A blog called “The Wild Peak” has an interesting critique of classical economics, making the case among other things that its failures are rooted in physics envy.
Given the absolute centrality of space and time for all things economic you might be forgiven for thinking that they would be important components in modern economic ‘science’. They are not. In neoclassical economics, which retains a vice-like grip on both academia and policy making and provides the intellectual support for the ideology of neoliberalism, space and time are almost totally absent. Why is this? Why does it matter for people and the planet? And are there more useful alternatives?
It also tend to ignore most important aspects of scale, energy use, resource limits, how aggregate markets are not scaled up individual demand and supply curves, and how economic actors actually interact, adapt, behave and choose. There is also no concept of time’s arrow, i.e. the irreversibility of processes and how such “path dependence” is crucial for economic development. The point is that even though all these factors have been studied by some excellent economists (usually of the non neoclassical variety), they are still marginalised within academia, business and government policy making. Stripped down classical mechanics still rules the roost.
I start to part ways with the article at the end; the author is a bit credulous regarding Georgescu-Roman’s overdrawn attachment to entropy. (As long as the sun shines, the world is far from its entropy bounds in a physical sense of entropy. Entropy in the mathematical sense should not be confused with thermodynamic entropy because it has no real second law constraints in that context.) I am not sure a satisfactory economic theory exists. But I think the argument for the failure of the dominant view (still called “liberal” in the UK, better understood in American contexts as “market-libertarian” of “Friedman school”) and its variants (Keynes-Krugman school) is solid.