Inaugural lecture Prof Steenge: ‘In economics, everything is connected to everything, but there's no vision on these connections’

Prof. dr. A.E. Steenge’s inaugural lecture on 30 September will deal with the fact that in economics, “everything is connected to everything”. What happens in one specific area usually has a great effect on what happens elsewhere. One example is the credit crisis, that started on the American housing market, but now raises questions about the economic system in general. The problem, according to Steenge, is that current insights do not offer a good vision on these kind of connections. By delivering his inaugural lecture, he officially accepts his appointment as Professor in Institutional multi-sector analysis at the Faculty of Economics and Business.

Steenge explains the problem of coherence from a movement within economics that focuses on precisely these connections, the so-called multi-sector or input-output analysis. This analysis describes flows of goods and services, including labour, in a modern economy: where do they come from, where do they go, and what do they cost. This type of analysis is also used to calculate the effect of economic and political choices on the employment rate, for example, the effect of the strengthening of the Dutch dyke system.

According to Steenge, in recent years, the focus has been too much on technological aspects – the word play in his inaugural lecture’s subtitle refers to this. Models often look like train timetables, that state the ideal or desired times, but take too little account of other conditions, such as rush hour, weather conditions, vacation, etc. How did this come to be? The foundations of the models that are currently in use date from the 1920s and 1930s. Back then, technology was chosen to determine our vision on the economy of a country or an area.

Nowadays, however, the problems are entirely different. They concern the free market system, private or public ownership, pollution, etc. Additional questions are: who decides? What tax system is in use? How does bureaucracy behave? These questions refer to the institutional aspects of the economy. It is the area of passions and dramatic disputes. However, in Steenge’s view, this area has been addressed far too little in existing models. He sketches a number of research lines that may be able to cause modernization, and also a number that will definitely not.