Discover your lunch economist

It's Edmund Phelps at lunch with FT;

Since 2001, Phelps has been director of the Center on Capitalism and Society, based at Columbia University. This is an economic forum for discussing what it is that allows commercial ideas to blossom into economic success for a country.

The waitress is back to take our order. We both choose corn chowder as a starter. He then selects the Maryland crab-cake sandwich, a regular choice of his. I follow his recommendation and opt for a Cobb salad, in this case a chicken and Roquefort mixture. “There’s a lot going on in the Cobb salad,” says the waitress. Phelps tells me it was invented in Manhattan, although later research suggests Californian origins.

Phelps feels that he is at the stage in his career “where I can afford to be as radical as I want to be. And so I am having a lot of fun thinking about capitalism and trying to imagine how economics would have to be re-written to capture the heart of that kind of system.” Traditional economics, he explains, sees the world as if it were a plumbing system. “It’s basically rooted in equilibrium – things work out as people expect them to do.” Capitalist reality, however, “is a system of disorder. Entrepreneurs have only the murkiest picture of the future in which they are making their bets, and also there is ambiguity, they don’t know when they push this lever or that lever that the outcome is going to be what they think it is going to be – there is the law of unanticipated consequences. This is not in the economic text books, and my mission, late in my career, is to get it into the text books.”