A crisis of economics

One of the primary criticisms of International Monetary Fund (IMF) stabilisation programmes is the imposition of stringent conditionality, often characterised by austerity measures. According to the IMF’s own research, such measures can lead to short-term economic contraction and social unrest. A 2015 paper titled “The Role of Fiscal Policy in the Post-Crisis Economic Recovery” suggests that austerity can deepen recessions, as public spending cuts reduce demand and hinder growth. The economics profession stands at a pivotal crossroads. Failures during the 2008 financial crisis, the inflation surge of 2022, and the rise of populism have exposed the limitations of conventional economic thinking. Economists have clung to outdated models, often ignoring the complexities of the real world. Prominent voices like Gita Gopinath, Thomas Piketty, Angus Deaton, and Dani Rodrik argue that the discipline must evolve. This discontent, reflected in the rise of populism, is rooted in economic alienation and the failure of traditional economic prescriptions.