I got the idea for the essay after reading Roger Farmer's excellent book "Prosperity for all". Farmer is equally critical of some parts of modern macroeconomic theory. Most importantly, he wants to discard the assumption of the natural rate of unemployment, which has dominated modern macroeconomics for the better part of half a century now. Instead, Farmer advocates a story of multiple equilibira. While multiple equilibria models have been more prominent in international macroeconomics, see models on currency crises, they have not made a real breakthrough in domestic macroeconomics yet.
In my piece I also briefly discuss chaos theory, but ultimately come to the conclusion that, at least for now, chaotic models will not do a better job in explaining the macroeconomy than the usual log-linearized models that are currently used by Central Banks and such. I might get back to this topic on this blog at some later point in time.
I recently met Roger Farmer at a Post-Keynesian conference at Greenwich University. I wrote him an email and he read my piece and briefly commented on it. He also allowed me to make his comment public. So here is what he had to say:
"Thank you for sending me this Julius. It is a very nice piece. Regarding your description of Chaos theory; there is a second problem, in addition to lack of data. We are also missing a convincing theory that leads to chaos."