"Econophysics: A New Paradigm'

by Michael Mannino:

Adam Smith was deeply influenced by the principles of Newtonian and classical physics and firmly believed that this system was a model for all social and economic phenomena. The principles of classical physics depicted the inner workings of the natural world so eloquently and were, after all, so widely believed. Newtonian physics described the world as deterministic, mechanistic, absolute and certain. The universe was often portrayed by the familiar metaphor of a clock, which could be analyzed by simply explaining its parts and how they move. According to Smith, similarly objective laws could describe human behavior – particularly economic behavior. His most familiar example is the invisible hand...

...The neoclassical economic zeitgeist has turned out to be a catastrophe. Rampant consumerism, the ever-widening gap between rich and poor, demoralization, depersonalization and environmental neglect are just a few of the problems of modern capitalism. Given this state of affairs, we must ask these critical questions: How did it get to be this way? What can we do to escape or amend these problems? The deep-seated answer to these questions lies in the foundations of physics.

In his book Small is Beautiful: Economics as if People Mattered, the late economist E.F. Shumacher addressed the fact that the current economic paradigm functions not only without incorporating the sustainability of the natural environment but also without recognition of the very people it so clearly depends on. Now that people matter again in physics, and since economics endeavors to be modeled after physics, we ought to matter again in economics as well.

-Michael Mannino, Adbusters, link