Chapter

What is economics good for?

Bill Jordan

in Why the Third Way failed

Published by Policy Press

Published in print October 2010 | ISBN: 9781847426567
Published online March 2012 | e-ISBN: 9781447304296 | DOI: http://dx.doi.org/10.1332/policypress/9781847426567.003.0005
What is economics good for?

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This chapter shows that the changes in economic analysis which the Third Way initiated were rather superficial. The crash of 2008–9 exposed its ineffectiveness in providing guiding principles for public policy, while the scandals in the UK public services of 2008–9, whose genesis lay in the years before the crash, showed that they provided a misleading basis of the design of state institutions. The chapter examines three key areas of the new economics' emphasis on institutions – contracts as the basis for achieving efficiency and value for money in the public sector; information and incentives as the basis for choice by citizens over the services provided through government; and predicting the future as the basis for economic management. It argues that the claims made by the new economists, such as Stiglitz, have proved overweening, and that economics should accept a more modest role in understanding the issues which public policy must address.

Keywords: contracts; public sector; economic management; Stiglitz; Third Way; UK

Chapter.  8505 words. 

Subjects: Economic Sociology

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