I only comment on one particular point. Pomfret says the following, to quote:

The financial crisis in the US and UK is, as Steve Keen says, related to the inner-workings of a credit-based market economy. This is well known to economists. The latest Nobel laureate, Paul Krugman, has a well-known analysis of the 1997 Asian Crisis, emphasising the problem of moral hazard in the credit-based Thai economy.

It appears that many main stream economists, especially from the west, are eager to find what is “wrong” with developing economies or countries, but not necessarily equally critical to industrialised, especially the US economies. Paul has been a well known economist for many years. Has he done a similar well-known analysis of the American credit problems? Has he done a similar well known analysis on the Japanese problems in the 1990s? If not to both, then why not done for an earlier one and for a later one? Further, notwithstanding Paul’s excellent work on Thailand’s problem in the 1990s, has he been able to provide an effective policy prescription to the current economic crisis in the US by now?

Further, there are so many well known economists including many Nobel laureates. Why do we still have problems of financial and economic crises, and a world synchronised one? Why will it take so long to successfully deal with the current crisis, and why are we still in the process of unknown length to know when the economy will recover, given that we have Keynesian economics, or neoclassical synthesis?

What this suggests that the current economics is insufficient to deal with the current crisis, although economics has been able to deal with many economic challenges.

Economists need to deal with real economic challenges. They need, at least collectively, to have a focus on real economic issues. Otherwise, what is economics for?

As I said, I this is not a criticise, but to show that economics needs not only to be living, but also to live up to the real challenges such as the current economic crisis.

It is probably a fact and normal to have economists who may often disagree among themselves. In fact, some jokes on economists include one like that if you have N economists in a room you may have N or more different opinions.

Some economists tend to develop their own new theories (and some may withstand tests) by killing or wounding existing theories. Yes, it is perfectly normal to find the shortcomings of existing theories to progress and advance. But history of economics appears to suggest that the birth of new theories do not necessarily mean the death of existing ones. They may all live and thrive well under particular conditions, that is they may have their usefulness and suitable for some cases.

There have been debates between monetarists and Keynesians. The rational expectations revolution in the 1970s produced the famous result of policy ineffectiveness. But when times of crises, policy makers have no other tools but the two main ones: fiscal and monetary policies, though expectations have become an important part in modelling.

From these limited (but fairly famous ones) episodes of economics, it is not too difficulty to see that both monetary and fiscal policies as well as expectations, both rational and adaptive are useful. It is seldom the case in economics that one theory will always replace another, irrespective whether the proponents of new theories may tend to say otherwise.

So let’s move beyond formalities, though useful they may be, and focus on advancing economics. If the debate can provide some new useful insights into the current economic crisis, it will be good. It will be even better if some policy solutions can be found in the process.