The following reflections by economist Gordon Tullock on the differences between biology and economics perhaps explain the economics profession’s failure to predict and ward off the extant financial crisis:
Though they proceeded in some ways in parallel, there was a striking difference between the development of economics and the development of evolutionary biology. Though the biologists had various fights among themselves, and naturally made mistakes, they did not have the special problem economics does. The only real purpose of studying economics other (than intellectual amusement) is to advise governments on policy. Further, the advice is rather apt to be contrary to tradition or conventional morality. As a result, there is continuous pressure on economists to conform to the majority opinion. Further, this pressure does not come entirely from outside. Many economists themselves are upset by the teachings of their own science. It was said long ago that any economist who is any good would be unpopular. He will be offering advice which people don’t want to take. The economists may feel the same moral drives as the layman. . .
A result of this is the development of various doctrines in economics which have the characteristic of bringing policy ideas more in accord with conventional wisdom. Further, an individual biologist who finds something strikingly different normally does not have to convince a number of politicians of it before he can take advantage of it. In general, that is not true in economics. As a result of this, economics is continuously subject to pressures and fads. The two most significant examples of this in recent years were Marxism and Keynesian macroeconomics. Both of these ‘heresies’ claimed to be economic science, and indeed Keynes himself was a major economist even if his book ‘general theory of employment, interest, and money’ (1936) is more accurately described as a moral tract than as an advance in science.
As a result of this economics finds itself in a situation in which progress sometimes actually is reversed. Leading members of the profession, young graduate students, etc., will find that they are pushing hard for something which seems very much in accord with conventional wisdom, but which is, as matter of fact, contrary to the bulk of economics. . .
The end result of all this is that while biology has been steadily, if not rapidly improving, economics has a much more checkered course. It goes ahead, and then goes back. I don’t think anybody looking over the present state of economic knowledge can doubt that we know a great deal more than we did 70 years ago. It is arguable that at some times between then and now practical application of economic knowledge, which is after all the only reason we study economics, actually went into reverse.
All of these are basic problems of economics, as opposed to biology. Inflation is entirely under government control, but most governments are unwilling to admit that and try to pretend that something else causes it. As far as depressions are concerned there is a perfectly good monetary theory invented by Irving Fisher (1967). Unfortunately, it appears to be too complicated for politicians to understand, and as a consequence very unlikely to be implemented. Although this is a perfectly good theory of many depressions, it seems likely there are additional causes of depressions beyond the purely monetary mechanism that Fisher proposed. A stable currency would in fact eliminate most, but not all downturns. Further, it would make it hard for governments, as they often wish, to give the economy a temporary jolt. These temporary jolts may get the economy through the next election, but in the long run the effect is bad.
All of these are reasons why economics has difficulties. They do not affect biology. The only political difficulty that biology has is its long continuing war with substantially all of the world religions. This causes continual difficulty for various people attempting to teach biology, but has not had any serious effect on the progress of biology itself. Thus, it is quite different from the political problems confronting the economists. It is difficult to make scientific progress in an area like economics where politics is so important.
Source: http://www.springerlink.com/index/G262N873318671WG.pdf