The Purpose of the Book

As we enter the second decade of the twenty-first century, the economics profession is grappling with how to better respond to an extremely deep financial-turned-fiscal crisis, and there is no end in sight to that debate. That context has forced at least part of the mainstream of the profession to seek for a new “identity,” and concepts which were at the core of the mainstream theory – such as the efficient market hypothesis and markets as self-regulating entities – are under severe scrutiny, while Keynes's ideas are fully back in business and Hyman Minsky's Financial Instability Hypothesis regains prestige in academic circles as well as among policymakers and money managers. On the policy front, the identity crisis is equally profound. The once taken-for-granted benefits of financial globalization are being replaced by the urgency of better supervision and regulation of banks and other financial entities, and different modalities of capital controls are now part of the IMF's tool kit for dealing with the instability now associated with the complete openness of countries' capital accounts (Skidelsky 2009; Sheng 2010; Grabel 2010).

In the “nonfinancial” side of economics, a less strident but equally important shakeout is also starting to happen. Research on open-source innovation by Harvard and Stanford legal scholars such as Yochai Benkler and Lawrence Lessig and on consumer-based innovation by MIT economist Eric von Hippel and his research team are throwing new light on matters like growth dynamics, innovation patterns and the interaction of competition and collaboration among firms and consumers.