In the day-to-day challenges of economic development work, the field of “economics” looms large. Somehow, we expect our efforts to build upon and take advantage of the rules and principles of economics in order to drive job creation and sustainable economic growth at the local level. And yet, rarely do we talk about economics principles like the invisible hand of the market, marginal utility calculations or equilibrium points. In his new book, “Economyths: How the Science of Complex Systems Is Transforming Economic Thought”, mathematician David Orrell explains why this is – and provides some valuable lessons for economic developers along the way.
Originally from Alberta, Orrell is now based in Oxford, England. In ten readable and accessible chapters, he examines some of the most fundamental principles of traditional laissez-faire economics, and explains how and why they don’t display much relationship with economic realities around us. With a deft and humorous style, he explains how economic crises and volatility are a central component of our economic system, how the financial risk models employed by banks emulate gambling, and how Milton Freidman caused the collapse of Iceland’s economy. Orrell’s basic point is one that should resonate with economic developers – real economic activity happens at street level, and not in the theoretical halls and ivory towers of academia. And if we want to understand the realities of economics as they’re playing out in our communities every day, Orrell’s book is a great starting place. If engineering is “applied science” then economic development is “applied economics” and Orrell provides a great tool for separating application from theory. Entertaining, informative and highly recommended.