Economics and in particular macroeconomics have come under assault lately because they supposedly were not able to identify the housing bubble and warn about the dangers in the banking sector. It has thus become fashionable to bash the field. It perfectly fine to review the basic tenets of research, this is part of the scientific process. Still, this needs to be done with a good understanding of the current state of the field.
Richard Holt, Barkley Rosser and David Colander claim that neoclassical economics is now dead and a new era has now begun, which they call "Economics of Complexity." I think we all agree that an economy is a complex object, none the least because you have many different people interacting. Like in other sciences, we use models that are simplified abstractions of the reality in order to understand it. One could argue that one simplifies too much, but often the resulting basic intuition is enough to understand what is going on. Sometimes more complexity is necessary, and can certainly no accuse macroeconomics of shying away from complexity. The days of analytically solvable models, even representative agent models are long gone, there are frictions galore and market imperfections are frequent modeling features. But this is still done within models that are clearly of a mainstream neo-classical tradition.
So why do Holt, Rosser and Colander claim that the future economics "is a vision that sees the economy as so complicated that simple analytical models of the aggregate economy—models that can be specified in a set of analytically solvable equations—are not likely to be helpful in understanding many of the issues that economists want to address. Thus, the Walrasian neo-classical vision of a set of solvable equations capturing the full interrelationships of the economy that can be used for planning and analysis is not going to work"? While I can this in say, international trade and public economics, macroeconomics, which is the most under fire, has in fact made that step long ago.
What do they concretely see coming in economics? "Instead, we have to go into the trenches, and base our analysis on experimental and empirical data. From there we build up, using whatever analytic tools we have available. This is different from the old vision where economists mostly did the opposite of starting at the top and then built down." That is not economics they are talking about, this is statistics. Also, when talking more about theory, they say "combined, these changes can be summarized as a movement in economics from a textbook economics of rationality, selfishness, and equilibrium to a new economics of purposeful behavior, enlightened self-interest, and sustainability. What they are criticizing here is the Max U paradigm, but when you think about it, "purposeful behavior" is rationality with information problem, "enlightened self-interest" is selfishness with a some altruism, and "sustainability" is about multiple equilibria, which are common in heterogenous agent models. There is nothing new here, and such modeling features are routinely used.
Does this mean the "Economics of Complexity" of the future is already happening? Probably. It is just that Holt, Rosser and Colander have not noticed it yet, despite the fact that it has been pursed for to decades already. Consider this gem: "the thought that one could develop a micro foundation of macro without considering the feedback of the macro system on the individual is beyond belief." Did they read any macroeconomics paper published in the last twenty years?