the UN, during the post-war settlement.

There is a revolving door between US government (particularly the treasury) and staffing in these insitutions. These institutions, which are often seen as extensions of US foreign policy, have done immeasurable damage to developing countries, since their "structural adjustment' policies have failed so spectacularly.

It is clear that this represents the dominant stream in economics, since the post 1980 shift in the profession coincided with these huge financial institutions finally caving in under the overwhelming evidence and criticisms mounting against their policies.

Stiglitz says as much, and his work on information economics is basically an exploration of one very faulty assumption in mainstream (neo-classical) economics, that is of perfect information. It has also become part of a new attempt to establish a hegemony around "accountability" in terms of the transparency of information being paramount in terms of how states run their affairs.

However this is a holding action by the economists: The problem is that they are technicians, and not policy makers, and should not have been left to run so much of the world's affairs.

"Information" cannot really say much about overarching human priorities, and is as such only a necesssary and not sufficient condition for democracy, or however else one finds social and political priorities.

When we have a functioning global democratic body, and an economics that is relegated to implementing policies, and in a way that is sensitive to particular social conditions, and particular sets of ethical and political priorities, then things will improve. Economists will be in their proper place as technicians implementing means to socially and poltically determined ends (rather than being agenda setters) and the cirticism will lessen.

This will not be achieved through theoretical apologies from economists, it will be achieved by reform of the instutions of global governments, to put human and democratic concerns above utilitarian economistic concerns. The profession will then follow suit, since economists seem to almost inavariably follow the money.

Au contraire. Mainstream economists get a bad rap not only for their record of being boring and irrelevant, but most importantly, for the utter failure the implementation of their theories has met with over the past thirty years or so.

My point is that until economists come up with ideas that, once implemented, lead to equitable, sustainable worldwide growth, they will be treated on a par with witch doctors. 'Witch doctors' is an appropriate designation considering the success rate neoclassical economics-inspired policies have had throughout the world, but perhaps 'court jesters' is more to the point, since mainstream economists seem to do nothing more than provide a veneer of justification and popular appeal for policies that will - and demonstrably have - beggared the masses and enriched a few. So long as the few getting wealthy are the same people who pay the court jesters' salaries, I don't think a significant change in mainstream economics very likely.

Economics lost its relevance for many with its focus on a particular form of rationality (choosing the extra dollar is the only rational choice) and the value it places on efficiency. More recent developments in economics, out of the mainstream and textbooks, is a pluralistic approach, incorporating behavioral and psychological factors. A few examples: the amount of money in absolute is less important than the amount relative to cohorts. Also, choosing not to receive the extra dollar where the cost does not impact the receiver directly, such as environmental costs. And, the concept of wellbeing (or happiness) as a non-monetary goal and rational choice. Finally, the higher-weighted value of democracy, or self determination of the individual.

These and many other examples are developments in microeconomic analysis with significant macro implications. The improvement in explanatory and predictive power is bound to gain wider acceptance of economics. As economics embraces the pluralism, so the public will embrace this 'revolution' in economics.