Paul Ormerod

Even in financial markets, the concept of market efficiency does not hold.

Paul Ormerod (born in 1969) is a British economist who is researching complexity, complex systems, nonlinear feedback, the boom and bust cycle of business and economic competition. Ormerod uses a multidisciplinary approach, making use of biology, physics, mathematics, statistics and psychology as sources of results that can be applied to economics.

Quotes

The Death of Economics (1994)

• The study of human societies and economics is of great importance, and it is not the purpose of the book to suggest otherwise. Rather it is to argue that conventional economics offers a very misleading view of how the world actually operates, and that it needs to be replaced.
  • Preface to the Paperback Edition, p. vii

• The obstacles facing academic economists are formidable, for tenure and professional advancement still depend to a large extent on a willingness to comply with and to work within the tenets of orthodox theory.
  • Preface, p. x

• The importance to Smith of the overall set of values in which the economy operates is generally ignored by his followers in the late twentieth century. His economics, based upon individual self-interest, is remembered, but his moral framework is not.
  • Part I, Chapter 1, Economics in Crisis, p. 14

• At 2 per cent growth a year, an economy doubles in size in just thirty years.
  • Part I, Chapter 2, Measuring Prosperity, p. 23

• The temptation to use mathematics is irresistible for economists. It appears to convey the appropriate air of scientific authority and precision to economists' musings.
  • Part I, Chapter 3, The Roots of Economic Orthodoxy, p. 43

• The second part of the New Right's policy package has been the belief that free-market solutions are always best. It is this latter view which is profoundly mistaken. Markets and profits are crucial, but the pure free-market model itself is deeply flawed.
  • Part I, Chapter 3, The Roots of Economic Orthodoxy, p. 65

• Despite the high salaries involved, employing economists is a cost-effective way for banks, and stockbrokers to secure exposure in the media.
  • Part I, Chapter 4, Professional Reservations, p. 67

By any reasonable criteria, the discipline of economics as a whole, in its present state, is sadly lacking.

• The model of competitive equilibrium which has been discussed so far is set in a timeless environment. People and companies all operate in a world in which there is no future and hence no uncertainty.
  • Part I, Chapter 4, Professional Reservations, p. 76

• The behavior of the economy as a whole, at the aggregate, macro-level, is built up from the individual equations at the micro-level.
  • Part I, Chapter 4, Professional Reservations, p. 79

• The reader might reflect that an awful lot of supposing has to take place in order for the quantity theory of money to be true.
  • Part I, Chapter 5, Mechanistic Modelling, p. 95

• Baseball players or cricketers do not need to be able to solve explicitly the non-linear differential equations which govern the flight of the ball. They just catch it.
  • Part I, Chapter 5, Mechanistic Modelling, p. 108

• By any reasonable criteria, the discipline of economics as a whole, in its present state, is sadly lacking.
  • Part I, Chapter 5, Mechanistic Modelling, p. 112

• In most Western economies, the general relationship is not in fact between the rate of inflation and the level of unemployment, but between the rate of change of inflation and the rate of change of unemployment.
  • Part II, Chapter 6, Unemployment and Inflation, p. 130

• Once the true relationship between inflation and unemployment is understood, with luck and skill, a free lunch is possible.
  • Part II, Chapter 6, Unemployment and Inflation, p. 137

• Keynes tried to show that market economies could settle in equilibrium states in which the labour market did not clear, and in which the level of unemployment was high. He believed that this was due to a particular example of market failure, developed in his concept of effective demand.
  • Part II, Chapter 7, Attractor Points, p. 140

• We need to abandon the economist's notion of the economy as a machine, with its attendant concept of equilibrium. A more helpful way of thinking about the economy is to imagine it as a living organism.
  • Part II, Chapter 7, Attractor Points, p. 151

• The linear, mechanistic view of the world which pervades orthodox economics is simply not capable of capturing the richness and complexity of the rhythms and fluctuations of developed economies.
  • Part II, Chapter 8, The Dynamics of Unemployment, p. 162

• Even in financial markets, the concept of market efficiency does not hold.
  • Part II, Chapter 8, The Dynamics of Unemployment, p. 176

Once the true relationship between inflation and unemployment is understood, with luck and skill, a free lunch is possible.

• Many Europeans, while admiring the strength and power of the American economy, undoubtedly feel that the system of social values which prevails in the United States, manifested in the acute problems evident in the inner cities and the level of violent crime, for example, leaves much to be desired.
  • Chapter 10, Economics Revisited, p. 206

• But Adam Smith was a philosopher as well as well as an economist, famous in his time as much for his Theory of Moral Sentiments as for The Wealth of Nations. And as he understood so well, society is more than the sum of its individual parts.
  • Chapter 10, Economics Revisited, p. 212