Nobel Laureate, James Buchanan, ain't dead. In fact, the man refuses to go out with a whimper, much less go out. He gives the whole economics discipline what for, right here:
How do markets work? Standing alone, this is an inappropriate and unanswerable question. It must be replaced by the question: How do markets work under this or that set of constitutional and institutional constraints? Economists’ scientific expertise can be brought to bear on the predicted effects of alternative sets of constraints. The relevant question is not that of asking how this or that end-state or outcome may be put in place through possible collective or political action. The question becomes, instead, how can this or that set of constraints be predicted to operate so as to allow the generation of an order that meets certain criteria of desirability? The difference between the two methodological stances may appear minor, but much ill-advised effort might be avoided if economists would recognize the limits of their own discipline.
Repeat after me: institutions matter.
Incidentally, I've been writing a considerably dumbed-down version of his line of thinking, which is currently sitting in an editor's queue. Here's an excerpt:
We have to explain that a scientist's models, while useful in limited circumstances, are little better than crystal balls for predicting big phenomena like markets and climate. They are offshoots of what F.A. Hayek called the "pretense of knowledge". In other words, a model is a cognitive shortcut for both the wonk as well as the journalist who wants to peg his story to something authoritative the wonk provides. At the receiving end of this unholy wonk/writer alliance are the rest of us -- with little besides common sense as our shields. This is not meant as a populist diatribe, but an a prioristic attack against scientism, an attack launched from good ol' fashioned Austrian economics.
Interestingly, Buchanan's piece is bolder. He questions not only the models (especially the failed forecasting), but the entire economics status quo as it tries to dissect the financial crisis of 2008 ex post facto. I'm only worried about economists trying to predict the future. But if hindsight ain't even 20/20 for economists, they need completely to refashion their enterprise. The economist has no clothes.