Just what planet do economists live on? No. 2

Here’s a note I wrote about 12 years ago, and I have just rediscovered. I remember this as a revelation at the time, and I’ve been searching for the book’s title ever since! The comment concerns itself with assumptions in Economics, but the implications stand for any discipline. Assumptions are useful, and even necessary, but they can be dangerous, and they always require testing at some stage.

Tumbling dice / Brian Toohey … gave some incredible (I assume true) facts about the neo-classical economic establishment in Australia, eg, did you know that the economic model developed by the Industry Commission assumes (as does neoclassical economics) that the movement of money (the financial system) has no cost (!), and that, when the IC was to do an inquiry into the banking system (for banking system, read a major earner of profits in Australia), it had to develop an extension to its model because the whole banking system was missing!

Tumbling dice : the story of modern economic policy / Brian Toohey. Port Melbourne : William Heinemann Australia, 1994.