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What Economics Can’t Explain
What Economics Can’t Explain
Oct 17, 2026 9:23 AM

Tyler Cowen has an interesting column in last Sunday’s New York Times, arguing that despite run-of-the-mill objections to “cold” and “heartless” economic analysis, economics is, as a science, “egalitarian at its core”:

Economic analysis is itself value-free, but in practice it encourages a cosmopolitan interest in natural equality. Many economic models, of course, assume that all individuals are motivated by rational self-interest or some variant thereof; even the so-called behavioral theories tweak only the fringes of a mon, rational understanding of people. The crucial implication is this: If you treat all individuals as fundamentally the same in your theoretical constructs, it would be odd to insist that the law should suddenly start treating them differently.

James Poulos offers an healthy response, reminding us that “no matter how solid the economic foundation for moral egalitarianism, there’s a thing or two of great moral significance that’s missing.”

Indeed, in attempting to avoid the cliché of cold-heartedness, Cowen risks perpetuating a different one: that economists ignore the mystery and spiritual significance of humanity and human behavior. The instilling of egalitarian sensibilities when es to seeing people as people is one thing, but part of thisreorientation needs to include a recognition of the features that make each us different. Leveling things is helpful when the earth is rocky, but the bigger problem for the modern economist seems to be his propensity to create craters in the pretty green grass.

Again, treating that which is equal as equal is no small thing, but acertain dehumanization can quickly result if we’re not discerning about the side effects of squeezing folks into one-size-fits-all formulas.Poulos’s basic suggestion: recognize the limits of economics and make room for the “realm of transformation”:

Rather than responding to the danger by doubling down on an economics-explains-it-all view of the world — whether Hayekian, Keynesian, or other — economists could consider looking beyond the moral frontier of their theoretical frameworks at the realm of transformation, a far different space than the one in which transactions transpire. There really is no economics of transfiguration, or conversion and deconversion in a spiritual or poetic sense, or surprise, or tragedy, or redemption. And that’s okay — so long as we do not get hung up on the idea that economics needs to explain it all because human beings are fundamentally natural equals endowed with basically the same species capabilities…

…Though it’s true that all humans are equally human, this is a necessary but insufficient insight to grasp what it is that makes us human: the possibility of transformative relationships that is always to us an unknown unknown — something that intercedes into our lives through us in a way that we can never understand or experience authentically as a capability that pertains to our individual self. It is much more revealing to think of ourselves, if we have to at all, as sites or spaces where the possibility of transformation and transfiguration can occur — not just for ourselves, but for others, and never just for predictable or foreseeable others.

Read Poulos’ full post here.

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