Why is a New Economic Theory So Controversial?

Our first reaction to that question is “Why wouldn’t it be controversial?” Almost any new scientific theory of any importance is controversial. It often has lots of negative implications for people who have received economic benefits or power from the status quo way of thinking.

They don’t like to see those benefits or power threatened.

However, our initial focus isn’t on the whole of society but just on academia. If a new theory can get the support of academia, it will likely go far in the rest of society. If it can’t get that academic support, then the real question has to be “Why is a new economic theory so controversial for economists?”

If anyone should rally in support of a new economic theory first, it most certainly should be academic economists. They re the most trained and most focused on economic theory. Unfortunately, those who should be most supportive of a new idea often are not. When Alfred Wegener developed his idea of continental drift to explain the geological features of the world, the academic community of geologists so strongly opposed it that they actually held a convention in the United States to denounce it: They really hated it. Even though it was the most important geological breakthrough in history, they fought it tooth and nail. They also did so despite the fact that it could be highly beneficial to their understanding of the field of geology and even to themselves personally had geologists been more support for further research on the subject.

But such opposition to new ideas is not just limited to academia. Western Union had little interest in the telephone, even though it could have been fantastically profitable for them—both as a company and personally as managers and investors—especially given the incredibly powerful position they held in the telecommunications industry.

What is happening in both cases is that the new theory or invention threatens their worldview. It also could threaten their positions, which were built on different ideas or different technology. This is primarily true if they are not very bright or capable in taking advantage of the new development. A new idea or technology opens the way for better and more capable people to take over the positions of the people who supported the old ideas or technology. The new ideas people would then get both the economic benefits and power the old ideas people were receiving. Again, this holds true only if the old ideas people are incompetent in being able to understand the new theory or technology and best develop it.

So, if you are receiving many benefits from the current system and are incompetent and unable to adapt to new ideas your standard response would normally be to oppose and criticize important new ideas. That makes a lot of sense, but it isn’t very smart or very helpful to moving the science of geology forward. The same problems confront academic economics today. But, they are compounded by two other problems.

The first is that economics is not yet a science. So there is no easy way to prove or disprove a theory. There are simply competing philosophies that can be endlessly competitive as long as anyone wants to champion a given philosophy. Most economists would even laugh at the idea that economics could be a science.

A few economists might argue that economics is a social science (which isn’t a real science), but almost no one would argue that it is a real science. Most economists would argue that it can’t be. They are, in fact, quite wrong, as we explain on this website, just as those who thought that chemistry or biology could never be a science were quite wrong.

The second problem facing economics, in addition to the kind of knee-jerk opposition to new ideas discussed above, is the twin hammers of the struggle for tenure and the enormous benefits that come from gaining tenure.

(we should make a brief description of tenure). STEPHEN: ADD THE SECTIN ON THE TWIN HAMMERS OF TENURE (AND THE SOLUTION) FROM THE VIDEO SCRIPT TO THE TEXT HERE

But, do we need to wait for academic economists to bless this new theory before we can move forward? Ha! Not at all. Progress cannot be stopped by the lethargy of academia! We can move forward, and that’s what this website is all about. Although there are a lot of problems with the Internet, one of the joys of the Net is that a website can be developed and open to all. No prior approval is required. That means there is a lot of junk out there, but it also means a lethargic economic community cannot stop an idea whose time has come.

It would be fantastic if the academic community would support it early on, but it is hardly necessary—as Alfred Wegener and Continental Drift shows. That also shows that the Internet is not a necessary tool in fighting academic incompetence, but it is extremely helpful. In the end, the most helpful tool is time (and the Aftershock). So, for now, we look forward to building this site as discussed in the introduction. It is an exciting time for economics—certainly the most exciting time in its history. More real progress will be made in economic thought in the next few decades than has been made in its history.

Again, like productivity changes, a new economic theory will be highly controversial and get little support at first. But ultimately, the benefits will far outweigh the costs (and over time most of those costs will be viewed as only perceived costs and not real costs). We look forward to being an integral part of making this revolutionary change in economic thought.