Sam Bowles and Wendy Carlin giving a presentation at the Vatican.

Neither Nordic social democracy nor Thatcherite and Reaganite neo-liberalism offer a set of political, economic and philosophical principles adequate to the challenges of populism and xenophobic nationalism, according to frequent SFI visitor Wendy Carlin of University College London and SFI Professor Samuel Bowles. Moreover, they point out, these models of public policy are out of step with recent research developments in their field: notably in the economics of information and behavioral economics.

This February, Carlin and Bowles are hosting a small working group at SFI to outline possible new directions for research at the interface between economics, public policy, and philosophy. The meeting will further develop themes in from their well-received SFI Community Lecture in July of 2018 titled: “After Trump and Brexit: A New Economics (forget red and blue).”

One recent development the group will consider is the now widely accepted proposition that economically relevant information is typically scarce and local. Initially advanced by Friedrich Hayek in his critique of central planning, this idea has more recently been deployed to demonstrate that market failures — in markets for labor, credit, and information itself — are the rule, not the exception. The underlying problem applies with equal force to governments, whose capacities to address social problems are intrinsically limited by a lack of information sufficient to impose solutions by fiat.

The second development — the behavioral revolution in economics — has led to a reconsideration of a fundamental tenet of the neo-liberal paradigm. This paradigm holds that citizens and government officials alike are amoral and self-interested. As a result, collective action by governments, trade unions or other bodies in civil society is seen not as a solution to social problems, but instead a pathology.

Carlin explains: “Because successful paradigms in political economy must provide guidance for public policy and broader societal governance — as did neo-liberalism and Keynesian social democracy — we will address policy challenges in the areas of economic insecurity, the predicament of high wage economies in a low wage global economy, modern monopoly, the organization of production, the urban-rural hiatus, intellectual property, and climate change.”

Participants include philosophers, economists, legal scholars, and political scientists, including SFI External Professors Luis Bettencourt (University of Chicago), a physicist, and economist Rajiv Sethi (Columbia University).

Read more about "A new paradigm for political economy."