MIT Prof. Talks Ancient Chinese Philosophy and Global Economics at IOP

MIT professor of management and economics Kristin Forbes spoke about how Sun Tzu’s “The Art of War” can be applied to global monetary policy on Tuesday at the annual Institute of Politics Albert H. Gordon Lecture.

During her lecture, Forbes also discussed the large-scale economic changes that have emerged in the last few decades, including several significant downturns that require more aggressive responses.

Forbes pointed to several of Sun Tzu’s ancient tactics — including laying plans, accepting what cannot be controlled, tactical positioning, and flexibility — as key techniques for economists at central banks to employ.

“There’s no single action, no single tactic, no single equation that can guarantee victory,” Forbes said.

Forbes also highlighted that “monetary policy has undergone a remarkable transformation over the last two decades.”

In particular, she pointed to the rise of artificial intelligence, saying that she is “positive that AI is going to make us more productive” and cause a “shifting in jobs.”

Forbes also said that since the beginning of the 21st century, the role of central banks in global and domestic economies has grown more prominent.

“We have had two back to back unusually severe, once-in-a-lifetime, economic and financial crises, followed by an acceleration of inflation we haven’t seen in over 40 years,” she said.

These two crises — the global economic crashes of 2008 and 2020 — revealed that policymakers,and banks have gained greater authority and hands-on control over the last two decades, Forbes said.

To properly respond to these economic catastrophes, Forbes said, requires banks to not only respond “aggressively” but also “start getting creative,” reflecting the continued relevance of Sun Tzu’s war tactics in economics.

Some attendees praised Forbes’ interdisciplinary approach.

“It’s not often that modern fields of study — especially fields that include science or STEM or math — open their doors to more traditional or more intuitive methods of thought, like philosophy,” Andrew Jing ’26 said.

Jing added that, as economic models can in fact prove to be “wrong”, or at least “unreliable”, “it may or may not be prudent to rely on other sources” for different approaches.

Forbes concluded her speech by encouraging countries to think strategically about their policies, which will “determine your growth rate, your income levels of people around the world.”

“Even in the face of large external shocks from heaven, the policy choices made by us mere mortals do matter,” she said.