Soros to invest $50m in economic think-tank By Alan Rappeport in New York Published: October 27 2009 14:20 |The Financial Times
George Soros, the fund manager, has pledged $50m to back a new think-tank with the mission of reconceiving the field of economics, which he describes as ³a dogma whose time has passed². The group, to be called the Institute of New Economic Thinking, will gather luminaries in the field of economics to reflect on the ideas that allowed the latest economic crisis to transpire and to bring new ideas to a profession that some argue has become too deeply entrenched in free-market ideology. The group¹s advisory board will be studded with economists such as Jeffrey Sachs, George Akerlof, Kenneth Rogoff and Joseph Stiglitz as well as public commentators such as Anatole Kaletsky and John Kay, a Financial Times columnist. Mr Soros is pledging $5m a year for 10 years. Mr Soros, who has long been a critic of economic ³fundamentalism², blames the unwavering belief in unchecked free markets, which remains pervasive in universities, for allowing financial markets and asset prices to melt down. Through INET, he will be indirectly funding his philosophy of ³reflexivity² <http://www.ft.com/cms/s/2/0ca06172-bfe9-11de-aed2-00144feab49a.html> that markets tend to influence perceptions of reality, which in turn feed back into markets. ³The ideologists in the free markets are still in command and I think they¹ll be very difficult to remove because they have tenure,² Mr Soros said in an interview with the Financial Times. A side-effect of the crisis has been a deep bout of self-doubt in the economics profession, which largely failed to predict the downturn. Even Alan Greenspan, one of the most faithful believers in the efficiency of markets, said he had found a ³flaw² in the free-market model that defined his world view. ³The financial crisis has caused a moment of deep reflection in the economics profession, for it has put many long-standing ideas to the test,² Mr Stiglitz, winner of the 2001 Nobel prize in economics, said in a statement. ³If science is defined by its ability to forecast the future, the failure of much of the economics profession to see the crisis coming should be a cause of great concern.² Mr Soros, who has called for limits on risk, leverage and compensation <http://www.ft.com/cms/s/0/79edee04-c00a-11de-aed2-00144feab49a.html> at big banks, said he realises it will be difficult to uproot the predominant strain of economic thinking. He hopes, however, to inspire a groundswell of support from students that will ³shift demand² at universities to include economic ideas that are more reality based and less focused on rigid mathematical models. ³I think that the financial crisis has proven that is unrealistic,² Mr Soros said of the prevailing economics literature, which assumes that people behave rationally. ³The dogma has lost touch with reality.² INET will fund research, fellowships and workshops aimed at explaining the flaws in the current financial system. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
