The aim of the ESRC’s Rebuilding Macroeconomics network is to transform macroeconomics back into a policy relevant social science. Our strategy has been to support interdisciplinary analysis and new research methods to enhance the understanding of our macroeconomic system. This conference explores some of the ideas that are emerging from our research and workshop discussions.

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Background

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Over the last twelve years, we have had at least three major economic crises: the global financial crisis; the rise of nationalism / protectionism; and the economic impact of COVID. Each one cascades from a small corner of the world with huge social consequences. Each one caught us unprepared.

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Is it reasonable to expect to do any better in future? A popular refrain in economics is that crises are by definition unexpected and therefore cannot be avoided. This is reminiscent of Voltaire’s solace after the devastation of the Lisbon Earthquake in 1755. He was challenged by his protégé Jean Jacques Rousseau who gave us the first ‘social science’ response to a disaster arguing that most of the loss was in fact the consequence of our own design. Today, the spread of COVID is arguably more due to our living conditions than the pathogen itself. Crises are unexpected if they fall outside of our modes of thinking. Anyone who watches Bill Gates’s Ted Talk in 2015 about a coming pandemic will agree that it looks extraordinarily prescient. But a call to action cannot be heard, no matter how powerful the voice, if the reasoning lies beyond our collective imagination.

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Aim of conference

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The aim of this conference is to challenge conventional modes of thinking in macroeconomics in the spirit of Rousseau. We start with social reality. Human beings are profoundly social animals engaging in almost non-stop interactions with those nearest to them to create shared customs and culture. Interaction between the social groups leads to adaptation, and the accumulation of knowledge and technology over generations. This takes us from a world of equilibrium, to a world of invention and intrinsic fundamental uncertainty: where the system is self-organising, but not necessarily self-stabilizing.

We have designed the programme to start each day from our most thoughtful policy makers to hear what they see as the most pressing questions for macroeconomists to consider.

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Day 1: will explore the nature of our macroeconomic system. As social animals we interact in a changing, but structurally organized system, which raises the question of the appropriate level of analysis. Successful economic systems continually adapt, restructure and reinvent themselves meaning it is not obvious that we are either in, let alone heading for, a steady state.

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Day 2: we explore how we might analyze this system. Adaptation and reinvention mean we face fundamental uncertainty which calls for a different approach to decision making. Our economic structures may be more fragile than an equilibrium system might suggest. Finally, is there a coherent alternative to our exclusively equilibrium framework of analysis?

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Day 3: looks at the ‘culture of expertise’ in UK macroeconomics. We ask how ideas migrate from lecture theatre to policy circles, which networks really count and whether there any unintended disincentives to innovation in macroeconomics. We hear from the next generation of macroeconomists.

If you would like to join us, please contact r.arnold@niesr.ac.uk for login credentials.