There’s a new book causing a stir in the physics community, Lee Smolin’s [amazon_link id=”1846142997″ target=”_blank” ]Time Reborn: From the Crisis in Physics to the Future of the Universe[/amazon_link]. It was reviewed at the weekend by, among others, Gillian Tett in the FT.  She writes: “Smolin, who has worked for several decades at the cutting edge of cosmology, conducting research into areas such as quantum gravity and string theory, argues that it is a mistake to view scientific laws as universal. Rather, they are “path-dependent”, or a function of what occurred before.” As she points out, mid-20th century economics drew on physics, attracted by the scientific rigour of its discoveries. How wonderful it would be to derive precise ‘laws of economics’. Economists are notoriously charged with ‘physics envy’.

[amazon_image id=”1846142997″ link=”true” target=”_blank” size=”medium” ]Time Reborn: From the Crisis of Physics to the Future of the Universe[/amazon_image]

However, it would be physics envy to conclude that economics now needs historical context and path dependency just because a top physicist has written a book discovering the contingency, the historical specificity of events. In her review, Tett concludes: “Economies do not have a “natural balance”; nor do they operate according to timeless “rules”.” But many economists have been there for a while. Some – like the redoubtable Paul Ormerod in books like [amazon_link id=”0571220134″ target=”_blank” ]Why Most Things Fail[/amazon_link] – never stopped arguing that economics is an intrinsically disequilibrium subject, putting dynamic behaviour over time in specific contexts right at centre stage. Older works like Malinvaud’s [amazon_link id=”0470268832″ target=”_blank” ]Theory of Unemployment Reconsidered[/amazon_link], or, famously, Minsky’s  [amazon_link id=”0071592997″ target=”_blank” ]Stablizing an Unstable Economy[/amazon_link]  were disequilibrium theories. Evolutionary economics, albeit always a minority sport, is inherently about dynamics.

I don’t think the concept of equilibrium should be wholly discarded; it can be a useful analytical tool to understand the dynamics of the economy. But on the whole, I don’t think economics needs another phase of physics envy. The subject is already well on the way to rediscovering the importance of time and place.