“Cogs & Monsters”: An Interview with Professor Diane Coyle

A: We are the cogs: although it has moved on from the days when the Phillips Machine literally modeled the economy in a mechanistic way, conventional economics treats us as individual decision makers acting predictably. Its approach is ‘methodological individualism’, in the jargon of social science. The monsters populate the as-yet unmapped world of today’s economy, just like the blank areas on old maps labeled ‘Here Be Monsters’. One of the important features of digital technology, in particular, is that it makes it more likely there will be spill-overs from anybody’s decisions onto others in the economy — in the various ways I describe in the book. (For movie fans, there’s a hint of a reference to Gods and Monsters, and the toast to Dr. Frankenstein’s new world!)

A: Like any other discipline there are tides and trends in economic thought. A good example would be the ascendancy of rational expectations and efficient market types of models in the 1980s, when this became the approach that was set out in textbooks and taught in many universities. Most students of economics, including those who go on to policy jobs, as many do, have the ideas prevailing from their student days cemented in their minds. If you learned your economics then, your starting point will always be the presumption of ‘free’ markets being best, never mind that such an abstraction doesn’t exist. This is human nature, but it explains Keynes’s comment.