Implicit in Christopher Hayes’ article in The Nation about the sources of change in mainstream economics are a tacit proposition and an urgent question. The proposition is that what economists think is somehow loosely connected to events in the political world, sometimes leading those events, sometimes scrambling to catch up to them. (In its strong form, this is the old saw about economists and political philosophers rule the world through their ideas.) A question animates Hayes’ inquiry, Is economics changing? Can we learn things at economists’ conventions that might foreshadow something about tomorrow’s political world and prove useful in it?

That proposition is evident to anyone who has lived through the last fifty years. Take the 1960s, for example, starting with the election of John F. Kennedy. Suddenly there was said to be a “New Economics,” many years in preparation, hit upon in the 1930s by John Maynard Keynes, John Hicks, Gunnar Myrdal, Michal Kalecki, Jan Tinbergen and Ragnar Frisch; fashioned in the ’50s by Paul Samuelson, Robert Solow, Lawrence Klein, Wassily Leontief, James Tobin, Kenneth Arrow and many others, sufficiently reliable to enable the economies of the industrial democracies of the West faster growth and greater stability than ever before.

Or consider the ’70s, when the influence on the profession of Friedrich von Hayek, James Buchanan and Gordon Tullock, Milton Friedman, Robert Lucas and Martin Feldstein was gathering steam. These thinkers raised considerations in their scholarly work that were compelling to many economists quite apart from their political implications. Money matters. So do expectations. Markets coordinate dispersed knowledge better than planners. Public servants have motives of their own, and governments, as well as markets, sometimes fail.

In each case, the new ideas had been considered distinctly heterodox for a time. Implicit in Hayes’ attendance on the scene is the question, Is there anything similar and deep going on today?

The answer is yes, I think. Hayes has collected some direct evidence of it, in the form of George Akerlof’s presidential address to the American Economics Association earlier this year, “The Missing Motivation in Macroeconomics.” Missing, reports Hays, “were social norms, people's conceptions of how they should act, which Akerlof argued play a central role in people's economic activity. Once these social norms are integrated into economic theory, Akerlof argued, many of the anti-Keynesian arguments made by Friedman and his ilk begin to fall apart.”

Akerlof is probably right. The robust understanding of the world that economists have fashioned in the last hundred years or so has come at the expense of leaving out much that is accessible to experience and common sense. Economists in the last 25 years have become deeply curious about the significance of what its models have omitted – declared “exogenous,” in the lingo of the field. But deep intellectual programs like the one Akerlof was describing – “endogenizing” norms and preferences -- are maddeningly slow to translate into widespread excitement within the discipline, much less practical policies. High expectations, such as Louis Uchitelle’s conjecture in his advance story in The New York Times -- that the talk could “push prevailing economic theory further away from the free market approach that has generally held sway for the last four decades” -- may fail to speed the process. (A parallax account of Akerlof’s lecture is here.)

The sense that technical economics was missing something quite important goes back to Adam Smith himself, who spent the last decade of his life trying to reinterpret the second book he wrote – The Wealth of Nations – in terms of the first, The Theory of Moral Sentiments. He didn’t succeed. As a result, he has been blamed by knowledgeable dissidents ever since for what economist Duncan Foley, in a book last year, called “Adam’s Fallacy.” Foley wrote, “For me the fallacy lies in the idea that it is possible to separate an economic sphere of life, in which the pursuit of self interest is guided by objective laws to a socially beneficent outcome, from the rest of social life, in which the pursuit of self interest is morally problematic, and has to be weighed against other ends.”

In fact, The Theory of Moral Sentiments is a primer on psychology, all about “the self performing on a public stage” (in the felicitous description of historian Roy Porter). And after two centuries of neglect, work on incorporating “multiple selves” is going forward in technical economics, exactly as Hayes describes it, by a significant community of young economists as exemplified by the University of Chicago’s Jesse Shapiro. Indeed, important new developments are almost always undertaken by the young, and usually by those operating inside the profession. A good example of an economist considered distinctly heterodox when young, who has by now persuaded large segments of the profession to adopt a new angle of vision, is Paul Romer, of Stanford University’s Graduate School of Business. The “new” growth economics which swept through economics in the 1980s gave a boost in turn to a “new” institutional economics in the 1990s. The program for the meeting next month in Reykjavik, Iceland, of International Society for the New Institutional Economics is as rich -- and heterodox – a mixture of economics, politics, law and cognitive science as one could wish.

Not that any amount of heterodoxy (this side of an apocalypse) is likely to cause economics to abandon its fundamental individualism in favor a more Spartan psychology. The staying power of the dominant “rational actor paradigm” can be seen into in Daniel McFadden’s presidential address to the AEA in 2006, "Free Markets and Fettered Consumers." McFadden, a Nobel laureate for his work in econometrics, deplored the looming prospect, with respect to the new Medicare pharmaceutical benefit, of “leaving the large block of uninformed consumers to ‘sink or swim’…relying on their self-interest to achieve satisfactory outcomes is clearly unrealistic.” He listed a variety of cognitive limitations of the evolutionary brain that he said rendered consumers ill-equipped to deal with various forms of risk.

A year later, though, a somewhat sheepish McFadden returned to the meetings to report that enrollments had gone better than he had expected. Sizable numbers of elderly people remained uncovered, contrary to their self-interest. But other vulnerable groups – those with poor health, low income, or cognitive impairment – did well enough. Further consumer protection was definitely in order, but much more work would be required to engineer its design.

And so it goes. Expect a great deal of work to be done in coming years, mapping what we know about economics into what we are finding out about the psychological and social context. The history of economic thought did not end with the “neoclassical synthesis.” Look carefully. Economics is evolving, sometimes swiftly.