Old economics is based on false ‘laws of physics’ – new economics can save us

It is time to ditch the belief that economies obey rigid mechanical rules, which has widened inequality and polluted our planet. Economics is evolving

Things are not going well in the world's richest economies. Most OECD countries are facing their highest levels of income inequality in 30 years, while generating ecological footprints of a size that would require four, five or six planet Earths if every country were to follow suit. These economies have, in essence, become divisive and degenerative by default. Mainstream economic theory long promised that the solution starts with growth - but why does that theory seem so ill-equipped to deal with the social and ecological fallout of its own prescriptions? The answer can be traced back to a severe case of physics envy.

In the 1870s, a handful of aspiring economists hoped to make economics a science as reputable as physics. Awed by Newton's insights on the physical laws of motion - laws that so elegantly describe the trajectory of falling apples and orbiting moons - they sought to create an economic theory that matched his legacy. And so pioneering economists such as William Stanley Jevons and Li(C)on Walras drew their diagrams in clear imitation of Newton's style and, inspired by the way that gravity pulls a falling object to rest, wrote enthusiastically of the role played by market forces and mechanisms in pulling an economy into equilibrium.

People and money are not so obedient as gravity, as it turns out, so no such laws exist

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Like a well-trained child, growth will apparently clean up after itself

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