Highlighting the problems of Economics

The recent edition of Economist runs the cover story What went wrong with economics.

The article highlights the sentiments against economics and also tries to defend economics. I am just quoting some of the most striking lines -

• OF ALL the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself
• In the public mind an arrogant profession has been humbled
• In its crudest form—the idea that economics as a whole is discredited—the current backlash has gone far too far
• Economics is less a slavish creed than a prism through which to understand the world
• Finance professors are not to blame for this, but they might have shouted more loudly that their insights were being misused
• Add these criticisms together and there is a clear case for reinvention, especially in macroeconomics
  

My thoughts -
Economics (or any other scientific theories per say) always work with certain assumptions and conditions. It is a discipline and science to think and understand the market realitie; and NOT a tool to predict the future outcomes.

If wasteful spending, illiquidity, negative sentiments and inadequate regulation leads to a crisis then I don't understand why macroeconomics has to be blamed. Markets work on "Greed and Fear" and no theory can ascertain the future outcomes. We can only understand the conditions under which a particular situation may arise. Yes, I agree that conditions like illiquidity were not touched or well understood in the past and macroeconomists could not detect the bubble but that does not mean that economics is discredited.

However I totally agree with the closing lines of the article - "Economists need to reach out from their specialised silos: macroeconomists must understand finance, and finance professors need to think harder about the context within which markets work". Although I am relatively a novice, in my understanding, economists need to understand the behavior of market participants better. We cannot assume that markets are perfect. Moreover it is a known fact that policies, regulations etc. can be fiddled for the advantage of few organizations / lobbies. In my opinion, new age economists need to incorporate the two above mentioned conditions in the theories.