Dani Rodrik says economics is fine, but its practitioners are not (the full version points to macroeconomists in particular):
Blame economists, not economics, by Dani Rodrik, Project Syndicate: As the world economy tumbles off the edge of a precipice, critics of the economics profession are raising questions about its complicity in the current crisis. Rightly so: economists have plenty to answer for. ...
So is economics in need of a major shake-up? Should we burn our existing textbooks and rewrite them from scratch? Actually, no. Without recourse to the economist's toolkit, we cannot even begin to make sense of the current crisis.
Why, for example, did China's decision to accumulate foreign reserves result in a mortgage lender in Ohio taking excessive risks? If your answer does not use elements from behavioral economics, agency theory, information economics, and international economics, among others, it is likely to remain seriously incomplete.
The fault lies not with economics, but with economists. The problem is that economists (and those who listen to them) became over-confident in their preferred models of the moment: markets are efficient, financial innovation transfers risk to those best able to bear it, self-regulation works best, and government intervention is ineffective and harmful.
They forgot that there were many other models that led in radically different directions. Hubris creates blind spots. If anything needs fixing, it is the sociology of the profession. The textbooks -- at least those used in advanced courses -- are fine.
Non-economists tend to think of economics as a discipline that idolizes markets and a narrow concept of (allocative) efficiency. ... But ... spend some time in advanced seminar rooms, and you will get a different picture. ... Advanced training in economics requires learning about market failures in detail, and about the myriad ways in which governments can help markets work better. ...
Economics is really a toolkit with multiple models -- each a different, stylized representation of some aspect of reality. One's skill as an economist depends on the ability to pick and choose the right model for the situation.
Economics' richness has not been reflected in public debate because economists have taken far too much license.
Instead of presenting menus of options and listing the relevant trade-offs -- which is what economics is about -- economists have too often conveyed their own social and political preferences. Instead of being analysts, they have been ideologues, favoring one set of social arrangements over others.
Furthermore, economists have been reluctant to share their intellectual doubts with the public, lest they 'empower the barbarians.' ...
Paradoxically, then, the current disarray within the profession is perhaps a better reflection of the profession's true value added than its previous misleading consensus. Economics can at best clarify the choices for policymakers; it cannot make those choices for them.
When economists disagree, the world gets exposed to legitimate differences of views on how the economy operates. It is when they agree too much that the public should beware.