Jamming neoclassical economics

Posted: 25 October 2010 in Uncategorized
Tags: , ,

Students at the University of California-Berkeley have launched the first salvo in an international movement to challenge neoclassical economics. They printed the Kick It Over Manifesto [pdf] on bright pink paper and pinned it to the door of Daniel McFadden, a Nobel Prize winner in economics [pdf], and to bulletin boards throughout the department.

The goal was to disrupt the obliviousness of students and teachers who preach the self-destructive consumerist lie that societies should pursue economic growth. It worked: the manifesto hit a nerve.

Within three hours, an adjunct professor emailed Adbusters to justify his approach to teaching economic theory. But he concluded with a defiant flare: “I have a fairly strong hunch that you are mistaken about the system crumbling, or the imminent loss of relevance of mainstream economics. In all likelihood my students will continue to have considerable influence on the body politic for many years to come.”

Here is the text of the manifesto:

We, the undersigned, make this accusation: that you, the teachers of neoclassical economics and the students that you graduate, have perpetuated a gigantic fraud upon the world.

You claim to work in a pure science of formula and law, but yours is a social science, with all the fragility and uncertainty that this entails. We accuse you of pretending to be what you are not.

You hide in your offices, protected by your mathematical jargon, while in the real world, forests vanish, species perish and human lives are callously destroyed. We accuse you of gross negligence in the management of our planetary household.

You have known since its inception that one of your measures of economic progress, the Gross Domestic Product, is fundamentally flawed and incomplete, and yet you have allowed it to become a global standard, reported day in, day out in every form of media. We accuse you of recklessly projecting an illusion of progress.

You have done great harm, but your time is coming to a close. Your systems are crumbling, your flaws increasingly laid bare. An economic revolution has begun, as hopeful and determined as any in history. We will have our clash of economic paradigms, we will have our moment of truth, and out of each will come a new economics–open, holistic, human‑scale.

On campus after campus, we will chase you old goats out of power. Then, in the months and years that follow, we will begin the work of reprogramming your doomsday machine.

The Real World Economics Review Blog lists 31 supporting links.

  1. smallin says:

    “On campus after campus, we will chase you old goats out of power. Then, in the months and years that follow, we will begin the work of reprogramming your doomsday machine.”

    Great stuff! I wish we had thought of that one…

  2. I absolutely agree: Let’s pull some of these people down from their ivory towers and rub reality into their faces!

    Wonderful manifesto.

  3. Yet another proletariat rehashing. Any attempt at rationalization will simply make it worse.

    How do you solve the problem of economic calculation, coordination, and incentives in an era of global trade and communication, when relative costs of local resources, especially human resources, differ dramatically?

    The problem is calculability in this environment, when we use the two edged sword of fiat money. Fiat money pegged to inflation is an insufficient boundary method. it’s gambling.

    The problem is not rationalizing allocation of resources. It’s maintaining competitive purchasing power and productivity when our human capital is increasingly worth less than that of our competitors.

    • MMTist says:

      Human wants are unlimited. Resources are not. To say that we should want less is simply ludicrous. It also follows that we have to make choices and the possibilities that we have forgone is the cost of our choices. It might make people cringe to think of it, but to save our environment there is a cost which we need to look at and decide if it’s one we want to pay.

      Mainstream economics distorts this decision in two fundamental, interrelated, ways:
      1 – It acts as if we are still on a gold standard, pretending that the government can’t achieve its social goals because it will run out of money (i.e. the numbers on the computer screen might have a – before them.)
      2 – It uses unemployment, with all of the associated human suffering, as a policy tool to combat inflation, without considering any of the more humane alternatives.

      Unemployment is unpopular, so politicians naturally want to minimize it. But from 1 and 2, they are unwilling to take it upon themselves to directly fix the issue (through a Job Guarantee.) Therefore, they leave it to the corporations, and bend over backwards to keep them happy. Add to this the neoclassical belief that intervention is bad and markets are always perfect everywhere, plus the strong need for corporate campaign donations, and you have a recipe for disasters.

      This is the fundamental problem. Governments think they need someone to give them their own money and corporations have too much power.

      Economics has not seen much real progress in the last 100 years. It’s been strangled by dogma, leaving mainstream economists to spew the same crap which has been empirically disproven time and time again. Keyne’s understood this, but his revolution – Keynesian in name only – was aborted in the early ’70s.

  4. […] panel consisted of three winners of the so-called Nobel Prize in Economic Sciences— Daniel L. McFadden (2000), James J. Heckman (2000), and Christopher A. Pissarides (2000)—and one “young […]

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