1. That most theories are base on some equilibrium position. Ceteris paribus, the world should converge to this point. However, this clearly has not happened, and is not likely to in the future. So what value are these equilibrium models?
Wouldn’t a better way be to explain the processes that cause constant changes? Rather than observing given situations, would it be better to know the processes that create the situations from previous ones? This is where evolutionary explanations come into play. The theory of evolution describes how such causal processes behave. An understanding of these processes may bring a whole new foundation to economics – where rather than focus on determining absolute outcomes, we focus on determining absolute processes, which, when given current starting points, will determine future paths.
2. Macro economics for the most part does not know what it is measuring, and therefore, cannot be much use in explaining our world. What are real incomes? What is the ‘price level’, when the type of goods in the economy continually change? If there is a price level, what is it relative to? Why is unemployment a bad thing when government benefits are provided? Do we value our time so poorly, and money so highly? Furthermore, there is a distinct lack of causal explanation for many of the phenomena observed. One observation of and abstract construct correlates with another observation of an abstract construct. Neither of which are known to the agents who make the decisions.
3. The great illusion of technology. Economists use the term ‘technology’ to explain everything the cannot explain. In the Solow growth model, technology is simply a residual term that captures everything that is not labour and capital. Can we really be so ignorant about the process of economic growth? Also, environmentalist have got the whole process backwards with regard to technological improvements in resource efficiency. Historically we know that such improvements cause increased resource consumption – how can they all of sudden start doing the opposite?
I’m sure there are many more, but that should be enough for today.