Shifting from Theories Made to Explain Humans to Humans “Made” to Explain Theories
No. 58, Mar.-Apr. 2026 In Friedrich Hayek’s words, “the curious task of economics is to demonstrate to men how little they really know about what they imagine they can design”. The shortsighted tendency to reduce higher-order interdependencies to linear relationships that miss out on essential details is conveyed by Robert Lucas’ “critique”. Phillips, the creator of the namesake “curve”, proved that until the ’50s, high levels of inflation were linked to a low unemployment rate. The statistical methods used then depicted the connection as strong and stable. In the early ’70s, adherents of the Keynesian school of thought, pervading both academic circles and the overall establishment, believed that pursuing inflationary policy would raise employment and generate just enough growth to escape the economic deadlock of those times. Acting on these predictions, the Federal Reserve issued currency to unprecedented levels, while the government patched up the upsurging deficit through debt. More
