How to make the economics profession socially useful? (A reaction to George Soros’ lectures and INET’s activities)

The profession of economics does not fulfill its social function to provide people a correct understanding of economic phenomena. In other words, the institution of economics does not work properly. George Soros makes this conclusion in his lectures at the Central European University (Soros, 2010). He sponsored the creation of the Institute for New Economic Thinking (INET) with the objective to change this situation in economics. However activities of the INET are not oriented to change the institution of economics and most of participants in its activities are mainstream economists. This short paper summarizes my ideas in what way it is necessary to change the institution of economics. First, in order to make the profession of economists socially useful, it is necessary to reconsider the methodology and history of economics. At present the former leads the profession in a wrong way and the latter to a great extent justifies this wrong way. Secondly, it is necessary to reform the institution of economics. I define the notion of institution in the following way: an institution is a set of formal and informal rules, and also beliefs, that stand behind these rules, that orient the behaviour of members of a certain community. The rules of the institution of economics relate to the community of university professors and students of economics. These rules provide a framework for developing curricula and syllabi, as well as for the organization of examinations. They define the procedures and directions of economic research, and the criteria for publication of articles in academic economic journals. These rules include formal and informal rules of functioning of professional organizations of economists, such as the American Economic Association. Beliefs that underlie the rules of functioning of the community of academic economists are expressed in different answers to such questions as: What does it mean to undertake economic research? What is the purpose of economic research? What should economists study? How should ...