“There is nothing as practical as a good theory,” social psychologist Kurt Lewin wrote in 1951 in his book, Field Theory in Social Science. His point was that a sound theory is not an abstract luxury. A good theory helps understand how things work, predict outcomes and design effective action. It is intensely practical because it guides better decisions.
The corollary of Lewin’s theory is, of course, that there is nothing more impractical than a bad theory.
Recent developments have challenged the validity of economists’ theories that have guided economic policies in the last 30 years. The theory that free trade across borders will make the world a better place for everyone is in a shambles, what with the geopolitical trade war started by the United States started and the collapse of the World Trade Organisation.
Theories that financial markets know best and should not be regulated, and that technological innovation, if left free, will find solutions for all the problems of the world are no longer tenable.
Rapid developments in the field of artificial intelligence, controlled by private, insufficiently regulated US companies, are threatening the security of all nations – including the US.
Economics science is a very young science compared with other sciences. It became a distinct field, separated from the other social sciences, in the early 20th century. While Nobels in other fields – physics, chemistry, biology, medicine, literature and peace – have been awarded since 1901, the first Nobel Prize in “economic science” was given only in 1969.
The first Nobel Prize in the field was awarded to Jan Tinbergen and Ragnar Frisch for their pioneering work in econometrics, which is the application of mathematics, statistics and data analysis to economics.
Tinbergen’s “targets and instruments” framework established the foundational rule that a government with N independent policy targets must wield at least N independent policy instruments to achieve them.
But this approach has led to economists and policy experts measuring complex systems in numbers, with people as numbers within them. As a consequence, they have placed themselves on pedestals and have stopped listening to the people whose lives they believe they are improving.
One glaring indication of the failure of this approach is to be found in the United Nations’ Sustainable Development Report 2026 released last month.
It reports progress on 17 sustainable development goals, which “recognise that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests” says the United Nations.
However, with less than four years remaining for the deadline to achieve these goals, progress is significantly off track, the report says.
The 17 goals are broken down into 169 targets (with 231 unique indicators). But only 16% of the targets are projected to be achieved by the deadline. In another 16% the world has actually gone backwards. On the remaining 67%, there is only limited progress.
The conclusion is that there has been no progress overall since 2015.
Meanwhile, the planet has been heating up further; water tables are receding; soil is becoming less productive; populations are aging and young people everywhere are unable to find stable employment with sufficient income and social security.
The 2026 report focuses on what is wrong. The fundamental problem is that the manner in which the process is being monitored and implemented is too mathematical and too compartmentalised.
Progress towards each goal is managed by teams of experts along with government agencies and private enterprises focused together on narrow goals. The underlying approach is that the greater the complexity, the more numerous the parts into which it must be broken.
Each part can then be assigned to dedicated teams. They race to achieve their goals unaware of the impact they have on the condition of the whole system.
This is the wrong approach for improving the well-being of complex living systems (such as the human body and the natural environment) in which all sub-systems within the living system need each other to sustain their own health and the health of the whole system.
Their parts cannot be, and must not be, improved in isolation of each other.
Economic science has been corrupted by the over-mathematisation of its models and its over-reliance on quantitative data. Robert Lucas, who received the Nobel Prize in economics in 1995 for expounding the “rational expectations” view of human behaviour referred to a theory as something that can be put on a computer and run.
Many economists insist on equations and numbers because that is all that computers can compute. But in reality, economists should study complex, living systems as they are – not as economists find easy to model.
Economists want to bend the real world to fit into their models and theories. It is time for them to rethink the fundamentals of their economics.
The insight of the Sustainable Development Report of the transformation required to make progress is this: “The scale of action required is regional and local, not only national.” Therefore, it is also not international.
This requires a fundamental change in the way the sustainable development goals have been developed and implemented so far. Top-down management is disempowering common people. Powerful nations are telling others how to develop themselves and are measuring their progress. However, they must reevaluate their own progress and transform themselves.
Economists must learn to engage with ordinary people and learn from them. That is the only way to make the world better for everyone.
Arun Maira is the author of Shaping the Future: A Guide for System Leaders.
