I've just read the stunning Economyths by David Orrell which points out something startling. Classical/neo-classical economics presents itself as a science - but actually it's woo. (Orrell doesn't say this literally, it's my interpretation.) Economics is a pretend science. Just like those who grab hold of the terms of quantum physics without understanding them, the founders of economics took the tools of science, but ignored scientific method. They wanted their ideology to be scientific, and assumed that by taking on the look of classical physics - laws, equilibria and such - that it was enough to make them scientific. But it wasn't.
It's worried me a long time that you can have such totally opposing views as Friedman and Keynes type approaches in what is supposedly a science. But now, thanks to Orrell's book, I can see this is simply because woo doesn't have to have a logical structure.
In the end, the scientific method is quite clear. Having formulated your hypothesis, you test it against experiment and/or observation. If the data contradicts the hypothesis, you have to either modify the hypothesis or discard it. Yet time after time, economics has failed to match reality. Still today economics students are taught about supply and demand curves. About a market that is stable, rational and efficient. It bears no relation to the real world.
I'm not saying you can't simplify. Most models are simplified compared to reality. But they still have to match observation. Instead, traditional economics has buried its head in the sand and pretended bubbles and spikes don't exist. They've pretended (sob) that traders always act rationally, rather than as an emotional herd of sheep. Most economic models don't even accept the existence of banks. It's pathetic.
Of course there are plenty of economists that go against the grain, who argue for taking a dynamic systems approach and for including an understanding of human behaviour in economics. But the fact remains that economics students are still taught the same baloney. It's as if we taught first year physics students the elemental theory of earth, air, fire and water. And that traditional economics approach is still very strong in banks and politics. Even after all that has happened. It's time for a change, and I really would recommend that every banker and politician be forced to read David Orrell's book.