Economic models should recognise the limitation of reductive reasoning and excessive assumptions.
(Photo credit: Bright Hong Kong)
As people become increasingly sceptical of capitalism in delivering a more prosperous society especially after the financial crisis of 2008, some have tried to refine their models and theories in bid to explain what the previous ones failed to anticipate; some others have made one step further back to question the dogmatism and scientism in modern day economics. The debate over putting humanity back in economics; to realise that politics and social values are part of the story instead of obstacles to achieve ‘efficiency optimisation’ or ‘value maximisation’ has never hit the discipline as hard as before.
In light of this, Bright Hong Kong held a discussion session themed, “How Capitalism can cope with its crisis? How our values & behavior shapes the economy” on 28 September with Professor Alicia García-Herrero, Chief Economist for Asia Pacific at NATIXIS and Adjunct Professor of Economics at Hong Kong University of Science and Technology, as keynote speaker.
Professor Garcia-Herrero noted that the prevailing neoclassical capitalist theories and models are moving away from the reality and that it is time for the discipline to rethink the beliefs that underlie the structure of models. She asserted that new models should take into account the complexities and interdependencies of socio-economic issues and technology-enabled transformations that are disrupting the global economic landscape and society. As she suggested, humbleness to recognise the limitations of economics as a social science and multidisciplinarity to better reflect the real world are key to reinvent the morality of capitalism.
Other participants at the event were:
- Germán Muñoz, Founder & Director Bright Hong Kong.
- Carmen Cano, Head of the EU in Hong Kong;
- Jean-Pierre Lehmann, Professor Emeritus International Political Economy at the International Institute for Management Development (IMD);
- Kathleen Ferrier, former member of the Dutch House of Representatives for the Christian Democratic Party;
- Prof Hans Werner Hess, Deputy Director, Europe-Asia Policy Centre for Comparative Research;
- Sanjukta Mukherjee, Head of PwC’s Thought Leadership team for HK and China;
- Simon Mak, CEO of Ascent Partners Group Limited;
- Maria Tsolaki, Financial Forensics Investigator, Ministry of Finance, Greece; and
- Andrew Work, Founder Lion Rock Institute and co-founder Bright Hong Kong.