Tuesday, November 25, 2008

Acknowledging uncertainty is a moral position

Argues Robert Skidelsky in an excellent article in today's Age. I have been arguing for some time now that the best way to deal with 'wicked problems' such as climate change, river catchment management etc ..... is to abandon certainty or to put it another way to acknowledge uncertainty. Skildesky makes the excellent point that 'the key theoretical point in the transition to a debt-fuelled economy was the redefinition of uncertainty as risk. This was the main achievement of mathematical economics. Whereas guarding against uncertanty has traditionally been a moral issue, hedging against risk became a purely technical question. .... The abolution of uncertainty abolishes the need for moral rules'.

He goes on to observe that the 'monstrous conceit of economics has brought the world to the edge of disaster'.

1 comment:

Anonymous said...

I think it odd to blame "economics" for the financial crisis. By all means blame (to some extent)those whose theories have undermined the legitimacy of regulation. But the immorality of those who sell loans to people who can't repay them,or rate financial instruments AAA so there is more money in their pockets, can't simply be blamed on economists. As much as anything,the crisis illustrates how limited are the public policy levers we have available for dealing with the age old problems of market boom and bust.