Anatole Kaletsky in Goodby, homo economicus in Prospect says that the scandal of modern economics is that two false theories—the rational expectations and the efficient market hypothesis— are not only misleading but are highly ideological, and that they have become so dominant in academia (especially business schools), government and markets themselves. He says:
While neither theory was totally dominant in mainstream economics departments, both were found in every major textbook, and both were important parts of the “neo-Keynesian” orthodoxy, which was the end-result of the shake-out that followed Milton Friedman’s attempt to overthrow Keynes. The result is that these two theories have more power than even their adherents realise: yes, they underpin the thinking of the wilder fringes of the Chicago school, but also, more subtly, they underpin the analysis of sensible economists like Paul Samuelson.
Kaletsky adds that the second great merit of rational expectations lay in its key ideological conclusion:
that deliberate policies of macroeconomic stimulus by governments and central banks could never reduce unemployment and would merely exacerbate inflation. That government activism was doomed to failure was exactly what politicians, central bankers and business leaders of the Thatcher and Reagan periods wanted to hear. Thus it quickly became established as the official doctrine of the political and economic establishments in America—and from this powerful position it was able to conquer the entire academic world.
His argument is that economics today is a discipline that must undergo a paradigm shift—it must broaden its horizons to recognise the insights of other social sciences and historical studies and it must return to its roots. That means rejecting the principle that economic behaviour could be described by precise mathematical relationships.