News
Prof. Reinert interviewed by a Latvian magazine
Professor Erik Reinert was featured in the July 14’ issue of the Latvian intellectual magazine “Rīgas Laiks” where he talked about some of the core fields of his scholarly interests including the history of economic thought and problems of economic development.
Speaking of the current situation in the study of economics, prof. Reinert emphasised that all generations of economists educated after 1970s know almost nothing of history of economic thought, but mostly work with mathematical models. However, he suggested, mathematical economic models work only in a particular context, and this context – the so-called big picture – is constantly changing.
Thus, he argued, these models have very limited applicability. While in real life there is infinite number of different variables, in economic models those are reduced to absurd minimum, thus becoming extremely abstract. While earlier economists, according to prof. Reinert, had a grasp of the practical side of life – they understood manufacturing, hierarchies, and skills – and thus could practically apply abstract models in a particular context, current generation of economists is focused solely on mathematical models and disregards the relevant practical aspects. This, of course, had profound implications for both economic science and economic policy.
When asked about the proposal made by Jeffrey Sachs for Mongolia to specialise in software development, prof. Reinert suggested that there is nothing wrong with the proposal if one does not take into account existing context, where 80% of the population beyond Ulan Bator live without electricity, which obviously makes this proposal useless. He continued his argument stating that in earlier years it was the job of economists to make policy proposals based on the understanding of local context, prescribing medicines according to the condition at hand. Nowadays, prof. Reinert quipped, every country receives the same treatment, thus firmly arguing for a return to Reality Economics.
