I have always found it useful to think of a modern free-enterprise economy as a human anthill. Like an anthill, it organizes individuals' activities into patterns more complex than the individuals can fully comprehend, it performs collective tasks that the individuals are hardly aware of, and it can adapt to shocks whose consequences none of the individuals can predict. Of course we humans have more cognitive ability than ants, but the U.S. economy is correspondingly more complex than an anthill. The unsettled state of macroeconomics is testimony to the fact that even those of us who should know best do not really understand much about how the economy works. And yet it does seem to work, at least most of the time and reasonably well.

This is not to say that macroeconomists know nothing, or that macroeconomic wisdom is unattainable. As I will argue below, I think there is much to be learned by viewing the economy as an anthill, and much we have already learned from an emergent Post Walrasian literature that has adopted this viewpoint. This literature has taught us about aspects of economic policy that are not even visible from the viewpoint of rational-expectations-equilibrium analysis, an analysis that evades the issue of limited economic knowledge by assuming that everyone operates with a consistent and correct (at some level) set of economic beliefs.